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 December 31, 1999
[ ] 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 0-13520
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2828131
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Second Avenue, Needham, Massachusetts 02494
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 444-5251
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 if disclosure of delinquent filers pursuant to Item 405
of regulation S-K 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 ]
Aggregate market value of voting stock held by non-affiliates of the registrant:
Not applicable
Documents incorporated by reference: None
Exhibits Index on Pages: 78-92
Page 1 of 94
1
PART I
Item 1. Business
The Registrant, Liberty Housing Partners Limited Partnership (the
"Partnership"), is a limited partnership organized under the provisions of the
Massachusetts Uniform Limited Partnership Act on March 20, 1984. Until December
27, 1995, the general partners in the Partnership consisted of Liberty Real
Estate Corporation, the managing general partner (the "Former Managing General
Partner"), LHP Associates Limited Partnership, the associate general partner
(the "Former Associate General Partner") and, together with the Former Managing
General Partner, (the "Former General Partners"). On December 27, 1995, the
Former General Partners withdrew from the Partnership and TNG Properties, Inc.,
a Massachusetts corporation (the "Managing General Partner"), was admitted to
the Partnership as a substitute general partner with an interest equivalent to
the aggregate interests of the Former General Partners.
The units of Limited Partnership Interest ("Units") were offered and
sold commencing July 13, 1984, pursuant to a Registration Statement on Form S-11
under the Securities Act of 1933. The offering and sale of 21,616 units was
completed on July 12, 1985. During 1995, the Partnership recorded as cancelled
and no longer outstanding 40 units which were formally abandoned by the holders.
During 1998 an additional 10 units were abandoned.
The Partnership will terminate on December 31, 2020, unless sooner
dissolved or terminated as provided in Section 11 of the Amended Agreement of
Limited Partnership dated as of July 13, 1984, as amended to date (the
"Partnership Agreement").
The Partnership has no employees. Under the Partnership Agreement, the
Managing General Partner is solely responsible for the operation of the
Partnership and its properties.
The Partnership is engaged in only one industry segment, the business of
investing in, operating, owning, leasing and improving interests in real estate
through ownership of interests in other limited partnerships (the "Local Limited
Partnerships") which own and operate government-assisted, multi-family rental
housing complexes. As described in Item 2, the Partnership acquired interests in
13 Local Limited Partnerships, each of which owns and operates a
government-assisted, garden-style, residential multi-family housing complex.
Each complex consists of one-to-three-story buildings of wood frame and brick
construction located on landscaped lots. The apartments within each of the
complexes contain fully equipped kitchens and some of the complexes include
swimming pools. In 1999, the Partnership sold its interests in Fiddlers Creek
Apartments and Linden Park Associates Limited Partnership. In February 2000, the
Partnership sold its interest in Osuna Apartments Company. These transactions
are described in more detail below.
The Partnership paid for two of the 13 limited partnership interests in
cash upon acquisition. The Partnership paid for 11 of such limited partnership
interests by delivery of cash, short-term promissory notes (which have all been
paid in full) and non-recourse promissory notes which bear interest at the rate
of 9% per annum ("Purchase Money Notes"). Each Purchase Money Note permits
interest to accrue to the extent cash distributions to the Partnership from the
applicable Local Limited Partnership are insufficient to enable the Partnership
to pay the Purchase Money Note on a current basis. The Purchase Money Notes do
not require payment of any portion of the principal amount of the notes prior to
maturity (except that the Purchase Money Notes require immediate payment
following a default (as defined therein) by the Partnership thereunder).
2
Item 1. Business, continued
As a result of these interest accrual and payment provisions, each
Purchase Money Note requires a substantial balloon payment at maturity. The
payment of each Purchase Money Note is secured by a pledge of the Partnership's
interest in the Local Limited Partnership to which the note relates. On
September 29, 1999 the Purchase Money Notes relating to Fuquay-Varina Homes for
the Elderly, Ltd., Oxford Homes for the Elderly, Ltd. and Williamston Homes for
the Elderly, Ltd. matured. The Purchase Money Notes relating to Austintown
Associates, Meadowwood Ltd., Brierwood Ltd. and Pine Forest Apartments, Ltd.
matured on October 30, 1999 and the Purchase Money Notes relating to Osuna
Apartments Company matured on November 27, 1999. As of December 31, 1999 these
eight series of Purchase Money Notes were in default. As described below, the
Partnership disposed of its interest in Osuna Apartments and the related
Purchase Money Note obligations in February 2000. The Purchase Money Notes
relating to Glendale Manor Apartments mature on August 29, 2000 and those
relating to Surry Manor, Ltd. on July 9, 2001. Linden Park Associates Limited
Partnership, one of the two Local Limited Partnerships in which the Partnership
acquired its interest for cash, issued purchase money notes in connection with
the purchase of its housing complex. Such notes had terms substantially
identical to those of the Purchase Money Notes, and were secured by a pledge by
all of the partners in such Local Limited Partnership (including the
Partnership) of their respective partnership interests therein. The notes were
paid in full in connection with a refinancing by Linden Park Associates of its
existing debt in July 1999.
Management does not believe that the principal and accrued interest due
on these notes can be realized or supported by the current value of the
respective properties, through either a sale or refinancing. The Partnership's
interests in these Local Limited Partnerships were pledged as security for the
Partnership's obligations under the respective Purchase Money Notes. The sale or
other disposition by the Partnership of its interests in the Local Limited
Partnerships, including in connection with a foreclosure of the pledged
security, is likely to result in recapture of previously claimed tax losses to
the Partnership and may have other adverse tax consequences to the Partnership
and to the Limited Partners. Such recapture may cause some or all of the Limited
Partners to have taxable income from the Partnership without cash distributions
from the Partnership with which to satisfy the tax liability resulting
therefrom.
Additional information concerning the Purchase Money Notes is set forth
below under "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
The Partnership does not intend to make any additional investments. The
Partnership's business is not seasonal.
In connection with the Partnership's investment in the Local Limited
Partnerships, Liberty LGP Limited Partnership, an affiliate of the Former
General Partners ("Liberty LGP") acquired co-general partnership interests or
special limited partnership interests in each of the Local Limited Partnerships.
In some cases, such interests entitle Liberty LGP to approve or disapprove
certain actions proposed to be taken by the unaffiliated general partners of the
Local Limited Partnership (the "Local General Partners"). In all cases, Liberty
LGP, acting alone, is authorized to cause each Local Limited Partnership to sell
and/or refinance the project owned by such Local Limited Partnership. On
December 27, 1995, TNG Properties, Inc. acquired a 19.8% limited partnership
interest in Liberty LGP. Liberty Housing Corporation held an 80.2% interest as a
general partner in Liberty LGP. Michael A. Stoller, President and CEO of the
Managing General Partner acquired all of the outstanding stock of Liberty
Housing Corporation from the Former Managing General Partner.
3
Item 1. Business, continued
The Partnership's investments are and will continue to be subject to
various risks, including the following:
(1) The risk that Partnership funds will not be sufficient to enable the
Partnership to pay its debts and obligations. Among the Partnership's
liabilities are the Purchase Money Notes. Such notes do not require payments
during their term, except to the extent of cash distributions from the Local
Limited Partnerships, but require substantial balloon payments at maturity. As
described above, certain of the notes have matured and the remainder will mature
in the next two years. The Partnership does not have funds sufficient to repay
such notes at maturity. See Item 7.
(2) Risk of recapture of previously claimed tax losses as a result of the
Partnership's inability to pay at maturity the Purchase Money Notes. As a result
of such recapture, the investors in the Partnership would have taxable income
from the Partnership, and the associated income tax liability, without cash
distributions from the Partnership with which to satisfy such income tax
liability.
(3) The risks associated with an investment in a partnership, including tax
risks as a result of possible adjustments by the IRS to federal income tax
returns filed by the Partnership and its Partners, and other tax risks.
(4) Risks that the federal government will cease or reduce funding of housing
subsidies, including subsidies under the Section 8 and Section 236 programs,
both of which provide substantial operating revenues to many of the Local
Limited Partnerships.
(5) Possible restrictions imposed by Federal, state or local agencies that
provide government assistance to the projects, which may limit the amount of
costs which may be passed on to tenants in the form of rent increases, limit
future direct government assistance to Local Limited Partnerships, or restrict
the Partnership's ability to sell or refinance its Local Limited Partnership
interests.
(6) The risk that properties owned by Local Limited Partnerships will not
generate income sufficient to meet their operating expenses and debt service or
to fund adequate reserves for capital expenditures.
(7) Continuing quality of on-site management of the local properties. Such
on-site management is subject to direct control by the Local General Partners of
the Local Limited Partnerships and not by the Partnership.
(8) Possible adverse changes in general economic conditions and adverse local
conditions, such as competitive over-building, a decrease in employment, or
adverse changes in real estate selling laws, which may reduce the desirability
of real estate in a particular area.
(9) Circumstances over which the Local Limited Partnerships may have little or
no control, such as fires, earthquakes, and floods.
(10) The risk that properties owned by Local Limited Partnerships will be unable
to replace the revenue received under federal housing assistance contracts or
extend the current contract at the same terms upon their termination.
4
Item 1. Business, continued
On May 28, 1999, the Partnership sold its interest in Fiddlers Creek
Apartments in exchange for $483,451 in cash and assumption of the Purchase Money
Note obligations. After transaction expenses, the Partnership recognized a gain
of $2,579,632 on the sale of the investment. In connection with the sale, the
Partnership is required to remit withholding taxes of approximately $212,000 to
the state of North Carolina. The benefit of this payment will be allocated among
the Partnership's Units.
On July 15, 1999, the Partnership sold its interest in Linden Park
Associates Limited Partnership in exchange for $395,960 in cash. After
transaction expenses, the Partnership recognized a gain estimated to be $344,491
on the sale of the investment. Linden Park Associates refinanced their existing
debt and also paid in full the principal and accrued and unpaid interest due the
Partnership on their notes totaling $241,058. In accordance with the
Partnership's agreement with the General Partner of Linden Park Associates (the
"Linden GP") these funds have been segregated for use to pay the fees and
expenses due the Linden GP in connection with the consulting arrangement
described below.
The Linden GP was engaged in 1998 to assist with the workout or
liquidation of the Partnership's portfolio. If the workout or liquidation of the
entire portfolio is successfully completed all of the segregated funds will be
paid to the Linden GP. The remaining balance of the segregated funds was
$165,994 as of December 31, 1999. As of December 31, 1999, the consulting fees
paid to the Linden GP in respect of the successful sales of the Partnership's
investment in Fiddlers Creek Apartments and Linden Park Associates totaled
$77,416. In 1999, the Partnership also reimbursed the Linden GP for expenses
incurred totaling $10,216.
The Partnership distributed $449,999 to the Partnership's Unit holders in
August, 1999 from the proceeds of the sales of these Local Limited Partnership
interests.
Management currently anticipates selling the Partnership's 98% limited
partnership interests in Fuquay-Varina, Oxford Homes and Williamston Homes to
the general partner of these partnerships or his affiliate for approximately
$148,485 plus the assumption of the Purchase Money Note obligations. The sale of
these interests requires consent from all the related Purchase Money Note
holders. Such consents have been requested and management anticipates receiving
unanimous consent. The Local Limited Partnerships need HUD approval for the
`transfer of physical assets' (TPA) to conclude these sales of interests.
Management understands that the general partner is currently preparing requests
for such approval. Management anticipates closing these transactions in the
third quarter of 2000.
Management had also entered into an agreement with the general partner
of Austintown Associates to sell the Partnership's 98% limited partnership
interest, subject, among other things, to the consent of the related Purchase
Money Note holders. A meeting with the Purchase Money Note holders to discuss
this transaction was held in November 1999. The Partnership has not received
unanimous consent of the Purchase Money Note holders and management is
continuing discussions with the local general partner regarding possibilities
for disposing of this investment.
On February 1, 2000, the Partnership sold its interest in Osuna
Apartments Company in exchange for $100,000 in cash and the assumption of the
related Purchase Money Note obligations.
5
Item 1. Business, continued
Management has also entered into negotiations with the general partner
of Brierwood I & II, Pine Forest and Meadowwood Apartments. The sale of the
Partnership's interests in Brierwood I, Pine Forest and Meadowwood Apartments
also requires consent from all the related Purchase Money Note holders.
Management presently anticipates selling the Partnership's 94% Limited
Partnership interests in these properties by the fourth quarter of 2000.
The Partnership has commenced discussions with the local manager for
Surry Manor, Ltd. and Glendale Manor Apartments to purchase the Partnership's
interests in those partnerships. Management expects to pursue more detailed
discussions in the second quarter of 2000.
No assurance can be given that the Partnership will be able to
successfully conclude any of the above transactions.
As discussed above, the Partnership is currently in various stages of
negotiations to sell its interests in the remaining ten local limited
partnerships. If the Partnership is successful in disposing of its remaining
investments, management presently intends to wind up the Partnership's
operations by the end of the Year 2001.
Item 2. Properties
Each of the 13 Local Limited Partnerships, in which the Partnership
acquired limited partnership interests, owns the fee interest in a
government-assisted residential multi-family rental-housing complex. As
discussed above, the Partnership's interests in Fiddlers Creek Apartments and
Linden Park Associates were sold in 1999 and in Osuna Apartments in February,
2000. The following table reflects: (1) the name of each of the Local Limited
Partnerships in which the Partnership held an investment at December 31, 1999
and the percentage of the total interests in the Local Limited Partnership
represented by the Partnership's interest; (2) the date on which the Partnership
acquired each of such interests; (3) the consideration paid for each interest,
(including purchase money notes); (4) the original principal amount, the
aggregate amount of the principal and accrued and unpaid interest outstanding as
of December 31, 1999, and the maturity date of the Purchase Money Notes relating
to each interest; (5) the Partnership's share of the mortgage indebtedness of
each Local Limited Partnership; (6) the size and the location of the housing
project owned by each Local Limited Partnership; and (7) the government program
pursuant to which the complex receives assistance and the number of housing
units in the project receiving such assistance.
