UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 0-26522
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Boston Financial Tax Credit Fund VIII, A Limited Partnership
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 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 12b -2 of the Exchange Act).
Yes No X .
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BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
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Item 1. Financial Statements
Balance Sheets - June 30, 2009 (Unaudited) and March 31, 2009 (Audited) 1
Statements of Operations (Unaudited) - For the Three
Months Ended June 30, 2009 and 2008 2
Statement of Changes in Partners' Equity (Unaudited) -
For the Three Months Ended June 30, 2009 3
Statements of Cash Flows (Unaudited) - For the Three
Months Ended June 30, 2009 and 2008 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
Item 4. Controls and Procedures 14
PART II - OTHER INFORMATION
Items 1-6 15
SIGNATURE 16
CERTIFICATIONS 17
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
BALANCE SHEETS
June 30, 2009 (Unaudited) and March 31, 2009 (Audited)
Assets June 30 March 31
- -------- ----------------- ----------------
Cash and cash equivalents $ 32,530 $ 109,829
Investments in Local Limited Partnerships (Note 1) 3,624,511 4,235,556
--------------- ---------------
Total Assets $ 3,657,041 $ 4,345,385
=============== ===============
Liabilities and Partners' Equity
- --------------------------------
Due to affiliate $ 767,595 $ 692,470
Accrued expenses 69,702 49,958
--------------- ---------------
Total Liabilities 837,297 742,428
General, Initial and Investor Limited Partners' Equity 2,819,744 3,602,957
--------------- ---------------
Total Liabilities and Partners' Equity $ 3,657,041 $ 4,345,385
=============== ===============
The accompanying notes are an integral part of thesefinancial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2009 and 2008
(Unaudited)
2009 2008
---------------- ----------------
Revenue:
Investment $ 385 $ 1,596
----------------- ----------------
Total Revenue 385 1,596
----------------- ----------------
Expense:
Asset management fees, affiliate 65,852 65,786
Provision for valuation allowance on advances to Local
Limited Partnerships 149,241 -
Impairment on investments in Local Limited Partnerships 499,000 -
General and administrative (includes reimbursements
to an affiliate in the amount of $21,615 and
$16,790 in 2009 and 2008, respectively) 52,801 44,384
Amortization 1,638 2,968
---------------- ----------------
Total Expenses 768,532 113,138
---------------- ----------------
Loss before equity in income (losses) of Local Limited Partnerships (768,147) (111,542)
Equity in income (losses) of Local Limited Partnerships (Note 1) (15,066) 20,475
---------------- ----------------
Net Loss $ (783,213) $ (91,067)
================ ================
Net Loss allocated:
General Partners $ (7,832) $ (911)
Limited Partners (775,381) (90,156)
---------------- ----------------
$ (783,213) $ (91,067)
================ ================
Net Loss per Limited Partner Unit
(36,497 Units) $ (21.25) $ (2.47)
================ ================
The accompanying notes are an integral part of thesefinancial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the Three Months Ended June 30, 2009
(Unaudited)
Initial Investor
General Limited Limited
Partners Partner Partners Total
----------- ----------- -------------- --------------
Balance at March 31, 2009 $ 36,030 $ 100 $ 3,566,827 $ 3,602,957
Net Loss (7,832) - (775,381) (783,213)
----------- ----------- -------------- --------------
Balance at June 30, 2009 $ 28,198 $ 100 $ 2,791,446 $ 2,819,744
=========== =========== ============== ==============
The accompanying notes are an integral part of thesefinancial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Three Months Ended June 30, 2009 and 2008
(Unaudited)
2009 2008
------------- -------------
Net cash used for operating activities $ (23,399) $ (199,536)
Net cash provided by (used for) investing activities (53,900) 106,963
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Net decrease in cash and cash equivalents (77,299) (92,573)
Cash and cash equivalents, beginning 109,829 469,376
------------- -------------
Cash and cash equivalents, ending $ 32,530 $ 376,803
============= =============
The accompanying notes are an integral part of thesefinancial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America. These statements should be read in
conjunction with the financial statements and notes thereto included with the
Fund's Form10-K for the year ended March 31, 2009. In the opinion of the
Managing General Partner, these financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
Fund's financial position and results of operations. The results of operations
for the periods may not be indicative of the results to be expected for the
year.
