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 December 31, 2009
---------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
XCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission file number 0-26522
Boston Financial Tax Credit Fund VIII, A Limited Partnership
___________________________________________________________________
(Exact name of registrant as specified in its charter)
Massachusetts 04-3205879
- ---------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 Arch Street, Boston, Massachusetts 02110-1106
- --------------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
-------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
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 ___ (Do not check if
a smaller reporting company) Smaller reporting company X
------
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b -2 of the Exchange Act).
Yes No X .
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
Balance Sheets - December 31, 2009 (Unaudited)
and March 31, 2009 (Audited) 1
Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 2009 and 2008 2
Statement of Changes in Partners' Equity (Unaudited) -
For the Nine Months Ended December 31, 2009 3
Statements of Cash Flows (Unaudited) - For the Nine
Months Ended December 31, 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 16
Item 4. Controls and Procedures 16
PART II - OTHER INFORMATION
Items 1-6 17
SIGNATURE 18
CERTIFICATIONS 19
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
BALANCE SHEETS
December 31, 2009 (Unaudited) and March 31, 2009 (Audited)
Assets December 31 March 31
- -------- ------------------ ----------------
Cash and cash equivalents $ 673,913 $ 109,829
Investments in Local Limited Partnerships (Note 1) 2,398,338 4,235,556
Other Assets 466 -
----------------- ---------------
Total Assets $ 3,072,717 $ 4,345,385
================= ================
Liabilities and Partners' Equity
Due to affiliate $ 756,830 $ 692,470
Accrued expenses 40,741 49,958
--------------- ---------------
Total Liabilities 797,571 742,428
General, Initial and Investor Limited Partners' Equity 2,275,146 3,602,957
--------------- ---------------
Total Liabilities and Partners' Equity $ 3,072,717 $ 4,345,385
================ ===============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 2009 and 2008
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
---------------- ---------------- ---------------- ---------------
Revenue
Investment $ 2,430 $ 327 $ 2,901 $ 2,703
--------------- ---------------- --------------- ---------------
Total Revenue 2,430 327 2,901 2,703
--------------- ---------------- ---------------- ----------------
Expenses:
Asset management fees, affiliate 65,852 65,786 197,556 197,358
Provision for valuation allowance on
advances to Local Limited Partnerships - - 209,146 -
Impairment on investments in Local
Limited Partnerships1 198,000 495,000 716,000 495,000
General and administrative (includes reimbursements
to an affiliate in the amounts of $79,170 and $55,218
for the nine months ended December 31, 2009 58,177 46,506 153,354 137,187
and 2008, respectively)
Amortization 437 2,968 1,955 8,904
------------------ ---------------- ---------------- ---------------
Total Expenses 322,466 610,260 1,278,011 838,449
------------------ ---------------- ---------------- ---------------
Loss before equity in income
of Local Limited Partnerships (320,036) (609,933) (1,275,110) (835,746)
Equity in income of Local Limited
Partnerships (Note 1) 73,862 97,191 84,061 28,302
Loss on sale of investments in Local
Limited Partnerships - - (136,762) -
----------------- --------------- --------------- --------------
Net Loss $ (246,174) $ (512,742) $ (1,327,811) $ (807,444)
================= =============== ================ ================
Net Loss allocated:
General Partners $ (2,462) $ (5,127) $ (13,278) $ (8,074)
Limited Partners (243,712) (507,615) (1,314,533) (799,370)
--------------- --------------- ---------------- ----------------
$ (246,174) $ (512,742) $ (1,327,811) $ (807,444)
=============== =============== ================ ================
Net Loss Per Limited Partner
Unit (36,497 Units) $ (6.68) $ (13.91) $ (36.02) $ (21.90)
============== ============== =============== ===============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the Nine Months Ended December 31, 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 (13,278) - (1,314,533) (1,327,811)
----------- ----------- -------------- --------------
Balance at December 31, 2009 $ 22,752 $ 100 $ 2,252,294 $ 2,275,146
=========== =========== ============== ==============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 2009 and 2008
(Unaudited)
2009 2008
------------- -------------
Net cash used for operating activities $ (293,332) $ (509,413)
Net cash provided by investing activities 857,416 141,048
------------- -------------
Net increase (decrease) in cash and cash equivalents 564,084 (368,365)
Cash and cash equivalents, beginning 109,829 469,376
------------- -------------
Cash and cash equivalents, ending $ 673,913 $ 101,011
============= =============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-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 September 30, 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 six 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%, and Hemlock Ridge, which is 77%. 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
December 31, 2009 and March 31, 2009:
December 31 March 31
---------------- --------------
Capital contributions and advances paid to Local Limited Partnerships $19,336,206 $26,647,252
Cumulative equity in losses of Local Limited Partnerships (excluding cumulative
unrecognized losses of $3,490,399 and $2,625,408 at
December 31 and March 31, 2009, respectively) (11,989,662) (15,517,498)
Cumulative cash distributions received from Local Limited Partnerships (837,342) (2,335,491)
------------- -------------
Investments in Local Limited Partnerships before adjustments 6,509,202 8,974,263
Excess investment costs over the underlying assets acquired:
Acquisition fees and expenses 662,167 1,003,989
Cumulative amortization of acquisition fees and expenses (197,817) (329,628)
------------- -------------
Investments in Local Limited Partnerships before valuation allowance 6,973,552 9,468,624
Valuation allowance on investments in Local Limited Partnerships (4,575,214) (5,233,068)
------------- --------------
Investments in Local Limited Partnerships $ 2,398,338 $ 4,235,556
============ ==============
During the nine months ended December 31, 2009, the Fund advanced $209,146 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 nine
months ended December 31, 2009 and 2008 is $934,634 and $675,176, respectively.