More detailed information related to the properties owned by the Local
Limited Partnerships, including their respective amounts of mortgage
indebtedness is included in Schedule III, Real Estate and Accumulated
Depreciation and included in Item 8. It is unlikely that operating cash flows
from the Local Limited Partnerships will generate any distributions to investors
in the Partnership, because in nearly all cases, the Partnership's share of
operating cash flows from the properties owned by the Local Limited Partnerships
must be applied to repayment of accrued interest and principal on the related
Purchase Money Notes.
6
Item 2. Properties
Purchase Money Notes
---------------------------------
Unpaid
Principal At Acquisition
Interest Total and --------------------- Description of Apartment Complex
Name/Percentage Acqui- Acqui- Original Interest LHPLP Total ------------------------------------
Ownership of Local sition sition Principal as of Maturity Share of Invested Geographic Government
Limited Partnership Date Cost Amount(A) 12/31/99 Date Local Debt Assets (C) Size Location Assistance (D)
- -------------------- -------- --------- ---------- ----------- ---------- --------- ----------- --------- ------------- ------------
98% interests are owned
in the following Local
Limited Partnerships(B):
1 Glendale Manor 8/31/84 $810,000 $450,000 $648,097 8/29/2000 $929,000 $1,739,000 50 Units Clinton, SC 221(d)(4)
Apartments 30,310 SF 100% Section
5.5 Acres 8 (E)
2 Surry Manor, Ltd. 8/31/84 740,000 360,000 731,029 7/9/2001 1,006,000 1,746,000 44 Units Dobson, NC 221(d)(4)
27,253 SF 100% Section
5.0 Acres 8 (E)
3 Oxford Homes 9/28/84 1,004,000 644,000 915,957 9/28/1999 653,000 1,657,000 50 Units Oxford, NC 221(d)(4)
for the Elderly, 26,672 SF 100% Section
Ltd. 4.5 Acres 8 (E)
4 Williamston 9/28/84 1,064,000 664,000 826,802 9/28/1999 649,000 1,713,000 50 Units Williamstown, 221(d)(4)
Homes for the 26,496 SF NC 100% Section
Elderly, Ltd. 7 Acres 8 (E)
5 Fuquay-Varina 9/28/84 1,118,000 707,000 737,737 9/28/1999 822,000 1,940,000 60 Units Fuqyay- 221(d)(4)
Homes for the 35,056 SF Varina, NC 100% Section
Elderly, Ltd. 6 Acres 8 (E)
6 Austintown 10/30/84 3,081,000 1,600,000 3,619,437 10/30/1999 3,635,000 6,716,000 200 Units Austintown, 236 HUD
Associates 189,200SF OH 100% Section
20 Acres 8 (E)
7 Osuna Apartments 11/30/84 2,042,000 1,300,000 2,928,803 11/27/1999 1,527,000 3,569,000 110 Units Albuquerque, 236 HUD
Company 97,400 SF NM Section 8,
7.3 Acres 22 Units (E)
(Continued)
7
Item 2. Properties, continued
Purchase Money Notes
---------------------------------
Unpaid
Principal At Acquisition
Interest Total and --------------------- Description of Apartment Complex
Name/Percentage Acqui- Acqui- Original Interest LHPLP Total ------------------------------------
Ownership of Local sition sition Principal as of Maturity Share of Invested Geographic Government
Limited Partnership Date Cost Amount(A) 12/31/99 Date Local Debt Assets (C) Size Location Assistance (D)
- -------------------- -------- --------- ---------- ----------- ---------- --------- ----------- --------- ------------- ------------
94% interests are owned
in the following Local
Limited Partnerships(B):
8 Pine Forest 10/29/84 736,000 350,000 797,027 10/30/1999 1,190,000 1,926,000 64 Units Cairo, GA 515 RHS
Apartments, Ltd. 53,344 SF 521 RHS
6 Acres 29 Units
9 Brierwood, Ltd. 10/29/84 563,000 270,000 623,406 10/30/1999 838,000 1,401,000 56 Units Bainbridge, 515 RHS
42,840 SF GA 521 RHS
6 Acres 33 Units
10 Meadowwood, Ltd. 10/29/84 1,001,000 610,000 1,426,211 10/30/1999 1,004,000 2,005,000 80 Units Tifton,GA 515 RHS
67,416 SF
6.8 Acres
11 Brierwood II, 01/25/85 101,000 351,000 452,000 18 Units Bainbridge, 515 RHS
Ltd. 12,402 SF GA
1.4 Acres
----------- ---------- ----------- ----------- -----------
Total Acquisitions $12,260,000 $6,955,000 $13,254,506 $12,604,000 $24,864,000 1,140 units
=========== ========== =========== =========== ===========
(Continued)
8
Item 2. Properties, continued
<FN>
(A) Purchase Money Notes bear interest at 9% per annum (Set Note 6 to Financial Statements). Each note requires no principal
payments prior to maturity. Each note requires payment of interest prior to maturity solely to the extent of cash distributions
from the Local Limited Partnership to which the note relates. To the extent interest is not paid currently, it accrues and is
payable at maturity. Accordingly, each note requires a substantial balloon payment at maturity.
The total of principal and accrued and unpaid interest outstanding at December 31, 1999 on the Purchase Money Notes is as
follows:
Principal Interest Total
$6,955,000 $6,299,506 $13,254,506
=================== =================== =========================
(B) Where the Partnership has acquired a 98% interest as investor partner, the Local General Partner has retained a 1% general
partner interest and Liberty LGP has acquired a 1% general partner interest. Where the Partnership has acquired a 94% interest
as investor partner, the Local General Partner has retained a 5% general partner interest and Liberty LGP has acquired a 1%
Special Limited Partner interest.
(C) The amount of any partnership management fee, as defined in the Partnership Agreement, which may be accrued and unpaid for any
year is limited to a specified percentage of Invested Assets, as defined in the Partnership Agreement.
(D) Government Assistance:
221 (d)(4): Mortgage is insured by HUD
Section 8: Rental Assistance from HUD for low income or elderly housing
515 RHS: Mortgage financing and interest subsidies from RHS pursuant to Section 515 of the Housing Act of 1949
521 RHS: Rental assistance from RHS pursuant to Section 521 of the Housing Act of 1949
236 HUD: Mortgage insurance and interest subsidies from HUD
(E) Section 8 rental assistance contracts expire as follows:
Glendale Manor Apartments 05/2000
Surry Manor, Ltd. 07/2000
Oxford Homes for the Elderly, Ltd. 06/2000
Williamston Homes for the Elderly, Ltd. 03/2005
Fuquay-Varina Homes for the Elderly, Ltd. 05/2000
Austintown Associates 06/2000, 10/2000
Osuna Apartments Company 08/2000
</FN>
9
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the Partnership
is a party or, to the knowledge of the Managing General Partner, of which any of
the properties owned by the Local Limited Partnerships is the subject.
Osuna Apartment Company ("Osuna"), one of the Local Limited
Partnerships, was party to a wrongful death action brought by the estate of a
former tenant in the Second Judicial District of the State of New Mexico. The
suit arose out of the murder of the tenant by the son of a maintenance
contractor periodically engaged by Osuna. No specific amount was claimed. In
1999, the jury awarded $1,800,000 to the plaintiffs of which 50% was payable by
Osuna. An appeal has been filed. Osuna's liability insurance covers this
payment.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for the Partnership's Securities and Related Security Holder
Matters
(a) Market Information
The Partnership's outstanding securities consist of units of limited
partnership interest ("Units"). There is no public market for the Units, and it
is not anticipated that such a public market will develop. Transfer of the Units
is subject to compliance with state and federal securities laws, and in various
states is subject to compliance with the minimum investment and suitability
standards imposed by the Partnership and applicable "blue sky" laws.
(b) Holders.
As of March 8, 2000, there were 997 holders of record of the 21,566
Units outstanding.
(c) Dividends.
The Partnership Agreement requires that Distributable Cash from
Operations (as defined in the Partnership Agreement) be distributed 99% to the
Limited Partners and 1% to the General Partners, to the extent then available,
within 120 days after completion of the Partnership's fiscal year.
The Partnership Agreement provides that Cash from Sales or Refinancings
(as defined in the Partnership Agreement), if any, received by the Partnership,
will be distributed (i) first, until the Limited Partners have received an
amount equal to their total invested capital, 100% to the Limited Partners, and
(ii) the balance, 85% to the Limited Partners and 15% to the General Partners;
provided however that if the amount of Cash from Sales or Refinancings exceeds
the amount of profits for tax purposes arising from such sale or refinancing,
the amount of such excess is distributed to those Partners, if any, who have
positive balances in their capital accounts following any distributions made
pursuant to clause (i) in connection with such sale or refinancing, in
proportion to and to the extent of such positive balances, and prior to any
distributions pursuant to clause (ii).
10
Item 6. Selected Financial Data
The following table sets forth-selected financial information regarding
the Partnership's financial position and operating results. This information
should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Financial Statements and
Notes thereto, which are included in Items 7 and 8 of this Report. Amounts are
expressed in thousands with the exception of per Unit calculations.
For the Years Ended December 31,
--------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Interest income $ 107 $ 36 $ 46 $ 61 $ 32
Net loss before
extraordinary items (1,602) (2,556) (2,218) (1,962) (1,564)
Net income (loss) 1,322 (2,556) (2,218) (1,962) (1,564)
Net loss per Unit before
extraordinary items (73.56) (117.31) (101.75) (90.02) (71.77)
Net income (loss) per Unit 60.67 (117.31) (101.75) (90.02) (71.77)
Total assets at
December 31 2,042 2,254 2,229 2,587 2,964
Long-term debt
(including current
portion, net of
discount) at
December 31 13,085 14,137 11,544 9,684 8,152
Distributable Cash
From Operations
per Unit (a) -- -- -- -- --
Units used in computing
per unit calculations
above (b)
21,566 21,568 21,576 21,576 21,576
<FN>
(a) Distributable cash is calculated pursuant to the terms of the
Partnership Agreement. See Note 11 to the Financial Statements.
(b) During 1995, the Partnership recorded as cancelled and no longer
outstanding 40 units which were formally abandoned by the holders.
During 1998 an additional 10 units were abandoned.
</FN>
11
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
The Partnership.
The Partnership is liable for the amount of the purchase money notes
delivered to purchase its interests in the Local Limited Partnerships (as
hereinafter described), and for the Partnership's day-to-day administrative and
operating expenses.
The Partnership acquired its interests in two Local Limited Partnerships
for cash. The Partnership acquired its interests in eleven other Local Limited
Partnerships by delivery of cash, short-term promissory notes (all of which have
been paid in full) and purchase money promissory notes which bear interest at
the rate of 9% per annum (the "Purchase Money Notes"). The payment of each
Purchase Money Note is secured by a pledge of the Partnership's interest in the
Local Limited Partnership to which the note relates. Recourse on each Purchase
Money Note is limited to the pledged partnership interest. Each note had an
initial term of 15 to 17 years. In May 1999, the Partnership sold its interest
in Fiddlers Creek Apartments and the purchaser assumed the Partnership's
obligations under the related Purchase Money Notes. At December 31, 1999 eight
series of the Purchase Money Notes, relating to Fuquay-Varina Homes for the
Elderly, Ltd., Oxford Homes for the Elderly, Ltd., Williamston Homes for the
Elderly, Ltd., Austintown Associates, Meadowwood Ltd., Brierwood Ltd, Pine
Forest Apartments, Ltd. and Osuna Apartments Company, had matured and were in
default. The Purchase Money Notes relating to Osuna Apartments were assumed by
the buyer in connection with the Partnership's sale of the related Local Limited
Partnership interest in February, 2000. The remaining two series of Purchase
Money Notes, relating to Glendale Manor Apartments and Surry Manor, Ltd. mature
on August 29, 2000 and July 9, 2001, respectively. None of the series of
Purchase Money Notes is cross-defaulted to the others, nor are the series of
Purchase Money Notes cross-collateralized in any manner.
The terms of each Purchase Money Note permit interest to accrue to the
extent cash distributions to the Partnership from the applicable Local Limited
Partnership are insufficient to enable the Partnership to pay the Purchase Money
Note on a current basis. Generally, the amount of such cash distributions have
not been sufficient in any year to pay the full amount of interest accrued for
that year on the Purchase Money Notes. The Purchase Money Notes do not require
payment of any portion of the principal amount of the note prior to maturity
(except that the Purchase Money Notes require immediate payment following a
default (as defined therein) by the Partnership thereunder). Accordingly, each
Purchase Money Note requires a substantial balloon payment at maturity. The
aggregate outstanding principal amount of and accrued and unpaid interest on the
Purchase Money Note obligations of the Partnership, as of December 31, 1999, as
set forth in the table included in Item 2 above, was $13,254,506. The
outstanding obligations are expected to increase annually as interest continues
to accrue under the Purchase Money Notes. The aggregate outstanding principal
amount of the Purchase Money Notes reported on the Partnership's Balance Sheet
($13,085,007 at December 31, 1999), reflects a discount using an imputed
interest rate of approximately 21%, which was applied to the face amount of the
notes on the respective investment purchase dates and which is used to calculate
an annual interest accrued in accordance with generally accepted accounting
principles that will equate to the legal obligation (as presented in Item 2 and
discussed above) expected at maturity of the notes. The unamortized discount was
written off in 1999 on those Purchase Money Notes that matured.
Management does not believe that the principal and accrued interest due
on these notes can be realized or supported by the current value of the
respective properties, through either a sale or refinancing. The Partnership's
interests in these Local Limited Partnerships were pledged as security for the
Partnership's obligations under the respective Purchase Money Notes.
12
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources, continued
The sale or other disposition by the Partnership of its interests in the Local
Limited Partnerships, including in connection with a foreclosure of the pledged
security, is likely to result in recapture of previously claimed tax losses to
the Partnership and may have other adverse tax consequences to the Partnership
and to the Unit holders. Such recapture may cause some or all of the Unit
holders to have taxable income from the Partnership without cash distributions
from the Partnership with which to satisfy the tax liability resulting
therefrom.