The Managing General Partner of the Fund has elected to report results of the
Local Limited Partnerships in which the Fund has a limited partnership interest
on a 90 day lag basis because the Local Limited Partnerships report their
results on a calendar year basis. Accordingly, the financial information about
the Local Limited Partnerships that is included in the accompanying financial
statements is as of March 31, 2009 and 2008.
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.
1. Investments in Local Limited Partnerships
______________________________________________
The Fund has limited partnership interests in nine Local Limited Partnerships,
which were organized for the purpose of owning and operating multi-family
housing complexes, all of which are government assisted. The Fund's ownership
interest in the Local Limited Partnerships is 99%, with the exception of
Springwood, which is 79.20%, Hemlock Ridge, which is 77% and Pike Place and West
End Place, which are 90%. The Fund may have negotiated or may negotiate options
with the Local General Partners to purchase or sell the Fund's interests in the
Local Limited Partnerships at the end of the Compliance Period at nominal
prices. In the event that Local Limited Partnerships are sold to third parties,
or upon dissolution of the Local Limited Partnerships, proceeds will be
distributed according to the terms of each Local Limited Partnership agreement.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
1. Investments in Local Limited Partnerships (continued)
________________________________________________________
The following is a summary of investments in Local Limited Partnerships at June
30, 2009 and March 31, 2009:
June 30 March 31
---------------- --------------
Capital contributions and advances paid to Local Limited Partnerships $26,796,494 $26,647,252
Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
unrecognized losses of $2,902,413 and $2,625,408 at
June 30 and March 31, 2009, Respectively) (15,532,564) (15,517,498)
Cumulative cash distributions received from Local Limited Partnerships (2,430,832) (2,335,491)
--------------- --------------
Investments in Local Limited Partnerships before adjustments 8,833,098 8,974,263
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 (331,266) (329,628)
-------------- --------------
Investments in Local Limited Partnerships before valuation allowance 9,505,821 9,468,624
Valuation allowance on investments in Local Limited Partnerships (5,881,310) (5,233,068)
------------- --------------
Investments in Local Limited Partnerships $3,624,511 $4,235,556
============= ==============
During the three months ended June 30, 2009, the Fund advanced $149,241 to one
of the Local Limited Partnerships, all of which was reserved.
The Fund has also recorded an impairment allowance for its investments in
certain Local Limited Partnerships in order to appropriately reflect the
estimated net realizable value of these investments.
The Fund's share of net loss of the Local Limited Partnerships for the three
months ended June 30, 2009 and 2008 is $292,071 and $232,067, respectively. For
the three months ended June 30, 2009 and 2008, the Fund has not recognized
$277,005 and $252,542, respectively, of equity in losses relating to certain
Local Limited Partnerships where cumulative equity in losses and cumulative
distributions exceeded its total investment in the Local Limited Partnership.
The Fund anticipates the interest in one Local Limited Partnership will
terminate as result of the underlying property foreclosure. This will result in
the recapture of tax credits to the partners of the Fund.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Fair Value Measurements
____________________________
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 June 30,
2009 and March 31, 2009 includes cash equivalents of $32,530 and $109,829,
respectively.
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 FINANCIAL STATEMENTS (continued)
(Unaudited)
3. New Accounting Principles
______________________________
FIN48-3
_______
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.
SFAS No. 168
____________
In June 2009, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 168, "The FASB Accounting Standards Codification and Hierarchy of
Generally Accepted Accounting Principles, a replacement of FASB Statement No.
162" ("SFAS 168"). SFAS 168 establishes the FASB Standards Accounting
Codification ("Codification") as the source of authoritative GAAP recognized by
the FASB to be applied to nongovernmental entities. The only other source of
authoritative GAAP is the rules and interpretive releases of the SEC which only
apply to SEC registrants. The Codification will supersede all the existing
non-SEC accounting and reporting standards upon its effective date. Since the
issuance of the Codification is not intended to change or alter existing GAAP,
adoption of this statement will not have an impact on the Fund's financial
position or results of operations, but will change the way in which GAAP is
referenced in the Fund's financial statements. SFAS 168 is effective for interim
and annual reporting periods ending after September 15, 2009.