For the nine months ended December 31, 2009 and 2008, the Fund has not
recognized $1,018,695 and $703,478, 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.
During the nine months ended December 31, 2009, the fund sold its interests in
three Local Limited Partnerships, resulting in a net loss of $136,762. 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
In September 2006, the Financial Accounting Standards Board ("FASB") issued
authoritative guidance which provided enhanced guidance for using fair value to
measure assets and liabilities. The authoritative guidance, which is effective
for financial statements issued in fiscal years beginning after November 15,
2007 and interim periods within those fiscal years, established a common
definition of fair value, providing a framework for measuring fair value under
U.S. generally accepted accounting principles and expanding disclosure
requirements about fair value measurements. In February 2008, additional
authoritative guidance was issued which delays the above effective date for fair
value measurement of 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 certain
provisions of the authoritative guidance for financial assets and liabilities
recognized at fair value on a recurring basis effective April 1, 2008. This
partial adoption did not have a material impact on the Fund's Financial
Statements. The Fund does not expect the adoption of the remaining provisions to
have a material effect on the Fund's financial position, operations or cash
flow. This authoritative guidance 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.
In February 2007, the FASB issued authoritative guidance 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. This guidance 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.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
3. New Accounting Principles
Accounting for Uncertainty in Income Taxes
In June 2006, the FASB issued authoritative guidance which provides guidance for
how uncertain tax positions should be recognized, measured, presented and
disclosed in the financial statements. As required, the Fund adopted this
authoritative guidance effective April 1, 2007 and concluded that the effect was
not material to its financial statements. In December 2008, the FASB issued
additional authoritative guidance which deferred the effective date for certain
nonpublic organizations. The deferred effective date is intended to give the
FASB additional time to develop guidance on the application of this
authoritative guidance by pass through and not-for-profit entities. If required,
the General Partner may modify the Fund's disclosures in accordance with the
FASB's guidance.
Codification and Hierarchy of Generally Accepted Accounting Principles
In June 2009, the FASB issued authoritative guidance which establishes the FASB
Standards Accounting Codification ("Codification") as the source of
authoritative GAAP recognized by the FASB to be applied to nongovernmental
entities. It is effective for interim and annual reporting periods ending after
September 15, 2009. The Fund has adopted this authoritative guidance with its
September 30, 2009 reporting. The only other source of authoritative GAAP is the
rules and interpretive releases of the SEC which only apply to SEC registrants.
The Codification supersedes 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 did not
have an impact on the Fund's financial position or results of operations, but
did change the way in which GAAP is referenced in the Fund's financial
statements.
Subsequent Events
In May 2009, the FASB issued authoritative guidance 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 this authoritative guidance for the
quarter ended June 30, 2009 and has evaluated subsequent events after the
balance sheet date of December 31, 2009 through February 16, 2010, the date the
financial statements were issued.
Interim Disclosures about Fair Value Measurement
In April 2009, the FASB issued authoritative guidance which amends previous
professional standards, to require disclosures about the fair value of financial
instruments for interim reporting periods. The authoritative guidance, effective
for interim and annual reporting periods ending after June 15, 2009, 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. The Fund adopted
this authoritative guidance for the quarter ended June 30, 2009 and the adoption
did not have a material impact on the Fund's financial position or results of
operations.