Linden Park Associates Limited Partnership, one of the two Local Limited
Partnerships in which the Partnership acquired its interest for cash ("LPLP"),
issued purchase money notes in connection with the purchase of its housing
complex. The terms of such notes were substantially identical to those of the
Partnership's Purchase Money Notes, requiring no payment of principal prior to
maturity and permitting interest to accrue prior to maturity to the extent
LPLP's cash flow is insufficient to pay such interest. On July 15, 1999, in
connection with the sale of the Partnership's interest in LPLP, LPLP refinanced
their existing debt and paid in full the principal and accrued and unpaid
interest due the Partnership on their notes totaling $241,058.
Management currently anticipates selling the Partnership's 98% limited
partnership interests in Fuquay-Varina, Oxford Homes and Williamston Homes to
the general partner of these partnerships or his affiliate for approximately
$148,485 plus the assumption of the related Purchase Money Note obligations. The
sale of these interests requires consent from all the related Purchase Money
Note holders. Such consents have been requested and management anticipates
receiving unanimous consent. The Local Limited Partnerships need HUD approval
for the `transfer of physical assets' (TPA) to conclude these sale of interests.
management understands that the general partner is currently preparing requests
for such approvals. Management anticipates closing these transactions in the
third quarter of 2000.
Management had also entered into an agreement with the general partner
of Austintown Associates to sell the Partnership's 98% limited partnership
interest, subject, among other things, to the consent of the related Purchase
Money Note holders. A meeting with the Purchase Money Note holders to discuss
this transaction was held in November 1999. The Partnership has not received
unanimous consent of the Purchase Money Note holdersand management is continuing
discussions with the local general partner regarding possibilities for disposing
of this investment.
On February 1, 2000, the Partnership sold its interest in Osuna
Apartments in exchange for $100,000 in cash and the assumption of the related
Purchase Money Note obligations.
Management has also entered into negotiations with the general partner
of Brierwood I & II, Pine Forest and Meadowwood Apartments. The sale of the
Partnership's interests in Brierwood I, Pine Forest and Meadowwood Apartments
also requires consent from all the related Purchase Money Note holders.
Management presently anticipates selling the Partnership's 94% Limited
Partnership interests in these properties by the fourth quarter of 2000.
The Partnership has commenced discussions with the local manager for
Surry Manor, Ltd. and Glendale Manor Apartments to purchase the Partnership's
interests in those partnerships. Management expects to pursue more detailed
discussions in the second quarter of 2000.
13
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources, continued
There can be no assurance that the Partnership will be able to
successfully consummate any of of the above-described transactions. If
Partnership funds are insufficient to pay when due the Purchase Money Notes, the
holders of the Purchase Money Notes will have the right to foreclose on the
Partnership's respective interests in the Local Limited Partnerships. The sale
or other disposition by the Partnership of its interests in the Local Limited
Partnerships, including in connection with such a foreclosure, is likely to
result in recapture of previously claimed tax losses to the Partnership and may
have other adverse tax consequences to the Partnership and to the Unit holders.
Such recapture may cause some or all of the Unit holders to have taxable income
from the Partnership without cash distributions from the Partnership with which
to satisfy the tax liability resulting therefrom.
At December 31, 1999, the Partnership's had cash and cash equivalents of
$526,940. Of this amount $165,994 represents funds segregated for use to pay the
fees and expenses due the Linden GP pursuant to a consulting agreement and
$212,000 anticipated North Carolina state taxes due on the sale of the
Partnership's interest in Fiddlers Creek Apartments, leaving cash reserves of
$120,946. The increase in cash reserves compared with $42,284 at December 31,
1998 was funded from the proceeds of the sales of the Partnership's interests in
Fiddlers Creek Apartments and LPLP. Such reserves have partially funded the
Partnership administrative expenses, including expense reimbursement to the
Managing General Partner. The Partnership incurs certain administrative costs,
including the management fee, which are earned by or reimbursed to the Managing
General Partner. As discussed more fully in Note 6 to the financial statements,
such administrative costs were $99,681, $98,136 and $107,707 in 1999, 1998 and
1997, respectively. Management has decided to continue to defer payment of the
management fee and reimbursements for general and administrative costs rather
than paying such costs out of cash reserves. However, the Partnership did pay
$83,000 of deferred management fees and reimbursable expenses out of the
proceeds from the sales of its interests in Fiddlers Creek and LPLP. Management
intends to continue to pay a portion of the deferred fees and costs from the
proceeds of any subsequent sales of Local Limited Partnership interests.
During 1999, 1998 and 1997 distributable cash flow from the Local
Limited Partnerships (LLP's) in connection with which the Partnership delivered
Purchase Money Notes was distributed to the Partnership, as follows: 1999: Seven
LLP's - $245,730; 1998: Seven LLP's - $186,617; and 1997: Seven LLP's -
$369,947. By April 30, 1999, 1998, and 1997, the Partnership used such cash
distributions to pay a portion of the accrued and unpaid interest on the related
Purchase Money Notes.
The Local Limited Partnerships.
The liquidity of the Local Limited Partnerships in which the
Partnership has invested is dependent on the ability of the respective Local
Limited Partnerships, which own and operate government assisted multi-family
rental housing complexes, to generate cash flow sufficient to fund operations
and debt service and to maintain working capital reserves. Each of the Local
Limited Partnerships is regulated by government agencies which require monthly
funding of certain operating and capital improvements reserves and which
regulate the amount of cash to be distributed to owners. Each Local Limited
Partnership's source of funds is rental income received from tenants and
government subsidies.
14
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Local Limited Partnerships, continued
Certain of the Local Limited Partnerships receive rental income pursuant to
Section 8 rental assistance contracts which expire at various times from May
2000 through March 2005. Under the Multifamily Assisted Housing and Reform and
Affordability Act (MAHRAA) of 1997, as amended, Congress set forth the
legislation for a permanent "mark-to-market" program and provided for permanent
authority for the renewal of Section 8 Contracts. Owners with Section 8
contracts expiring after September 30, 1998 are subject to the provisions of
MAHRAA. On September 11, 1998, HUD issued an interim rule to provide
clarification of the implementation of the mark-to-market program. Since then,
revised guidance has been provided through various HUD housing notices, most
recently HUD housing notice 99-36, which addresses project-based Section 8
contracts expiring in fiscal year 2000.
Under this notice, project owners have several options for Section 8
contract renewals, depending on the type of project and rent level. Options
include marking rents up to market, renewing other contracts with rents at or
below market, referring projects to the Office of Multifamily Housing Assistance
Restructuring (OMHAR) for mark-to-market or "OMHAR lite" renewals, renewing
contracts that are exempted from referral to OMHAR, renewing contracts for
portfolio re-engineering demonstration and preservation projects, and opting out
of the Section 8 program. Owners must submit their option to HUD at least 120
days before expiration of their contract. Each option contains specific rules
and procedures that must be followed to comply with the requirements of housing
notice 99-36.
As such, each Local Limited Partnership may choose to either opt out of
the Section 8 program, request mortgage restructuring and renewal of the Section
8 contract, or request renewal of the Section 8 contract without mortgage
restructuring. Each option contains a specific set of rules and procedures that
must be followed in order to comply with the requirements of MAHRAA. The manager
of Osuna Apartments had received a one year contract extension through August,
2000. The general partner of Williamston Homes received a five year renewal to
March, 2005, subject to annual Federal appropriation of funds. The remaining
properties are working with HUD to renew their existing contracts for two to
five year periods.
The Partnership cannot reasonably predict legislative initiatives and
governmental budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program. Such changes could adversely
affect the future net operating income and debt structure of certain Local
Limited Partnerships currently receiving such subsidy or similar subsidies.
As discussed above, the Partnership is currently in various stages of
negotiations to sell its interests in the remaining ten local limited
partnerships. If the Partnership is successful in disposing of its remaining
investments, management presently intends to wind up the Partnership's
operations by the end of the Year 2001.
Each of the Local Limited Partnerships has incurred mortgage
indebtedness as reflected in Item 8 in Schedule III - Real Estate and
Accumulated Depreciation. The mortgage loans provide for equal monthly payments
of principal and interest in amounts, which will reduce the principal amount of
the loans to zero at maturity. Each of the maturity dates of the respective
mortgages is substantially beyond the due date of the Purchase Money Note
obligations.
15
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Local Limited Partnerships, continued
Upon a sale of a property by a Local Limited Partnership the mortgage
indebtedness of such property must be satisfied prior to distribution of any
funds to the partners in the Local Limited Partnership.
Partnership Operations
The Partnership is engaged solely in the business of owning interests in
the Local Limited Partnerships rather than the direct ownership of real estate.
The Partnership's interest income reflects interest earned on reserves, interest
earned on the notes receivable from LPLP (in 1998 and 1997 net of discount
amortization) and the reversal of the unamortized discount in 1999. Total
interest income increased to $107,488 in 1999 from $36,347 in 1998 primarily due
to the reversal of the unamortized discount of $74,524. Total interest income
decreased to $36,347 in 1998 from $45,607 in 1997.
This decrease was attributable to the lower reserve balance maintained
during the year and a decrease in interest payments received on the long-term
note receivable ($18,634 in 1998 versus $23,803 in 1997).
The Partnership's interest expense decreased to $1,695,878 in 1999 from
$2,672,560 in 1998. The decrease is attributable to the sale of the Fiddlers
Creek investment on May 28, 1999, which included the assumption of the related
Purchase Money Notes. Total interest expense increased to $2,672,560 in 1998
from $2,214,122 in 1997. Such increase was attributable to the accrual of
interest under the Purchase Money Notes. Refer to Note 7 to the Financial
Statements.
General and administrative expenses of the Partnership were $153,550 in
1999, $143,677 in 1998, and $145,864 in 1997.
Occupancy levels at the projects owned by the Local Limited Partnerships
ranged from 72% to 100% in 1999, 89% to 100% in 1998, and 88% to 100% in 1997.
The Partnership's equity in income from the Local Limited Partnerships
was $139,548 in 1999, $224,229 in 1998, and $96,766 in 1997. The $84,681
decrease in income recognized in 1999 compared to 1998 is primarily due to the
recognition of only five months of income from Fiddlers Creek Apartments. In
1999 the Partnership's share of income from Fiddlers Creek Apartments was
$60,011 versus $132,181 in 1998. The Partnership did not recognize losses from
six Local Limited Partnerships in 1999 totaling $200,870, as it would have
reduced its investment balance below zero, and recognized investment income of
$19,002 based on cash distributions received from Glendale Manor. The $107,503
increase in income recognized in 1998 compared to 1997 is attributable to: an
increase of $127,463 in net income from the combined statements of operations of
all Local Limited Partnerships, and an increase in cash distributions recognized
as investment income of $28,000. The Partnership did not record losses in 1998
totaling approximately $163,658 from six Local Limited Partnerships. The
recognition of income in 1997 is primarily attributable to the fact that the
partnership did not record losses totaling approximately $172,000 for five Local
Limited Partnerships and recognized investment income of $23,065 of cash
distributions received from Glendale Manor. The Partnership is not obligated to
make additional capital contributions to fund the deficit in its capital
accounts in any of the Local Limited Partnerships.
Because of the above discussed factors, net loss before extraordinary
items decreased to $1,602,392 in 1999 from $2,555,661 in 1998 and increased in
1998 from $2,217,613 in 1997.
16
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Partnership Operations, continued
The Partnership realized a net gain of $2,579,632 on its sale of
investment in Fiddlers Creek Apartments on May 28, 1999 and a net gain of
$344,491 on the sale of investment in Linden Park Associates on July 15, 1999.
These gains were calculated as follows:
Fiddlers Creek Linden Park
Apartments Associates
---------- ----------
Cash received $ 483,451 $ 395,960
Purchase Money Notes assumed by buyer 2,624,966 --
Investment in local limited partnership
interest sold (465,520) --
Consulting fees (35,982) (41,434)
Legal fees (22,708) (10,035)
Accounting fees (4,575) --
----------- -----------
Net gain on sale $ 2,579,632 $ 344,491
The operations of the Partnership and of each of the Local Limited
Partnerships are subject to numerous risks, including material tax risks. The
rents of the Properties, many of which receive rental subsidy payments,
including payments under Section 8 of Title II of the Housing and Community
Development Act of 1974 ("Section 8"), are subject to specific laws, regulations
and agreements with federal and state agencies. The subsidy agreements expire at
various times from May 2000 through March 2005. The United States Department of
Housing and Urban Development ("HUD") has issued notices, which relate to
project based Section 8 contracts. HUD's current program provides in general for
restructuring rents and/or mortgages where rents may be adjusted to market
levels and mortgage terms may be adjusted based on the reduction in rents,
although there may be instances in which only rents, but not mortgages, are
restructured.
The Partnership cannot reasonably predict legislative initiatives and
governmental budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program.
Such changes could adversely affect the future net operating income and
debt structure of certain Local Limited Partnerships currently receiving such
subsidy or similar subsidies. See Item 1 above.
Recent Accounting Pronouncements
In December 1998, the Financial Accounting Standards Board (FASB)
issued SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after
the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise - an amendment of FASB Statement No. 65." In February 1999, the FASB
issued SFAS No. 135, "Rescission of SFAS No. 75 and Technical Corrections (which
was the Deferral of the Effective date of Certain Accounting requirements for
Pension Plans and State and Local Government Units)." In December 1999, the FASB
issued SFAS No. 136, "Transfers of Assets to a Non-for Profit Organization or
Charitable Trust that Raises or Holds Contributions for Others." Lastly, in June
1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of SFAS No. 133."
17
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Partnership Operations, continued
The Registrant does not have any items of mortgage backed securities,
does not have any pension plans, is not a non-for-profit or a charitable trust,
and does not have any derivatives or hedging activities. Consequently, these
pronouncements are expected to have no effect on the financial statements.