SFAS No. 165
____________
In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165"),
which establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before the financial statements are
issued or are available to be issued. The Fund adopted SFAS 165 effective April
1, 2009 and has evaluated subsequent events after the balance sheet date of June
30, 2009 through August 14, 2009, the date the financial statements were issued.
During this period, the Fund did not have any recognizable subsequent events.
FAS 107-1 and APB 28-1
______________________
In April 2009, the FASB issued FASB Staff Position ("FSP") FAS 107-1 and APB
28-1, "Interim disclosures about Fair Value Measurement", which amends FASB
Statement No. 107, "Disclosures about Fair Value of Financial Instruments", and
Accounting Principles Board ("APB") Opinion No. 28, "Interim Financial
Reporting", to require disclosures about the fair value of financial instruments
for interim reporting periods. This FSP also requires companies to disclose the
methods and significant assumptions used to estimate the fair value of financial
instruments in financial statements on an interim basis and to describe any
changes during the period. FSP FAS 107-1 and APB 28-1 are effective for interim
and annual reporting periods ending after June 15, 2009. Fund adopted FSP FAS
107-1 and APB 28-1 effective April 1, 2009 and the adoption did not have a
material impact on the Fund's financial position or results of operations.
4. 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 June 30, 2009 or 2008 or net
losses for the three months ended either June 30, 2009 or 2008. The following
financial information represents the performance of these Local Limited
Partnerships for the three months ended March 31, 2009 and 2008:
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
4. Significant Subsidiaries (continued)
2009 2008
--------------- --------------
Beaverdam Creek Associates, a Limited Partnership
Revenue $ 277,400 $ 282,200
Net Income $ 8,700 $ 11,900
Oak Knoll Renaissance, Limited Partnership
Revenue $ 507,400 $ 492,600
Net Income $ 3,900 $ 46,600
Pike Place, A Limited Partnership
Revenue $ 164,300 $ 161,900
Net Loss $ (35,700) $ (26,000)
West End Place, A Limited Partnership
Revenue $ 128,900 $ 140,200
Net Loss $ (30,600) $ (15,600)
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The use of
words like "anticipate, "estimate," "intend," "project," "plan," "expect,"
"believe," "could," and similar expressions are intended to identify such
forward-looking statements. The Fund intends such forward-looking statements to
be covered by the safe harbor provisions for forward-looking statements and is
including this statement for purposes of complying with these safe harbor
provisions. Although the Fund believes the forward-looking statements are based
on reasonable assumptions, the Fund can give no assurance that its expectations
will be attained. Actual results and timing of certain events could differ
materially from those projected in or contemplated by the forward-looking
statements due to a number of factors, including, without limitation, general
economic and real estate conditions and interest rates.
Critical Accounting Policies
____________________________
The Fund's accounting 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 ($3,624,511 and $4,235,556 at June 30, 2009 and March 31, 2009,
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.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources
_______________________________
At June 30, 2009, the Fund had cash and cash equivalents of $32,530, as compared
to $109,829 at March 31, 2009. 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 June 30,
2009 and March 31, 2009, $32,530 and $109,829, 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 June 30, 2009, the Fund has
advanced approximately $1,358,000 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 $584,000 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 June 30, 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 three months ended June 30, 2009.
Results of Operations
_____________________
For the three months ended June 30, 2009, the Fund's operations resulted in a
net loss of $783,213 as compared to a net loss of $91,067 for the three months
ended June 30, 2008. The increase in net loss is primarily attributable to an
increase in impairment on investments in Local Limited Partnerships, an increase
in provision for valuation allowance on advances in Local Limited Partnerships
and a decrease in equity in income of Local Limited Partnerships. Impairment on
investments in Local Limited Partnerships increased due to the Fund recording an
impairment allowance for its investments in certain Local Limited Partnerships.
The increase in provision for valuation allowance on advances to Local Limited
Partnerships is the result of an increase in advances made to Local Limited
Partnerships for the three months ended June 30, 2009, as compared to the same
three month period of 2008. The change in equity in income of Local Limited
Partnerships is primarily due to an increase in unrecognized losses by the Fund
of Local Limited Partnerships with carrying values of zero.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Portfolio Update
__________________
The Fund is a Massachusetts limited partnership organized to invest in Local
Limited Partnerships which own and operate apartment complexes which are
eligible for low income housing tax credits that may be applied against the
federal income tax liability of an investor. The Fund's objectives are to: (i)
provide investors with annual tax credits which they may use to reduce their
federal income tax liability; (ii) provide limited cash distributions from the
operations of apartment complexes; and (iii) preserve and protect the Fund's
capital. The fiscal year of the Fund ends on March 31.