Consolidation of Variable Interest Entities
In June 2009, the FASB issued authoritative guidance which amends existing
consolidation guidance for variable interest entities. The guidance requires
ongoing reassessment to determine whether a variable interest entity must be
consolidated, requires additional disclosures regarding involvement with
variable interest entities and disclosure of any significant changes in risk
exposure due to that involvement. This guidance will be effective for the Fund's
fiscal year beginning April 1, 2010. The Fund is currently evaluating the
effects of this guidance on its financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
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 December 31, 2009 or 2008 or
net losses for the three months then ended. The following financial information
represents the performance of these Local Limited Partnerships for the three
months ended September 30, 2009 and 2008:
2009 2008
--------------- ------------
Beaverdam Creek Associates, a Limited Partnership
Revenue N/A $ 280,031
Net Income N/A $ 16,676
Oak Knoll Renaissance, Limited Partnership
Revenue $ 525,982 $ 510,978
Net Income (Loss) $ 74,608 $ (9,200)
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 ($2,398,338 and $4,235,556 at December 31, 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 December 31, 2009, the Fund had cash and cash equivalents of $673,913, as
compared to $109,829 at March 31, 2009. The increase is primarily attributable
to proceeds from the sale of investments in Local Limited Partnerships and cash
distributions received from Local Lmited Partnerships partially offset by cash
used for operating activities.
The General Partner initially designated 5% of the Gross Proceeds as Reserves,
as defined in the Partnership Agreement. The Reserves were established to be
used for working capital of the Fund and contingencies related to the ownership
of Local Limited Partnership interests. The General Partner may increase or
decrease such Reserves from time to time, as it deems appropriate. At December
31, 2009 and March 31, 2009, approximately $428,000 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 December 31, 2009, the Fund has
advanced approximately $1,417,000 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 $89,000 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 December 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 three months ended December 31, 2009.
Results of Operations
Three Month Period
For the three months ended December 31, 2009, the Fund's operations resulted in
a net loss of $246,174 as compared to a net loss of $512,742 for the three
months ended December 31, 2008. The decrease in net loss is primarily
attributable to a decrease in impairment on investments in Local Limited
Partnerships, partially offset by a decrease in equity in income of Local
Limited Partnerships and increase in general and administrative expenses.
Impairment on investments in Local Limited Partnerships decreased due to the
Fund recording less impairment allowance for its investments in certain Local
Limited Partnerships. The change in equity in income is due to an increase in
unrecognized losses by the Fund of Local Limited Partnerships with carrying
value of zero. General and admistrative costs increased primarily due to
increased charges due to an affiliate of the Managing General Partner for
operations and administrative expenses necessary for the operation of the Fund.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
Nine Month Period
For the nine months ended December 31, 2009, the Fund's operations resulted in a
net loss of $1,327,811 as compared to a net loss of $807,444 for the nine months
ended December 31, 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 to Local Limited
Partnerships and a loss on sale of investments in 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 nine months ended December 31, 2009,
as compared to the same nine month period of 2008. The increase in loss on sale
of investments in Local Limited Partnerships is primarily due to a loss from the
sale of one Local Limited Partnership.
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") has now sold substantially all of
the assets of its Low Income Housing Tax Credit ("LIHTC") business to a venture
consisting of JEN Partners, LLC or its affiliates ("JEN") and Real Estate
Capital Partners, LP or its affiliates ("RECP"). The first stage of this sale
closed on July 30, 2009 and the second stage closed on October 13, 2009. The
business is owned by Boston Financial Investment Management, LP, a Delaware
limited partnership, which is directly and indirectly owned by JEN and RECP
("Boston Financial"). The general partner of Boston Financial is BFIM
Management, LLC, a JEN affiliate. From July 30, 2009 through October 13, 2009,
MuniMae had 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, 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, on October 13, 2009,
ownership and control of the Managing General Partner and control of the
co-General Partner were directly and/or indirectly transferred from an affiliate
of MuniMae to Boston Financial. The transfer did not change the organizational
structure of the Fund. The principal office and place of business of the Fund
will continue to be 101 Arch Street, 13th Floor, Boston, Massachusetts 02110.