Impact of the Year 2000 Issue
There were no material issues relating to the Year 2000 compliance on
the Partnership's operations as a result of problems arising from systems and
services utilized by the Managing General Partner or by various Local Limited
Partnerships.
Item 7A. Qualitative and Quantitative Disclosure About Market Risk:
This item is not applicable as this registrant is a small business
issuer within the meaning of Rule 12b-2.
18
Item 8. Financial Statements and Supplementary Data
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
INDEX
Page
Financial Statements:
Balance Sheets, December 31, 1999 and 1998 20-21
Statements of Operations for the Years
Ended December 31, 1999, 1998 and 1997 22
Statements of Changes in Partners' Deficit
for the Years Ended December 31, 1999, 1998 and 1997 23
Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997 24-25
Notes to Financial Statements 26-40
Independent Auditors' Report 41
Separate Financial Statements, including
Reports of Independent Auditors', for
Significant Subsidiaries:
Osuna Apartments Company 42-70
Financial Statement Schedules:
Independent Auditors' Report 71
Schedule III - Real Estate and Accumulated Depreciation 72
All schedules other than those indicated in the index have been omitted as the
required information is inapplicable or the information is presented in the
financial statements or related notes.
19
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS
December 31,
------------
1999 1998
---- ----
Assets
Current assets:
Cash and cash equivalents $ 526,940 $ 42,284
Notes and accrued interest receivable, current maturities -- 159,303
Deferred legal fees 40,109 --
------------ ------------
Total current assets 567,049 201,587
Investments in local limited
partnerships 1,475,083 2,052,426
------------ ------------
Total Assets $ 2,042,132 $ 2,254,013
============ ============
(continued)
20
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
BALANCE SHEETS (continued)
December 31,
------------
1999 1998
---- ----
Liabilities and Partners' Deficit
Current liabilities:
Purchase Money Notes, current maturities $ 12,436,808 $ 13,151,250
Accounts payable to affiliates 188,272 173,271
Accounts payable 1,565 2,659
Accrued expense 98,597 16,500
Accrued interest payable 141,318 263,558
------------ ------------
Total current liabilities 12,866,560 13,607,238
Purchase money notes, net of current maturities 648,199 985,493
------------ ------------
Total liabilities 13,514,759 14,592,731
------------ ------------
Contingencies -- --
Partners' deficit:
General partners:
Capital contributions 4,202 4,202
Capital distributions (128) (72)
Accumulated losses (210,889) (224,106)
------------ ------------
(206,815) (219,976)
------------ ------------
Limited partners (21,566 Units in 1999 and 1998):
Capital contributions (net of
offering costs of $1,134,440) 9,649,520 9,649,520
Capital distributions (462,706) (7,122)
Accumulated losses (20,452,626) (21,761,140)
------------ ------------
(11,265,812) (12,118,742)
------------ ------------
Total partners' deficit (11,472,627) (21,338,718)
------------ ------------
Total liabilities and partners' deficit $ 2,042,132 $ 2,254,013
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
21
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
--------------------------------
1999 1998 1997
---- ---- ----
Interest income $ 107,488 $ 36,347 $ 45,607
Expenses:
Interest expense 1,695,878 2,672,560 2,214,122
General and administrative
expense 153,550 143,677 145,864
----------- ----------- -----------
Total expenses 1,849,428 2,816,237 2,359,986
----------- ----------- -----------
Loss before equity in income of local limited
partnership investments and extraordinary items (1,741,940) (2,779,890) (2,314,379)
Equity in income of local
limited partnership investments 139,548 224,229 96,766
----------- ----------- -----------
Loss before extraordinary items (1,602,392) (2,555,661) (2,217,613)
Extraordinary items:
Gain on sale of investment in Fiddler's Creek Apts 2,579,632 -- --
Gain on sale of investment in Linden Park Associates 344,491 -- --
----------- ----------- -----------
Net income (loss) $ 1,321,731 $(2,555,661) $(2,217,613)
=========== =========== ===========
Units used in computing
Basic net income (loss) per
Limited Partnership Unit 21,566 21,568 21,576
=========== =========== ===========
Basic loss per Limited
Partnership Unit before
Extraordinary items $ (73.56) $ (117.31) $ (101.75)
=========== =========== ===========
Basic net income (loss) per
Limited Partnership Unit $ 60.67 $ (117.31) $ (101.75)
=========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
22
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
For the years ended December 31, 1999, 1998 and 1997
General Limited
Partner Partners Total
------- -------- -----
Partners' deficit
at December 31, 1996 $ (172,171) $ (7,386,079) $ (7,558,250)
Net loss (22,177) (2,195,436) (2,217,613)
Capital Distributions (22) (2,211) (2,233)
------------ ------------ ------------
Partners'deficit
at December 31, 1997 $ (194,370) $ (9,583,726) $ (9,778,096)
Net loss (25,556) (2,530,105) (2,555,661)
Capital Distributions (50) (4,911) (4,961)
------------ ------------ ------------
Partners' deficit
at December 31, 1998 $ (219,976) $(12,118,742) $(12,338,718)
Net income 13,217 1,308,514 1,321,731
Capital Distributions (56) (455,584) (455,640)
------------ ------------ ------------
Partners' deficit
at December 31, 1999 $ (206,815) $(11,265,812) $(11,472,627)
============ ============ ============
The accompanying notes are an integral part of these financial statements.
23
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31
-------------------------------
1999 1998 1997
---- ---- ----
Cash flows from operating activities:
Cash distributions from local limited partnerships $ 251,371 $ 191,578 $ 372,180
Interest payments on purchase money notes (245,730) (186,617) (369,947)
Uncashed interest payments on purchase money notes
from prior years 841 -- --
Cash paid for general and administration expenses (121,926) (43,930) (128,051)
Interest received 25,733 20,529 29,821
--------- --------- ---------
Net cash used in operating activities (89,711) (18,440) (95,997)
--------- --------- ---------
Cash flows from financing activities:
Capital distributions (455,640) (4,961) (2,233)
Principal and accrued interest received upon
repayment of Linden Park Associates notes
receivable 241,058 -- --
--------- --------- ---------
Net cash used in financing activities (214,582) (4,961) (2,233)
--------- --------- ---------
Cash flows from investing items:
Cash proceeds from sale of investment in
Fiddlers Creek Apartments 483,451 -- --
Cash proceeds from sale of investment in
Linden Park Associates 395,960 -- --
Closing costs (77,416) -- --
Deferred closing legal costs (13,046) -- --
--------- --------- ---------
Net cash provided by investing items 788,949 -- --
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 484,656 (23,401) (98,230)
Cash and cash equivalents at:
Beginning of period 42,284 65,685 163,915
--------- --------- ---------
End of period $ 526,940 $ 42,284 $ 65,685
========= ========= =========
(continued)
24
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
STATEMENTS OF CASH FLOWS (continued)
Reconciliation of net loss to net cash used in operating activities:
1999 1998 1997
---- ---- ----
Loss before extraordinary items $(1,602,392) $(2,555,661) $(2,217,613)
Adjustments to reconcile loss before extraordinary
items to net cash used in operating activities:
Share of income of local limited
partnership investments (139,548) (224,229) (96,766)
Cash distributions from local limited
Partnerships 251,371 191,578 372,180
Interest expense added to purchase money
Notes, net of discount amortization 1,573,230 2,592,548 1,859,914
Interest income added to
Notes receivable, net of discount
amortization, and interest received (81,755) (15,818) (15,817)
Decrease in other current assets -- -- 31
(Decrease) increase in:
Accrued interest payable (122,241) (106,607) (15,736)
Accounts payable to affiliates 15,002 98,000 17,000
Accounts payable (1,093) 1,249 410
Accrued expenses 17,715 500 400
----------- ----------- -----------
Net cash used in operating activities $ (89,711) $ (18,440) $ (95,997)
=========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
25
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Organization of Partnership
Liberty Housing Partners Limited Partnership (the "Partnership") was
formed under the Massachusetts Uniform Limited Partnership Act on March 20, 1984
for the primary purpose of investing in other limited partnerships which own and
operate government assisted multi-family rental housing complexes (the "Local
Limited Partnerships").
The General Partners of the Partnership through December 27, 1995 were
Liberty Real Estate Corporation, which served as the Managing General Partner,
and LHP Associates Limited Partnership, which served as the Associate General
Partner. On December 27, 1995, Liberty Real Estate Corporation and LHP
Associates Limited Partnership withdrew from the Partnership and assigned and
transferred all of their interests in the Partnership to the Successor General
Partner, TNG Properties Inc., which was admitted to the Partnership as Successor
General Partner. TNG Properties Inc. serves as the Managing General Partner.
The Partnership Agreement authorized the sale of up to 30,010 units of
Limited Partnership Interest ("Units") of which 21,616 were subscribed for and
sold as of the completion of the offering on July 12, 1985. During fiscal 1995
and 1998, the Partnership recorded as cancelled and no longer outstanding 40 and
10 Units, respectively, which were formally abandoned by the holders of such
Units.
Pursuant to terms of the Partnership Agreement, Profits or Losses for
Tax Purposes (other than from sales or refinancings) and Distributable Cash From
Operations, both as defined in the Partnership Agreement, are allocated 99% to
the Limited Partners and 1% to the General Partners. Different allocations of
profits or losses and cash distributions resulting from other events are
specified in the Partnership Agreement.
2. Significant Accounting Policies
The Partnership records are maintained on the accrual basis of
accounting.
Investments in Local Limited Partnerships are accounted for by the
equity method whereby costs to acquire the investments, including cash paid,
notes issued and other costs of acquisition, are capitalized as part of the
investment account. The Partnership's equity in the earnings or losses of each
of the Local Limited Partnerships is reflected as an addition to or reduction of
the respective investment account. The Partnership does not recognize losses,
which reduce its investment account below zero.
Cash equivalents at December 31, 1999 consist of a $298,957 certificate
of deposit which earned interest at a rate of 4.9 percent and is rolled forward
on a seven day basis. The remaining funds held are in money market funds with no
stated maturity, valued at cost, which approximates market value. At December
31, 1998, cash equivalents consist of money market fund investments with no
stated maturity, valued at cost, which approximates market value.
26
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
2. Significant Accounting Policies, continued
Discounts on purchase money notes are amortized over the terms of the
related notes using the effective interest method. The Partnership has fully
amortized the discount for those purchase money notes which have matured and are
still outstanding.
Discounts on notes receivable were being amortized over the term of the
notes using the effective interest method. In 1999, the unamortized discount on
the notes receivable was reversed and is included in the Partnership's interest
income.
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss pass through to, and is
reportable by the partners individually.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Net loss per Limited Partnership Unit is based on the weighted average
number of Units outstanding in the applicable year. Refer to Note 1 for
information regarding profit and loss sharing ratios.
In December 1998, the Financial Accounting Standards Board (FASB)
issued SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after
the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise - an amendment of FASB Statement No. 65." In February 1999, the FASB
issued SFAS No. 135, "Rescission of SFAS No. 75 and Technical Corrections (which
was the Deferral of the Effective date of Certain Accounting requirements for
Pension Plans and State and Local Government Units)." In December 1999, the FASB
issued SFAS No. 136, "Transfers of Assets to a Non-for Profit Organization or
Charitable Trust that Raises or Holds Contributions for Others." Lastly, in June
1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of SFAS No. 133."
The Registrant does not have any items of mortgage backed securities,
does not have any pension plans, is not a non-for-profit or a charitable trust,
and does not have any derivatives or hedging activities. Consequently, these
pronouncements are expected to have no effect on the financial statements.
3. Contingencies
The Partnership's cash balances have continued to decrease in 1999 from
the payment of operating expenses. If that trend continued, the Partnership
would not have had sufficient cash available for operating expenses during 1999.
27
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
3. Contingencies, continued
The Partnership therefore replenished cash reserves from the proceeds of the
sales of its interests in Fiddlers Creek Apartments and Linden Park Associates
to fund anticipated operating expenses through 2001. Management has decided that
the Partnership may continue to defer payment of the management fee, and defer
reimbursements out of cash reserves for general and administrative costs. The
Partnership did pay $83,000 of deferred management fees and reimbursable
expenses from the Fiddlers Creek and Linden Park sales proceeds. Management
intends to pay a portion of the deferred fees upon any subsequent sales of Local
Limited Partnership interests.
On September 29, 1999 the Purchase Money Notes relating to Fuquay-Varina,
Oxford Homes and Williamston Homes matured. The Purchase Money Notes relating to
Austintown Associates, Meadowwood Ltd, Brierwood Ltd and Pine Forest matured on
October 30, 1999 and the Purchase Money Notes relating to Osuna Apartments
matured on November 27, 1999. The Purchase Money Notes relating to Osuna were
assumed by the buyer in connection with the sale of the Partnership's investment
in February 2000. The remaining seven series Purchase Money Notes are now in
default. The Purchase Money Notes for Glendale Manor mature on August 29, 2000
and Surry Manor on July 9, 2001.
Management does not believe that the principal and accrued interest due
on these notes can be realized or supported by the current value of the
respective properties, through either a sale or refinancing. The Partnership's
interests in these Local Limited Partnerships were pledged as security for the
Partnership's obligations under the respective Purchase Money Notes. The sale or
other disposition by the Partnership of its interests in the Local Limited
Partnerships, including in connection with a foreclosure of the pledged
security, is likely to result in recapture of previously claimed tax losses to
the Partnership and may have other adverse tax consequences to the Partnership
and to the Limited Partners. Such recapture may cause some or all of the Limited
Partners to have taxable income from the Partnership without cash distributions
from the Partnership with which to satisfy the tax liability resulting
therefrom.
Management currently anticipates selling the Partnership's 98% limited
partnership interests in Fuquay-Varina, Oxford Homes and Williamston Homes to
the general partner of these partnerships or his affiliate for approximately
$148,485 plus the assumption of the Purchase Money Note obligations. The sale of
these interests requires consent from all the related Purchase Money Note
holders. Such consents have been requested and management anticipates receiving
unanimous consent. The local limited Partnerships need HUD approval for the
`transfer of physical assets' (TPA) to conclude these sales of interests.