Municipal Mortgage & Equity, LLC ("MuniMae") is in the process of selling
substantially all of the assets of its Low Income Housing Tax Credit business to
a venture consisting of JEN Partners, LLC or its affiliates ("JEN") and/or Real
Estate Capital Partners, LP or its affiliates ("RECP"). The first stage of this
sale closed on July 30, 2009 and a second closing is scheduled for on or about
August 31, 2009. The entire sale will be completed no later than December 31,
2009. Upon completion of the acquisition, the business will be owned by Boston
Financial Investment Management, LP, a Delaware limited partnership, which is
directly and indirectly owned by JEN and/or RECP ("Boston Financial"). The
general partner of Boston Financial will be BFIM Management, LLC, a JEN
affiliate. Effective as of July 30, 2009, MuniMae has engaged BFIM Asset
Management, LLC ("BFIM"), an affiliate of Boston Financial, to provide asset
management to the Fund. Most of the employees of MuniMae's LIHTC business have
joined Boston Financial and BFIM; the operations of the business are to remain
intact in the Boston office and the Fund will continue to be managed and
administered in the ordinary course.
Arch Street VIII, Inc. is the Managing General Partner of the Fund ("Arch
Street") and Arch Street VIII Limited Partnership is the co-General Partner of
the Fund ("Arch Street LP"). The general partner of Arch Street LP is Arch
Street. In connection with the above-described transaction, the ownership
interests in Arch Street are being transferred from entities controlled by
MuniMae to one or more entities controlled by or associated with Boston
Financial. The transfer is expected to occur on or about August 31, 2009, and
will not change the organizational structure of the Fund. The principal office
and place of business of the Fund subsequent to the transfer will continue to be
101 Arch Street, 13th Floor, Boston, Massachusetts 02110.
As of June 30, 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 has generated Tax Credits of approximately
$1,429 per Limited Partner Unit. The aggregate amount of Tax Credits generated
by the Fund was consistent with the objective specified in the Fund's
prospectus.
Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 calendar years
from the date the property is placed in service (the "Compliance Period").
Failure to do so would result in the recapture of a portion of the property's
Tax Credits. The Compliance Period expired for three of the nine Properties on
December 31, 2008. Between December 31, 2009 and December 31, 2010, the
Compliance Period of the remaining six 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 three Local Limited
Partnerships in 2009. The Fund has not disposed of any Local Limited Partnership
interests during the three months ended June 30, 2009.
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.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions
_____________________
Five of the Properties in which the Fund has an interest had stabilized
operations and operated above break-even at March 31, 2009. 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, 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 transferring the Fund's interest in the
Local Limited Partnership that owns Pike Place, located in Fort Smith, Arkansas,
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 transferring the Fund's interest in the
Local Limited Partnership that owns West End Place Apartments, located in
Springdale, Arkansas, 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 or
early 2010. 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. The Compliance Period expires on December 31, 2010.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Non Applicable
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
__________________________________
We conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, to ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities
Exchange Commission's rules and forms, including to ensure that information
required to be disclosed by us in the reports filed or submitted by us under the
Exchange Act is accumulated and communicated to management to allow timely
decisions regarding required disclosure. Based on that evaluation, management
has concluded that as of June 30, 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
June 30, 2009. Based on this assessment, management concluded that, as of June
30, 2009, the Fund's internal control over financial reporting were designed
efeectively.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
(a) Exhibits
31.1 Certification of Principal Executive Officer and
Principal Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Executive Officer and
Principal Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
32.1 Certification of Principal Executive Officer and
Principal Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
32.2 Certification of Principal Executive Officer and
Principal Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended June 30, 2009
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 14, 2009 BOSTON FINANCIAL TAX CREDIT FUND VIII,
A LIMITED PARTNERSHIP
By: Arch Street VIII Limited Partnership,
its General Partner
/s/Greg Judge
______________
Greg Judge
President
Arch Street VIII Limited Partnership