As of December 31, 2009, the Fund's investment portfolio consists of limited
partnership interests in six 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 five of the six Properties on
December 31, 2009. The Compliance Period of the remaining Property in which the
Fund has an interest will expire December 31, 2010. 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 Fund did not dispose of any
Local Limited Partnership interests during the three-months ended December 31,
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
Four of the Properties in which the Fund has an interest had stabilized
operations and operated above breakeven at September 30, 2009. Two 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. On September 30, 2009, the Fund's interest was
transferred. The Fund received $550,000, or $15.07 per Unit. The General
Partner, in accordance with and as permitted by the Partnership Agreement,
retained the entire amount of the net proceeds in Reserves. The Managing General
Partner currently estimates a 2009 tax loss of $673,780, or $18.46 per Unit. The
Fund no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner transferred the Fund's
interest in the Local Limited Partnership that owns Pike Place, located in Fort
Smith, Arkansas, on September 30, 2009. The Fund received $351,083, or $9.62 per
Unit. The General Partner, in accordance with and as permitted by the
Partnership Agreement, retained the entire amount of the net proceeds in
Reserves. The Managing General Partner currently estimates a 2009 tax loss of
$245,603, or $6.73 per Unit. The Fund no longer has an interest in this Local
Limited Partnership.
As previously reported, the Managing General Partner transferred the Fund's
interest in the Local Limited Partnership that owns West End Place Apartments,
located in Springdale, Arkansas, on September 30, 2009. The Fund received $974,
or $0.03 per Unit. The General Partner, in accordance with and as permitted by
the Partnership Agreement, retained the entire amount of the net proceeds in
Reserves. The Managing General Partner currently estimates a 2009 taxable income
of $557,917, or $15.29 per Unit. 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
generally terminate no earlier than 90 days upon the sale of the Property in
January 2011. Net sales proceeds to the Fund are not known at this time.
As previously reported, the Managing General Partner anticipates the Fund's
interest in the Local Limited Partnership that owns Webster Court, located in
Kent, Washington, to generally terminate no earlier than 90 days upon the sale
of the Property, which is projected to be October 2010. Net sales proceeds, if
any, as well as taxable income, are unknown at this time.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
As previously reported, 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 early 2010. Currently, the Managing General Partner estimates
that there will be a $190,760 recapture penalty, or $5.23 per Unit, and
estimates 2009 taxable gain for approximately $4,000,000, or $109.60 per Unit,
which does not include the recapture penalty. The Compliance Period expires on
December 31, 2010. The Managing General Partner continues to negotiate with the
Local General Partner on alternative ways to exit the Local Limited Partnership.
The Managing General Partner anticipates the Fund's interest in the Local
Limited Partnership that owns Meadow Wood of Pella, located in Pella, Iowa, to
terminate in July 2010. The Managing General Partner and Local General Partner
are currently negotiating an exit strategy to dispose of the Fund's interest in
the Local Limited Partnership. Net sales proceeds, if any, as well as taxable
income or loss, is unknown at this time.
The Managing General Partner anticipates the Fund's interest in the Local
Limited Partnership that owns Hemlock Ridge, located in Livingston Manor, New
York, to terminate in October 2010. The Managing General Partner and Local
General Partner are currently negotiating an exit strategy to dispose of the
Fund's interest in the Local Limited Partnership. Net sales proceeds, if any, as
well as taxable income or loss, is unknown at this time.
The Managing General Partner anticipates the Fund's interest in the Local
Limited Partnership that owns Oak Knoll Renaissance, located in Gary, Indiana,
to terminate in October 2010. The Managing General Partner and Local General
Partner are currently negotiating an exit strategy to dispose of the Fund's
interest in the Local Limited Partnership. Net sales proceeds, if any, as well
as taxable income or loss, is unknown at this time.
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
The Fund maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities
Exchange Act of 1934 ("Exchange Act") is recorded, processed, summarized and
reported within the specified time periods. The Fund's Chief Executive Officer
and its Chief Financial Officer (collectively, the "Certifying Officers") are
responsible for maintaining disclosure controls for the Fund. The controls and
procedures established by the Fund are designed to provide reasonable assurance
that information required to be disclosed by the issuer in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Commission's rules and forms.
As of the end of the period covered by this report, the Certifying Officers
evaluated the effectiveness of the Fund's disclosure controls and procedures.
Based on the evaluation, the Certifying Officers concluded that as of December
31, 2009, the Fund's disclosure controls and procedures were effective to
provide reasonable assurance that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
applicable rules and forms, and that it is accumulated and communicated to our
management, including the Certifying Officers, as appropriate to allow timely
decisions regarding required disclosure.
Internal Control over Financial Reporting
The Certifying Officers have also concluded that there was no change in the
Fund's internal controls over financial reporting identified in connection with
the evaluation that occurred during the Fund's third fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Fund's
internal control over financial reporting.
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 December 31, 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: February 16, 2010 BOSTON FINANCIAL TAX CREDIT FUND VIII,
A LIMITED PARTNERSHIP
By: Arch Street VIII, Inc.,
its Managing General Partner
/s/Kenneth J. Cutillo
------------------------------------------
Kenneth J. Cutillo
President
Arch Street VIII, Inc.