Management understands that the general partner is currently preparing request
for such approval. Management anticipates closing these transactions in the
third quarter of 2000.
Management also entered into an agreement with the general partner of
Austintown Associates to sell the Partnership's 98% limited partnership
interest, subject, among other things, to the consent of the related Purchase
Money Note holders. A meeting with the Purchase Money Note holders to discuss
this transaction was held in November 1999.
28
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
3. Contingencies, continued
The Partnership has not received unanimous consent of the Purchase Money Note
holders and management is continuing discussions with the local general partner
regarding possibilities for disposing of this investment.
The Partnership has an agreement to sell its interest in Osuna
Apartments in exchange for $100,000 in cash and the assumption of the related
Purchase Money Note obligations. The sale was consummated on February 1, 2000.
Management has also entered into negotiations with the general partner
of Brierwood I & II, Pine Forest and Meadowwood Apartments. The sale of the
Partnership's interests in Brierwood I, Pine Forest and Meadowwood Apartments
also requires consent from all the related Purchase Money Note holders.
Management presently anticipates selling the Partnership's 94% Limited
Partnership interests in these properties by the fourth quarter of 2000.
The Partnership has commenced discussions with the local manager for
Surry Manor, Ltd. and Glendale Manor Apartments to purchase the Partnership's
interests in those partnerships. Management expects to pursue more detailed
discussions in the second quarter of 2000.
No assurance can be given that the Partnership will be able to
successfully conclude any of the above transactions.
The rents of the Properties, many of which receive rental subsidy
payments, including payments under Section 8 of Title II of the Housing and
Community Development Act of 1974 ("Section 8"), are subject to specific laws,
regulations and agreements with federal and state agencies. The subsidy
agreements expire at various times from May 2000 through March 2005. Under the
Multifamily Assisted Housing and Reform and Affordability Act (MAHRAA) of 1997,
as amended, Congress set forth the legislation for a permanent "mark-to-market"
program and provided for permanent authority for the renewal of Section 8
Contracts. Owners with Section 8 contracts expiring after September 30, 1998 are
subject to the provisions of MAHRA. On September 11, 1998, HUD issued an interim
rule to provide clarification for implementation of the mark-to-market program.
Since then, revised guidance has been provided through various HUD housing
notices, most recently HUD housing notice 99-36, which addresses project-based
Section 8 contracts expiring in fiscal year 2000.
Under this notice, project owners have several options for Section 8
contract renewals, depending on the type of project and rent level. Options
include marking rents up to market, renewing other contracts with rents at or
below market, referring projects to the Office of Multifamily Housing Assistance
Restructuring (OMHAR) for mark-to-market or "OMHAR lite" renewals, renewing
contracts that are exempted from referral to OMHAR, renewing contracts for
portfolio re-engineering demonstration and preservation projects, and opting out
of the Section 8 program.
29
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
3. Contingencies, continued
Owners must submit their option to HUD at least 120 days before expiration of
their contract. Each option contains specific rules and procedures that must be
followed to comply with the requirements of housing notice 99-36.
As such, each Local Limited Partnership may choose to either opt out of
the Section 8 program, request mortgage restructuring and renewal of the Section
8 contract, or request renewal of the Section 8 contract without mortgage
restructuring. Each option contains a specific set of rules and procedures that
must be followed in order to comply with the requirements of MAHRAA. The manager
of Osuna Apartments had received a one year contract extension through August,
2000. The general partner of Williamston Homes received a five year renewal to
March, 2005 subject to annual Federal appropriation of funds. The remaining
properties are working with HUD to renew their existing contracts for two to
five year periods.
The Partnership cannot reasonably predict legislative initiatives and
governmental budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program. Such changes could adversely
affect the future net operating income and debt structure of certain Local
Limited Partnerships currently receiving such subsidy or similar subsidies.
4. Investments in Local Limited Partnerships
The Partnership acquired Local Limited Partnership interests in thirteen
Local Limited Partnerships which own and operate government assisted
multi-family housing complexes. The Partnership, as Investor Limited Partner
pursuant to Local Limited Partnership Agreements, acquired interests ranging
from 94% to 98% in the profit or losses from operations and cash from operations
of each of the Local Limited Partnerships.
As discussed above, the Partnership is currently in various stages of
negotiations to sell its remaining investments in the Local Limited
Partnerships. If the Partnership is successful in disposing of its remaining
investments, management presently intends to wind up the Partnership's
operations by the end of the Year 2001.
On May 28, 1999, the Partnership sold its interest in Fiddlers Creek
Apartments in exchange for $483,451 in cash and assumption of the Purchase Money
Note obligations. After transaction expenses, the Partnership recognized a gain
of $2,579,632 on the sale of the investment. In connection with the sale, the
Partnership is required to remit withholding taxes of approximately $212,000 to
the state of North Carolina. The benefit of this payment will be allocated among
the Partnership's Units.
30
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
4. Investments in Local Limited Partnerships, continued
On July 15, 1999, the Partnership sold its interest in Linden Park
Associates in exchange for $395,960 in cash. After transaction expenses, the
Partnership recognized a gain of $344,491 on the sale of the investment. Linden
Park Associates Limited Partnership refinanced their existing debt and also paid
in full the principal and accrued and unpaid interest due the Partnership on
their notes totaling $241,058. In accordance with the Partnership's consulting
agreement with the General Partner of Linden Park Associates (the "Linden GP")
these funds have been segregated for use to pay the fees and expenses due the
Linden GP. The Linden GP was engaged in 1998 to assist with the workout or
liquidation of the Partnership's portfolio. If the workout or liquidation of the
entire portfolio is successfully completed all of the segregated funds will be
paid to the Linden GP. The remaining balance of the segregated funds was
$165,994 as of December 31, 1999. This amount is included in cash and cash
equivalents at December 31, 1999. As of December 31, 1999, the consulting fees
paid to the Linden GP in respect of the successful sales of the Partnership's
investment in Fiddlers Creek Apartments and Linden Park Associates totaled
$77,416. In 1999, the Partnership also reimbursed the Linden GP for expenses
incurred totaling $10,216.
The Partnership distributed $449,999 to the Partnership's Unit holders
in August, 1999 from the proceeds of these sales of Local Limited Partnership
interests.
Twelve Local Limited Partnership interests were acquired from
withdrawing partners of existing Local Limited Partnerships and one Local
Limited Partnership interest was acquired from a newly formed Local Limited
Partnership. In conjunction with the acquisition of eleven of the Local Limited
Partnership interests from withdrawing partners, the Partnership issued
long-term purchase money notes in the aggregate principal amount of $8,705,000,
before discount, to such withdrawing partners. In conjunction with the
acquisition of Linden Park Associate's interests, the Local Limited Partnership
issued purchase money notes to withdrawing partners amounting to $1,800,000 with
the same terms as the purchase money notes issued by the Partnership in
connection with its acquisition of interests in other Local Limited
Partnerships. All of the Purchase Money Notes bear simple interest at 9% per
annum. Interest is payable annually but only to the extent of cash distributed
from the respective Local Limited Partnerships. Both principal and unpaid
interest are due at maturity. Recourse on such purchase money notes is limited
to the Partnership's respective Local Limited Partnership interests which are
pledged as security on the notes.
Purchase Money Note obligations decreased by $2,624,966 in the second
quarter of 1999 as the Purchase Money Note obligations were assumed by the
purchaser of the Partnership's interest in Fiddlers Creek Apartments. See Note 7
for further information on Purchase Money Notes.
31
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
4. Investments in Local Limited Partnerships, continued
The following is a summary of cumulative activity for investments in
Local Limited Partnerships since their dates of acquisition:
Years Ended December 31,
------------------------
1999 1998
---- ----
Total acquisition cost to the Partnership $ 9,356,379 $ 9,356,379
Additional capital contributed by the Partnership 11,425 11,425
Partnership's share of losses of Local Limited Partnerships (3,450,761) (3,571,307)
Cash distributions received from Local Limited Partnerships (4,069,602) (3,818,231)
Cash distributions received from Local Limited
Partnerships recognized as Investment Income 93,162 74,160
Sales of investments in Local Limited Partnerships (465,520) --
----------- -----------
Investments in Local Limited Partnerships $ 1,475,083 $ 2,052,426
=========== ===========
Summarized financial information from the combined financial statements
of all Local Limited Partnerships is as follows:
Summarized Balance Sheets
-------------------------
Assets: 1999 1998
---- ----
Investment property, net
of accumulated depreciation $ 9,283,026 $ 16,092,927
Current assets 1,798,870 2,253,903
Other assets 183,041 281,271
------------ ------------
Total assets $ 11,264,937 $ 18,628,101
============ ============
Liabilities and Partners' Equity (Deficit):
Current liabilities 809,543 $ 1,665,916
Long-term debt, net of discounts 10,326,846 16,441,103
------------ ------------
Total liabilities 11,136,389 18,107,019
Partnership's equity (deficit) 280,166 717,476
Other partners' equity (deficit) (151,618) (196,394)
------------ ------------
Total liabilities and
partners' equity (deficit) $ 11,264,937 $ 18,628,101
============ ============
32
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
4. Investments in Local Limited Partnerships, continued
Summarized Statements of Operations
-----------------------------------
For the Years Ended December 31,
--------------------------------
1999 1998 1997
---- ---- ----
Rental and other income $ 4,463,668 $ 5,482,888 $ 5,358,709
Expenses:
Operating expenses 2,957,059 3,442,496 3,424,047
Interest expense 773,617 1,019,581 1,041,432
Depreciation and amortization 813,890 1,011,101 993,415
----------- ----------- -----------
Total expenses 4,544,566 5,473,178 5,458,894
----------- ----------- -----------
Net income (loss) $ (80,898) $ 9,710 $ (100,185)
=========== =========== ===========
Partnership's share of net income (loss) $ (80,324) $ 9,506 $ (97,997)
=========== =========== ===========
Other partners' share
of net income (loss) $ (574) $ 204 $ (2,188)
=========== =========== ===========
The difference between the Partnership's share of income in Local
Limited Partnership investments in the Partnership's Statement of Operations for
the years ended December 31, 1999 through 1997 and the share of income (loss) in
the above Summarized Statements of Operations consists of the Partnership's
unrecorded share of losses and cash distributions recorded as investment income
as follows:
1999 1998 1997
---- ---- ----
Share of income in Local Limited Partnership Investments
in the Partnership's Statement of Operations $ 139,548 $ 224,229 $ 96,766
Partnership's share of income (loss) in the
Above summarized Statement of Operations (80,324) 9,506 (97,997)
--------- --------- ---------
Difference $ 219,872 $ 214,723 $ 194,763
========= ========= =========
Unrecorded Losses:
Linden Park $ 37,641 $ 19,199 $ 46,355
Brierwood, Ltd. 33,837 46,313 35,037
Brierwood II, Ltd. 25,903 18,802 11,530
Pine Forest Apartments, Ltd. 33,806 41,658 66,954
Surry Manor 39,642 -- 11,822
Glendale Manor 1,995 7,778 --
Meadowwood 28,046 -- --
--------- --------- ---------
Subtotal Unrecorded Losses 200,870 163,658 171,698
Cash distributions recorded as investment income:
Glendale Manor 19,002 37,497 23,065
Surry Manor -- 13,568 --
--------- --------- ---------
Total $ 219,872 $ 214,723 $ 194,763
========= ========= =========
33
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
4. Investments in Local Limited Partnerships, continued
The Partnership's investment in Local Limited Partnerships reported in
its Balance Sheets at December 31, 1999 and 1998 are $1,194,917 and $1,334,950,
respectively, greater than the Partnership's equity reported in the Summarized
Balance Sheets above. This is related to the share of unrecorded losses of the
seven Local Limited Partnerships and cash distributions received from Glendale
Manor and Surry Manor which were recorded as investment income. The investment
of these seven Local Limited Partnerships has been reduced to zero with Linden
Park Associates (one of the seven) being sold on July 15, 1999.
The Partnership recorded its share of losses in Linden Park, Brierwood
Ltd., Brierwood II, Ltd., Pine Forest Apartments, Ltd., Surry Manor, Glendale
Manor and Meadowwood, Ltd. until its related investment was reduced to zero.
Subsequent to that point, any cash distributions received from the six remaining
partnerships will be recognized as investment income rather than as a reduction
in Investment in Local Limited Partnerships on the Partnership's Balance Sheet.
In 1999, $19,002 of cash distributions from Glendale Manor were recognized as
investment income as it would have reduced its investment balance below zero.
The Partnership is not obligated to make additional capital contributions to
fund the deficit in its capital accounts in these Local Limited Partnerships.
Certain Local Limited Partnerships have made payments on behalf of the
Partnership for non-resident state withholding taxes in accordance with state
income tax regulations. These amounts totaling $5,641 in 1999 and $4,961 in 1998
have been treated as distributions from the Local Limited Partnerships and a
distribution to the partners of Liberty Housing Partners Limited Partnership.
5. Notes and Accrued Interest Receivable
During 1989, the Partnership purchased long-term purchase money notes of
Linden Park Associates Limited Partnership ("Linden Park"), a Local Limited
Partnership. The notes represent obligations of Linden Park to former partners
whose partnership interests were purchased for resale to the Partnership in
connection with the Partnership's acquisition of an interest in Linden Park. The
Partnership purchased such notes, which carried a face value of $173,803 plus
accrued and unpaid interest of $49,692, for $58,000. The notes earned interest
at a rate of 9% per annum payable only from available cash from operations of
Linden Park.
On July 15, 1999 (also the date that the Partnership sold its interest
in Linden Park) Linden Park refinanced their existing debt and paid in full the
principal and accrued and unpaid interest due the Partnership on their notes
totaling $241,058. In accordance with the Partnership's consulting agreement
with the General Partner of Linden Park (the "Linden GP") these funds have been
segregated for use to pay the fees and expenses due the Linden GP. The Linden GP
was engaged in 1998 to assist with the workout or liquidation of the
Partnership's portfolio. If the workout or liquidation of the entire portfolio
is successfully completed all of the segregated funds will be paid to the Linden
GP. The remaining balance of the segregated funds was $165,994 as of December
31, 1999 and is included in cash and cash equivalents.
34
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Partnership)
NOTES TO THE FINANCIAL STATEMENTS
6. Transactions with Affiliates
During the years ended December 31, 1999, 1998 and 1997 the Partnership
recognized general and administrative expenses owed to the Managing General
Partner, as follows:
1999 1998 1997
---- ---- ----
Reimbursement of Partnership
administration expenses $49,681 $48,136 $57,707
Partnership management fees 50,000 50,000 50,000
As of December 31, 1999 and 1998, accounts payable to affiliates
totaling $188,272 and $173,271 respectively, represent amounts owed for
reimbursements of Partnership administration expenses of $96,001 and $68,000,
respectively, and partnership management fees of $ 92,271 and $105,271,
respectively. In 1999, the Partnership reimbursed deferred administration
expenses of $20,000 and Partnership management fees of $63,000 out of the
Fiddlers Creek Apartments and Linden Park Associates sales proceeds. Management
has determined to defer further payment of the amounts accruing for Partnership
management fees and reimbursement of Partnership administrative expenses out of
operating cash flows in order to conserve cash reserves available to fund the
Partnership's operations. See note 3.
35
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Partnership)
NOTES TO THE FINANCIAL STATEMENTS
7. Purchase Money Notes
Purchase money notes consist of the following at December 31:
1999 1998
---- ----
Purchase Money Notes, due July 9, 2001,
bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest
in Surry Manor, Ltd.:
Original principal balance $360,000 $360,000
Accrued and unpaid interest 371,029 338,512
Purchase Money Notes, due August 29,
2000, bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest in
Glendale Manor Apartments:
Original principal balance 450,000 450,000
Accrued and unpaid interest 198,097 159,482
Purchase Money Notes, due September 28,
1999, bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest in
Oxford Homes for the Elderly, Ltd.:
Original principal balance 643,600 643,600
Accrued and unpaid interest 272,357 239,852
Purchase Money Notes, due September 28,
1999, bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest in
Williamston Homes for the Elderly, Ltd.:
Original principal balance 664,100 664,100
Accrued and unpaid interest 162,702 119,067
36
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Partnership)
NOTES TO THE FINANCIAL STATEMENTS
7. Purchase Money Notes (Continued)
1999 1998
---- ----
Purchase Money Notes, due September 28,
1999, bearing interest at 9% per annum,
collateralized by the Partnership's
Local Limited Partnership interest in
Fuquay-Varina Homes for the Elderly, Ltd.:
Original principal balance $ 707,300 $ 707,300
Accrued and unpaid interest 30,437 30,249
Purchase Money Notes, due September 28,
1999, bearing interest at 9% per annum,
collateralized by the Partnership's Local
Limited Partnership interest in
Fiddlers Creek Apartments:
Original principal balance 0 1,750,000
Accrued and unpaid interest 0 1,322,656
Purchase Money Notes, due
October 30, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Meadowwood, Ltd.:
Original principal balance 610,000 610,000
Accrued and unpaid interest 816,211 760,985
Purchase Money Notes, due
October 30, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Brierwood, Ltd.:
Original principal balance 270,000 270,000
Accrued and unpaid interest 353,406 328,962
Purchase Money Notes, due
October 30, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Pine Forest Apartments, Ltd.:
Original principal balance 350,000 350,000
Accrued and unpaid interest 447,027 415,340
37
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Partnership)
NOTES TO THE FINANCIAL STATEMENTS
7. Purchase Money Notes (Continued)
1999 1998
---- ----
Purchase Money Notes, due
October 30, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Austintown Associates:
Original principal balance $ 1,600,000 $ 1,600,000
Accrued and unpaid interest 2,019,437 1,879,213
Purchase Money Notes, due
November 27, 1999, bearing interest at
9% per annum, collateralized by the
Partnership's Local Limited Partnership
interest in Osuna Apartments Company:
Original principal balance 1,300,000 1,300,000
Accrued and unpaid interest 1,628,803 1,519,435
------------ ------------
Total principal and accrued and unpaid
interest at 9% at December 31 13,254,506 15,818,753
Aggregate discount on the above purchase
money notes plus accrued interest (based
upon average imputed interest rates of 21%)
The unamortized discount for those Purchase (169,499) (1,682,010)
------------ ------------
Money Notes that matured in 1999 was written off
Purchase money note liability 13,085,007 14,136,743
Less: current maturities, net of
aggregate discount (12,436,808) (13,151,250)
------------ ------------
Long-term purchase money note liability $ 648,199 $ 985,493
============ ============
The purchase money notes were originally discounted using an imputed
interest rate of approximately 19% and assuming a certain level of cash flow
from distributions from the underlying Local Limited Partnerships
("distributions"). Since 1990, on an annual basis, the Partnership has reviewed
the estimated annual level of distributions expected to be received based on
historical and re-forecasted future distributions and adjusted accordingly the
future effective annual interest expense. The effective annual interest rate as
of December 31, 1999 is approximately 21%.
38
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
7. Purchase Money Notes (Continued)
The Purchase Money Notes (PMN) outstanding for Fuquay-Varina, Oxford
Homes, Williamston Homes, Compass West Apartments Meadowwood Ltd, Brierwood Ltd,
Pine Forest and Osuna Apartments matured in 1999 and are now in default. In
1999, the unamortized discount for these PMN's totaling $658,894 was written
off. Upon maturity of each of these notes, the Partnership continued to accrue
interest at the legal rate of 9 percent. See Footnote 3 for further discussion.
All of the purchase money notes and accrued interest thereon for the
remaining Purchase Money Notes may be repaid without penalty prior to maturity.
However, it is not anticipated that any principal payments will be made prior to
maturity on these notes
The portion of interest, which is expected to be paid currently, is
classified as a current liability and the portion of interest, which is not
expected to be paid currently has been reflected as interest, added to purchase
money note debt.
8. Reconciliation of Income (Loss) in Financial Statements to Income
(Loss) for Federal Income Tax Purposes
A reconciliation of the income (loss) reported in the Statements of
Operations for the years ended December 31, 1999, 1998 and 1997, to the income
(loss) reported for Federal income tax purposes is as follows:
1999 1998 1997
---- ---- ----
Net income (loss) per Statements of
Operations $ 1,321,731 $(2,555,661) $(2,217,613)
Less: Excess of tax equity over book equity in
loss of Local Limited Partnership (281,806) (700,821) (669,980)
Add: Additional book basis interest 814,632 1,707,207 1,292,826
Expenses not deducted pursuant to I.R.C
Section 267 15,002 98,000 17,000
Excess tax gain over book gain on sale of
Interest in Fiddlers Creek Apartments 1,400,512 -- --
Excess tax gain over book gain on sale of
Interest in Linden Park Associates 3,423,861 -- --
----------- ----------- -----------
Income (Loss) for Federal Income
Tax purposes $ 6,693,932 $(1,451,275) $(1,577,767)
=========== =========== ===========
39
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
9. Disclosure About Fair Value of Financial Instruments
Purchase Money Notes Payable
Management does not believe it is practical to determine the fair value
of the Purchase Money Notes payable because notes with similar terms and
provisions are not currently available to the partnership.
10. Concentration of Credit Risk
The Partnership maintains its cash and cash equivalents in two financial
institutions. The balances are insured by the Federal Deposit Insurance
Corporation up to $100,000 by these banks. As of December 31, 1999, the
uninsured cash balances held at its banks was approximately $369,747.
11. Statement of Distributable Cash from Operations (Unaudited)
Distributable Cash From Operations for the year ended December 31, 1999,
as defined in Section 17 of the Partnership Agreement, is as follows:
Interest income per Statement of Operations $ 107,488
Less: Interest income added to long-term notes
receivable, net of discount amortization (81,755)
Plus: 1999 cash distributions to be received from
Local Limited Partnerships, net of non-resident
state withholding taxes 126,566
Less: 1999 interest payments on purchase money
notes to be paid out of 1998 cash
distributions from Local Limited Partnerships (126,566)
Less: General and administrative expenses per
Statement of Operations (153,550)
---------
Cash from Operations, as defined (127,817)
---------
Distributable Cash from Operations, as defined $ 0
=========
12. Subsequent Event
On February 1, 2000, the Partnership sold its interest in Osuna
Apartments in exchange for $100,000 in cash and the assumptions of the related
Purchase Money Note obligations.
40
Independent Auditors' Report
To the Partners
Liberty Housing Partners Limited Partnership
We have audited the accompanying balance sheets of Liberty Housing
Partners Limited Partnership (a Massachusetts Limited Partnership) as of
December 31, 1999 and 1998, and the related statements of operations, changes in
partners' deficit, and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits. We did not audit the financial
statements of certain operating partnerships in which Liberty Housing Partners
Limited Partnership owns a limited partnership interest. Investments in such
partnerships comprise 36% and 47% of the assets as of December 31, 1999 and
1998, respectively, and income and (losses) from such partnerships comprise 8%,
0%, and 1.5% of the partnership income (loss) for each of the three years in the
period ended December 31, 1999, of Liberty Housing Partners Limited Partnership.
The financial statements of these partnerships were audited by other auditors,
whose reports have been furnished to us, and our opinion, insofar as it relates
to information relating to these partnerships, is based solely on the reports of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors
referred to above, the financial statements referred to above present fairly, in
all material respects, the financial position of Liberty Housing Partners
Limited Partners as of December 31, 1999 and 1998 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with generally accepted accounting principles.
Boston, Massachusetts REZNICK FEDDER & SILVERMAN
March 21, 2000
41
OSUNA APARTMENTS COMPANY
HUD Project No. 116-44052-LDP
(A Limited Partnership)
Financial Statements
and
Supplementary Information
For the Year Ended December 31, 1999
42
OSUNA APARTMENTS COMPANY
HUD Project No. 116-44052-LDP
(A Limited Partnership)
Table of Contents
Independent Auditors' Report
Financial Statements:
Balance Sheet Exhibit A
Statement of Profit and Loss Exhibit B
Statement of Changes in Partners' Equity Exhibit C
Statement of Cash Flows Exhibit D
Notes to Financial Statements
Supplementary Information:
Supplemental Data Required by HUD Schedule 1
Independent Auditors' Report on Compliance with Specific
Requirements Applicable to Major HUD Programs Schedule 2
Independent Auditors' Report on Compliance with Specific
Requirements Applicable to Nonmajor HUD Program Transactions Schedule 3
Independent Auditors' Report on Internal Control Schedule 4
Independent Auditors' Report on Compliance with Specific
Requirements Applicable to Fair Housing and Non-Discrimination Schedule 5
Schedule of Findings and Questioned Costs Schedule 6
Auditors' Comments on Audit Resolution Matters
Relating to HUD Programs Schedule 7
Corrective Action Plan Schedule 8
Partners' Certification Schedule 9
Management Agent's Certification Schedule 10
43
Kirkpatrick, Klein & Mathis, P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
Mike G. Kirkpatrick
James M. Klein, P.C.
John C. Mathis
MEMBER OF AICPA
MEMBER OF PRIVATE COMPANIES
TEXAS SOCIETY OF PRACTICE SECTION
CERTIFIED PUBLIC ACCOUNTANTS OF DIVISION FOR CPA FIRMS
INDEPENDENT AUDITORS' REPORT
To the Partners of
Osuna Apartments Company
We have audited the accompanying balance sheet of Osuna Apartments Company (a
limited partnership), HUD Project No. 116-44052-LDP, as of December 31, 1999,
and the related statements of profit and loss, changes in partners' equity and
cash flows for the year 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 audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards issued by the Comptroller General of the
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. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Osuna Apartments Company (a
limited partnership), HUD Project No. 116-44052-LDP as of December 31, 1999, and
the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued a report dated January 21, 2000, on our
consideration of Osuna Apartments Company's internal control, and reports dated
January 21, 2000, on its compliance with specific requirements applicable to
major HUD programs, specific requirements applicable to Affirmative Fair
Housing, and specific requirements applicable to nonmajor HUD program
transactions.
4901 LBJ Freeway o Suite 120 o Dallas, Texas 75244 o
(972) 386-0800 o Fax (972) 404-9308
44
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information required by HUD included in Schedule 1 provides additional analysis
which is not a required part of the basic financial statements of the
Partnership. The information in such schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
As discussed in Note 10 to the financial statements, the Partnership has
informed HUD of its intention to prepay the mortgage.
Kirkpatrick, Klein & Mathis, P.L.L.C.
January 21, 2000
45
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Exhibit A
Balance Sheet
December 31, 1999
Assets
Current assets:
1120 Cash - operations (Note 1) $ 33,569
1130 Accounts receivable - tenants 135
1135 Accounts receivable - HUD 3,834
1200 Prepaid expenses 7,786
----------
Total current assets 45,324
Deposits held in trust - funded:
1191 Tenant security deposits (contra) (Schedules 1 and 2) 10,612
Restricted deposits and funded reserves:
1310 Mortgage escrow deposits $ 12,069
1320 Reserve for replacements
(Note 2 and Schedule 1) 175,765
1330 Reserve for exterior painting (Schedule 1) 44,863
1340 Reserve for residual receipts
(Note 2 and Schedule 1) 298,791 531,488
----------
Fixed assets (at cost) (Notes 1 and 3) (Schedule 1):
1410 Land 255,230
1420 Buildings 1,854,035
1440 Building equipment - portable 13,555
1460 Furnishings 154,013
1465 Office furniture 10,064
----------
2,286,897
1495 Less accumulated depreciation 1,095,127 1,191,770
----------
Other asset:
1520 Unamortized deferred expenses (Note 1) 16,507
----------
$1,795,701
==========
Liabilities and Partners' Equity
Current liabilities:
2110 Accounts payable - trade $ 7,771
2113 Accounts payable - other (Note 4) 2,500
2115 Accounts payable - HUD 2,168
2121 Accrued payroll taxes 395
2131 Accrued interest payable 263
2150 Accrued property taxes 7,885
2210 Prepaid revenue 64
2170 Current maturities of long-term debt (Note 3) 42,856
---------
Total current liabilities 63,902
Deposit liabilities:
2191 Tenant security deposits (contra) 10,400
Long-term debt (Note 3):
2320 Mortgage payable, 7 percent, less
current maturities of $42,856 1,128,791
Contingency (Note 8)
3130 Partners' equity (Notes 1 and 5) 592,608
----------
$1,795,701
==========
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
46
Statement of Profit and Loss U.S. Department of Housing and Urban Development EXHIBIT B
Office of Housing
Federal Housing Commissioner
Public reporting burden for this collection of information is estimated to average 1.0 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the
collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to the Reports Management Officer, Paperwork Reduction Project (2502-0062). Office
of Information Technology, U.S. Department of Housing and Urban Development, Washington, D.C. 20410-3600. This agency may not
collect this information, and you are not required to complete this form, unless it displays a currently valid OMG control number.
Do not send this form to the above address.
For Month/Period Ending: Project Project Name:
Beginning: Number:
1/99 12/99 116-44052-LDP Osuna Apartments
Part I Description of Account Acct. No. Amount
Rental Income Rent Revenue - Gross Potential 5120 402,609
5100 Tenant Assistant Payments 5121 38,959
Stores and Commercial 5140
Garage and Parking Spaces 5170
Flexible Subsidy Revenue 5180
Misc. Rent Revenue 5190
Excess Rent 5191
Rent Revenue - Insurance 5192
Special Claims Revenue 5193
Retained Excess Income 5194
Total Rent Revenue 441,568
Vacancies Apartments 5220 11,375
5200 Stores and Commercial 5240
Rental Concessions 5250
Garage and Parking Spaces 5270
Miscellaneous 5290
Total Vacancies 11,375
Net Rental Revenue (Rent Less Vacancies) 430,193
Nursing Home/Assisted Living/Board
Care/Other Elderly Care/Coop/& Other 5300
Financial Revenue Financial Revenue - Project Operations 5410 1,538
5400 Revenue from Investments - Residual Receipts 5430 13,088
Revenue from Investments - Replacement Resv. 5440 7,256
Revenue from Investments - Misc. 5490
Total Financial Revenue 21,882
Other Revenue Laundry and Vending Revenue 5910 4,496
5900 Tenant Charges 5920 1,330
Miscellaneous Revenue 5990 1,279
Total Other Revenue 7,105
Total Revenue 459,180
Administrative Expenses Conventions and Meetings 6203
6200/6300 Management Consultants 6204
Advertising and Marketing 6210 111
Other Renting Expense 6250 60
Office Salaries 6310 6,953
Office Expenses 6311 10,456
Office or Model Apartment Rent 6312
Management Fee 6320 40,331
Manager or Superintendent Salaries 6330 19,384
Administrative Rent Free Unit 6331 4,244
Legal Expenses - Project 6340
Audit Expense 6350 5,626
Bookkeeping Fees/Accounting Services 6351 5,280
Bad Debts 6370
Misc. Administrative Expenses 6390 120
Total Administrative Expenses 92,565
The accompanying notes are an integral part of the finanical statements.
1 of 2
47
OSUNA APARTMENTS EXHIBIT B
Utilities Expense Fuel Oil/Coal 6420
6400 Electricity 6450 45,240
Water 6451 20,079
Gas 6452 18,129
Sewer 6453 7,167
Total Utilities Expense 90,615
Operating and Payroll 6510 25,465
Maintenance Expenses Supplies 6515 28,716
6500 Contracts 6520 60,498
Operating and Maintenance Rent Free Unit 6521 4,784
Garbage and Trash Removal 6525 7,781
Security Payroll/Contract 6530
Security Rent Free Unit 6531
Heating/Cooling Repairs and Maintenance 6546 7,006
Snow Removal 6548
Vehicle and Maintenance Equipment O & R 6570 297
Miscellaneous Operating and Maintenance 6590
Total Operating and Maintenance Expenses 134,547
Taxes and Insurance Real Estate Taxes 6710 15,771
6700 Payroll Taxes (Project Share) 6711 6,148
Property & Liability Insurance (Hazard) 6720 9,849
Fidelity Bond Insurance 6721 533
Workmen's Compensation 6722 896
Health Insurance and Other Employee Benefits 6723 2,821
Miscellaneous Taxes, Licenses, Permits and Ins. 6790
Total Taxes and Insurance 36,018
Financial Expenses Interest on Mortgage Payable 6820 4,324
6800 Interest on Notes Payable Long Term 6830
Interest on Notes Payable Short Term 6840
Mortgage Insurance Premium/Service Charge 6850 6,058
Miscellaneous Financial Expenses 6890 2,531
Total Financial Expenses 12,913
Elderly & Congregate Nursing Homes/Assisted Living/Board
Service Expenses & Care/Other Elderly Care Expenses 6900 -
6900 Total Cost of Operations before Depreciation 366,658
Profit (Loss) Before Depreciation 92,522
Depreciation Expense 6600 65,435
Amortization Expense 6610 1,053 66,488
Operating Profit or (Loss) 26,034
Mortgagor Entity Officers Salaries 7110
Expenses Legal Expense 7120
7100 Federal, State and Other Income Taxes 7130
Interest Income 7140
Interest on Notes Payable 7141
Interest on Mortgage Payable 7142
Other Expens Note 4 7190 2,500
Net Entity Expenses 2,500
Profit or Loss (Net Income or Loss) 3250 23,534
Warning: HUD will prosecute false claims and statements. Conviction may result in criminal and/or civil penalties. (18 U.S.C. 1001,
1010, 1012; 31 U.S.C. 3729, 3802)
Miscellaneous or other Income and Expense Sub-account Groups. If miscellaneous or other income and/or expense subaccounts (5190,
5290, 5490, 5990, 6390, 6590, 6729, 6890, and 7190) exceed the Account Groupings by 10% or more, attach a separate schedule
describing or explaining the miscellaneous income or expenses.
Part II
1. Total principal payments required under the mortgage, even if payments under a
Workout Agreement are less or more than those required under the mortgage. $ 39,966
2. Replacement Reserve deposits required by the Regulatory Agreement or
Amendments thereto, even if payments may be temporarily suspended or waived. $ 6,068
3. Replacement or Painting Reserve releases which are included as expense items on
this Profit and Loss statement None
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that
are included as expense items on this Profit and Loss Statement. NA
<FN>
Form provided by The Sovereign Management Corporation.
The accompanying notes are an integral part of the finanical statements.
</FN>
48
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Exhibit C
Statement of Changes in Partners' Equity
For the Year Ended December 31, 1999
Associate Local
General General Limited
Total Partner Partner Partner
---------- ---------- --------- ---------
Balance, January 1, 1999 $ 578,386 $ 4,056 $ 4,121 $ 570,209
Distributions to partners (9,312) (93) (118) (9,101)
Net income (loss) for the year 23,534 694 694 22,146
--------- --------- --------- ---------
Balance, December 31, 1999 $ 592,608 $ 4,657 $ 4,697 $ 583,254
========= ========= ========= =========
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
49
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Exhibit D
Statement of Cash Flows
For the Year Ended December 31, 1999
Cash flows from operating activities:
Rental receipts $ 416,465
Interest receipts 1,538
Other receipts 6,893 $ 424,896
---------
Administrative expenses 23,973
Management fees 40,331
Utilities 98,635
Salaries and wages 51,802
Maintenance expenses 104,298
Real estate taxes 16,336
Other taxes and insurance 10,775
Property insurance 10,258
Mortgage interest 4,539
Mortgage insurance premium 5,814
Miscellaneous financial expenses 2,531 369,292
--------- ---------
Net cash provided by operating activities 55,604
Cash flows from investing activities:
Deposit to residual receipts (1,375)
Deposits to reserve for replacements (6,068)
Deposits and interest to reserve for exterior painting (4,903)
Purchase of fixed assets (10,808)
Net change in mortgage excrow 16,983
---------
Net cash used in investing activities (6,171)
Cash flows from financing activities:
Mortgage principal payments (39,967)
Distribution to partners (9,312)
---------
Net cash used in financing activities (49,279)
---------
Increase in cash 154
Cash, beginning of year 33,415
---------
Cash, end of year $ 33,569
=========
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
50
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Exhibit D
Statement of Cash Flows
For the Year Ended December 31, 1999
Cash flows from operating activities:
Net income $ 23,534
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization $ 66,488
Decrease in accounts receivable - tenants 269
Increase in accounts receivable - HUD (3,555)
Increase in prepaid expenses (165)
Decrease in accounts payable - trade (7,849)
Decrease in accounts payable - HUD (824)
Decrease in accrued payroll taxes (548)
Decrease in accrued interest payable (215)
Decrease in prepaid revenue (410)
Decrease in accrued property taxes (565)
Decrease in tenant security deposit cash 188
Decrease in tenant security deposit liability (400)
Interest earned on reserve accounts (20,344) 32,070
--------- ---------
Net cash provided by operating activities $ 55,604
=========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest $ 4,324
=========
Interest earned on reserve accounts and
maintained in the respective reserve accounts $ 20,344
=========
<FN>
The accompanying notes are an integral part of the financial statements.
</FN>
51
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Notes to Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies
Osuna Apartments Company (the "Partnership") was organized as a limited
partnership on February 25, 1974, to acquire an interest in real property
located in Albuquerque, New Mexico and to construct and operate thereon an
apartment complex of 110 units, under Section 236 of the National Housing Act.
Such projects are regulated by HUD as to rent charges and operating methods.
Lower rental charges to tenants are recovered by the Partnership through rent
subsidies provided by HUD. The project's major program is its insured loan under
Section 236. The project's nonmajor program results from its participation in
the Section 8 housing assistance program. Unless otherwise dissolved, the
Partnership remains in full force and effect until December 31, 2030.
During the year ended December 31, 1999, rental revenue from HUD totaled $38,959
representing eight percent of total revenue. The rent subsidy contract with HUD
expires August 31, 2000.
The Certificate of Limited Partnership provides that profits and losses from
operations be allocated 1% to the local general partner, 1% to the associate
general partner and 98% to the investor limited partner. However, the allocation
of deductions in respect to depreciation on property contributed to the
Partnership is to be allocated according to the basis contributed by respective
partners. In the case of certain other events which are specified in the
Partnership Agreement (for example, a sale or refinancing of the property) the
allocation may be different than as described above for profits and losses from
operations.
The partnership does business under the assumed name of "Osuna Apartments ".
The regulatory agreement limits annual distributions of net operating receipts
to "surplus cash" available at the end of the year. The maximum distributable
amount for the year ended December 31, 1999 was $11,812 and "surplus cash"
amounted to $26,954. Undistributed amounts are cumulative and may be distributed
in subsequent years if future operations provide "surplus cash" in excess of
current requirements. The cumulative amount distributable at December 31, 1999
was $11,812.
The following significant accounting policies have been followed in the
preparation of the financial statements:
Basis of accounting
The Partnership's policy is to prepare its financial statements on the basis of
accounting practices prescribed by the Department of Housing and Urban
Development. Assets and liabilities are classified as current based on the
instructions provided in the Consolidated Audit Guide for Audits of HUD
Programs. For purposes of the statement of cash flows, cash does not include
tenant security deposits or restricted deposits.
52
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Notes to Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies (Continued)
Depreciation
Depreciation is provided using the accelerated and straight-line methods over
the estimated useful lives of the assets which range from five to 40 years.
Deferred expenses
Unamortized deferred expenses consist of fees for obtaining the HUD insured
mortgage loan which are being amortized on the straight-line method over the
life of the mortgage loan.
Income taxes
No income tax provision has been included in the financial statements since
income or loss of the partnership is required to be reported by the respective
partners on their income tax returns.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Actual results could differ
from those estimates.
Rental revenue
Gross rental revenue earned (accounts 5120 and 5121) was based on the approved
rental rate structure (revenue and non-revenue units) of the project. Two
non-revenue apartments (a 2BR and a 3BR) were occupied by the resident manager
and maintenance person during the year.
Concentration of credit risk
The Partnership maintains its cash in various insured bank accounts which, at
times, may exceed Federally insured limits. The partnership has not experienced
any losses in such accounts and believes it is not exposed to any significant
risk on cash. Management is aware of the limitation and attempts to minimize any
risk.
53
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Notes to Financial Statements
Note 2 - Replacement Reserves and Residual Receipts
Replacement reserve funds are held in cash ($13,083) and U.S. Treasury bills
($162,682) due April 2000. Residual receipts are held in cash ($16,490) and U.S.
Treasury bills ($282,301) due April 2000. The Treasury bills bear interest at
approximately 4.64% per annum. The amounts reported approximate fair value and
are based on quoted market prices.
Note 3 - Long-term Debt
The seven percent mortgage note payable is insured by HUD and is payable in
monthly installments of $10,293 (before any interest supplement) through August,
2015. A portion of the interest is paid by HUD under its 236 Program. The
apartment project is pledged as collateral for the note.
Current maturities of long-term debt over the next five years ending December
31, are as follows:
2000 $42,856
2001 $45,954
2002 $49,275
2003 $52,838
2004 $56,657
It is impractical to estimate, with any precision, the fair value of the
outstanding debt without incurring excessive cost.
Note 4 - Related Party Transactions
During 1999, the general partners earned $2,500 in local partnership
administrative fees. This amount is reflected as an accrued expense at December
31, 1999. These fees are treated as a portion of the limited dividend payable
and can only be paid as part of the allowable distribution from surplus cash.
54
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Notes to Financial Statements
Note 5 - Restricted Equity
Under the terms of the Regulatory Agreement, the Partnership is required to set
aside specified amounts for the replacement of property and other project
expenditures as approved by HUD. Restricted funds, which approximate $474,000 at
December 31, 1999, are held in separate accounts and generally are not available
for operating purposes without HUD's prior written approval.
Note 6 - Rent Increases
Under the regulatory agreement, the partnership may not increase rents charged
to tenants without HUD approval.
Note 7 - Management Fees
Management fees of $40,331 were earned under a HUD approved 9.4% management
contract. Management fees are based on collections of rentals, commercial
(laundry and vending), late and NSF fees and forfeited security deposits. In
addition, accounting fees of four dollars per unit per month ($5,280) were paid
to the management company.
Note 8 - Contingency
The Partnership was named in a lawsuit stemming from the alleged wrongful death
of a tenant. The Partnership's insurance carrier retained counsel to represent
the Partnership in this action. Even though allegations were denied and
vigorously contested in court proceedings, the jury returned a verdict finding
the project negligent and assessing liability at 50% on the project. Total
damages were awarded in the amount of $1,800,000 of which the project is
responsible for $900,000. An appeal has been filed. Accordingly, no provision
for any liability (if any) that might result above and beyond the insurance
carrier's responsibility has been made in the accompanying financial statements.
55
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Notes to Financial Statements
Note 9 - Current Vulnerability Due to Certain Concentrations
The Partnership's sole asset is Osuna Apartments. The Partnership's operations
are concentrated in the multifamily real estate market. In addition, the
Partnership receives rental subsidies from HUD and operates in a heavily
regulated environment. The operations of the Partnership are subject to the
administrative directives, rules and regulations of federal, state and local
regulatory agencies, including, but not limited to, HUD. Such administrative
directives, rules and regulations are subject to change by an act of congress or
an administrative change mandated by HUD. Such changes may occur with little
notice or inadequate funding to pay for the related cost, including the
additional administrative burden, to comply with a change.
Note 10 - HUD Mortgage
In August 1999 the Partnership informed HUD of its decision to prepay the
present HUD held mortgage on or about February 1, 2000. Prepayment of the
mortgage could result in an increase in tenant rents. In the event the mortgage
is prepaid, tenants who are eligible will receive vouchers to assist them in
paying their rent. The impact of this decision upon the Partnership is not
readily determinable at this time.
56
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule 1
Supplemental Data Required by HUD
Reserve for Replacements
In accordance with the provisions of the regulatory agreement, restricted cash
and securities are held by GMAC Commercial Mortgage at December 31, 1999 to be
used for replacement of property with the approval of HUD as follows:
Balance, January 1, 1999 $162,441
Monthly deposits ($506 x 12) 6,068
Interest earned 7,256
--------
Balance, December 31, 1999 $175,765
========
Reserve for Residual Receipts
In accordance with the provisions of the regulatory agreement, residual receipts
cash and securities are held by GMAC Commercial Mortgage. Use of these funds is
contingent upon HUD's prior written approval. The following is an analysis of
1999 transactions.
Balance, January 1, 1999 $284,328
Interest earned 13,088
1998 residual receipts transferred 1,375
--------
Balance, December 31, 1999 $298,791
========
Reserve for Exterior Painting
Restricted cash is held by a bank to be used for exterior painting as follows:
Balance, January 1, 1999 $39,960
Deposits for 1999 ($300 x 12) 3,600
Interest earned 1,303
-------
Balance, December 31, 1999 $44,863
=======
This supplemental data is presented for purposes of additional analysis and is
not a required part of the basic financial statements.
57
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule 1
Supplemental Data Required by HUD (Continued)
Miscellaneous Information
The lead auditor of the engagement was James M. Klein, a member in the firm of
Kirkpatrick, Klein & Mathis, P.L.L.C. (EIN: 75-2785999), located at 4901 LBJ
Freeway, Suite 120, Dallas, Texas 75244.
This supplemental data is presented for purposes of additional analysis and is
not a required part of the basic financial statements.
58
Schedule 1
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule 1
Supplemental Data Required By HUD (continued)
December 31, 1999
Changes in the Apartment Project
Assets Accumulated Depreciation Net
---------------------------------------------------- ------------------------------------------------- Carrying
Balance Balance Balance Balance Amount
Jan 1. Dec. 31, Jan 1. Dec. 31, Dec. 31,
1999 Additions Deductions 1999 1999 Additions Deductions 1999 1999
------------ ------------ ---------- ------------ ----------- ----------- --------- ------------ -----------
Land $ 255,230 $ $ $ 255,230 $ $ $ $ - $ 255,230
Buildings 1,854,035 1,854,035 866,746 61,848 928,594 925,441
Building
equipment
portable 7,487 6,068 13,555 5,805 1,330 7,135 6,420
Furnishings 149,273 4,740 154,013 149,273 948 150,221 3,792
Office
furniture 10,064 10,064 7,868 1,309 9,177 887
------------ ------------ ---------- ------------ ----------- ----------- --------- ------------ -----------
Totals $ 2,276,089 $ 10,808 $ - $ 2,286,897 $ 1,029,692 $ 65,435 $ - $ 1,095,127 $ 1,191,770
============ ============ ========== ============ =========== =========== ========= ============ ===========
Additions:
- ---------------------------------------------------------
Appliances $ 6,068
Computer 563
Sign 4,177
----------------
$ 10,808
================
This supplemental data is presented for purposes of additional analysis and is
not a required part of the financial statements.
59
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HOUSING - FEDERAL HOUSING COMMISSIONER
OFFICE OF MULTIFAMILY HOUSING MANAGEMENT AND OCCUPANCY
COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND SCHEDULE 1
RESIDUAL RECEIPTS
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER
OSUNA APARTMENTS 12/31/99 116-44052-LDP
PART A - COMPUTE SURPLUS CASH
1. Cash (Accounts 1110, 1120, 1191, 1192) $44,191
2. Tenant subsidiary vouchers due for period covered
by financial statement $ 3,834
3. Other (describe) $
(a) Total Cash (Add Lines 1, 2, and 3) $48,015
4. Accrued mortgage interest payable $ 263
5. Delinquent mortgage principal payments $
6. Delinquent deposits to reserve for replacements $
7. Accounts payable (due within 30 days) $ 7,771
8. Loans and notes payable
(due within 30 days) $
9. Deficient Tax Insurance or MIP Escrow Deposits $
10. Accrued expenses (not escrowed) Payroll Taxes $ 395
11. Prepaid Rents (Account 2210) $ 64
12. Tenant security deposits liability (Account 2191) $10,400
13. Other (Describe) Excess Rents $ 2,168
(b) Less Total Current Obligations (Add Lines 4 through 13) $21,061
(c) Surplus Cash (Deficiency) (Line (a) minus Line (b)) $26,954
PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS
1. Surplus Cash $26,954
Limited Dividend Projects
2a. Distribution Earned During Fiscal Period
Covered by the Statement $11,812
2b. Distribution Accrued and Unpaid as of the
End of the Prior Fiscal Period $11,812
2c. Distributions Paid During Fiscal Period Covered by Statement $11,812
3. Distributions Earned but Unpaid as of the End of
the Fiscal Period Under Review (Line 2a + 2b - 2c) $11,812
4. Amount Available for Distribution During Next Fiscal Period $11,812
5. Deposit Due Residual Receipts
(Must be deposited with Mortgagee within 60 days after Fiscal Period ends) $15,142
PREPARED BY REVIEWED BY
LOAN TECHNICIAN LOAN SERVICER
DATE DATE
See Reverse for instructions) HUD-93486
<FN>
This supporting data is presented for additional analysis and is not a required part of the basic financial statements.
</FN>
60
Schedule 2
INDEPENDENT AUDITORS' REPORT ON
COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS
To the Partners of
Osuna Apartments Company
We have audited the financial statements of Osuna Apartments Company (a limited
partnership), Project No. 116-44052-LDP, as of and for the year ended December
31, 1999, and have issued our report thereon dated January 21, 2000.
We have also audited Osuna Apartments Company's compliance with the specific
program requirements governing federal financial reports, mortgage status, the
replacement reserve, the residual receipts, tenant security deposits, cash
receipts and disbursements, distributions to owners, tenant application, tenant
eligibility, tenant recertification, and management functions, that are
applicable to its major HUD-assisted program for the year ended December 31,
1999. The management of the Partnership is responsible for compliance with those
requirements. Our responsibility is to express an opinion on compliance with
those requirements based on our audit.
We conducted our audit of compliance with those requirements in accordance with
generally accepted auditing standards, Government Auditing Standards, issued by
the Comptroller General of the United States and the Consolidated Audit Guide
for Audits of HUD Programs (the "Guide") issued by the U.S. Department of
Housing and Urban Development, Office of Inspector General. Those standards and
the Guide require that we plan and perform the audit to obtain reasonable
assurance about whether material noncompliance with the requirements referred to
above occurred. An audit includes examining, on a test basis, evidence about the
Partnership's compliance with those requirements. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, Osuna Apartments Company complied, in all material respects,
with the requirements described above that are applicable to its major
HUD-assisted program for the year ended December 31, 1999.
This report is intended solely for the information and use of management and the
Department of Housing and Urban Development and is not intended to be and should
not be used by anyone other than these specified parties.
Kirkpatrick, Klein & Mathis, P.L.L.C.
Dallas, Texas
January 21, 2000
61
Schedule 3
INDEPENDENT AUDITORS' REPORT
ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO
NONMAJOR HUD PROGRAM TRANSACTIONS
To the Partners of
Osuna Apartments Company
We have audited the financial statements of Osuna Apartments Company (a limited
partnership), HUD Project No. 116-44052-LDP as of and for the year ended
December 31, 1999, and have issued our report thereon dated January 21, 2000.
In connection with our audit of the 1999 financial statements of Osuna
Apartments Company and with our consideration of the Partnership's internal
control used to administer HUD programs, as required by the Consolidated Audit
Guide for Audits of HUD Programs (the "Guide"), issued by the U.S. Department of
Housing and Urban Development, Office of Inspector General, we selected certain
transactions applicable to certain nonmajor HUD-assisted programs for the year
ended December 31, 1999. As required by the Guide, we performed auditing
procedures to test compliance with the requirements governing fair housing and
non-discrimination, management, maintenance, the replacement reserve, federal
financial reports, tenant application, tenant eligibility, tenant
recertification, and tenant security deposits that are applicable to those
transactions. Our procedures were substantially less in scope than an audit, the
objective of which is the expression of an opinion on the Partnership's
compliance with those requirements. Accordingly, we do not express such an
opinion.
The results of our tests disclosed no instances of noncompliance that are
required to be reported herein under the Guide.
This report is intended solely for the information and use of management and the
Department of Housing and Urban Development and is not intended to be used by
anyone other than these specified parties.
Kirkpatrick, Klein & Mathis, P.L.L.C.
Dallas, Texas
January 21, 2000
62
Schedule 4
INDEPENDENT AUDITORS' REPORT
ON INTERNAL CONTROL
To the Partners of
Osuna Apartments Company
We have audited the financial statements of Osuna Apartments Company (a limited
partnership), HUD Project No. 116-44052-LDP as of and for the year ended
December 31, 1999, and have issued our report thereon dated January 21, 2000. We
have also audited the Partnership's compliance with requirements applicable to
its major HUD-assisted program and have issued our report thereon dated January
21, 2000.
We conducted our audits in accordance with generally accepted auditing
standards, Government Auditing Standards, issued by the Comptroller General of
the United States, and the Consolidated Audit Guide for Audits of HUD Programs
(the "Guide"), issued by the U.S. Department of Housing and Urban Development,
Office of the Inspector General. Those standards and the Guide require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement and about whether the
Partnership complied with laws and regulations, noncompliance with which would
be material to a major HUD-assisted program.
The management of Osuna Apartments Company is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of controls. The objectives of internal control are to provide management
with reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition, that transactions are executed in
accordance with management authorization and recorded properly to permit the
preparation of financial statements in accordance with generally accepted
accounting principles, and that HUD-assisted programs are managed in compliance
with applicable laws and regulations. Because of inherent limitations in any
internal control, errors, irregularities or instances of noncompliance may
nevertheless occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that procedures may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation of controls may deteriorate.
In planning and performing our audits, we obtained an understanding of the
design of relevant controls and determined whether they had been placed in
operation, and we assessed control risk in order to determine our auditing
procedures for the purpose of expressing our opinions on Osuna Apartments
Company's financial statements and on its compliance with specific requirements
applicable to its major HUD-assisted program and to report on internal control
in accordance with the provisions of the Guide and not to provide any assurance
on internal control.
63
We performed tests of controls, as required by the Guide, to evaluate the
effectiveness of the design and operation of controls that we considered
relevant to preventing or detecting material noncompliance with specific
requirements applicable to the Partnership's major HUD-assisted program. Our
procedures were less in scope than would be necessary to render an opinion on
internal control. Accordingly, we do not express such an opinion.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or more
of the internal control components does not reduce to a relatively low level the
risk that errors or irregularities in amounts that would be material in relation
to the financial statements being audited or that noncompliance with laws and
regulations that would be material to a HUD-assisted program may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. We noted no matters involving internal
control and its operation that we consider to be material weaknesses as defined
above.
This report is intended solely for the information and use of management and the
Department of Housing and Urban Development and is not intended to be and should
not be used by anyone other than these specified parties.
Kirkpatrick, Klein & Mathis, P.L.L.C.
Dallas, Texas
January 21, 2000
64
Schedule 5
INDEPENDENT AUDITORS' REPORT
ON COMPLIANCE WITH SPECIFIC REQUIREMENTS
APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION
To the Partners of
Osuna Apartments Company
We have audited the financial statements of Osuna Apartments Company as of and
for the year ended December 31, 1999, and have issued our report thereon dated
January 21, 2000.
We have also applied procedures to test Osuna Apartments Company's compliance
with the Fair Housing and Non-Discrimination requirements applicable to its
HUD-assisted programs for the year ended December 31, 1999.
Our procedures were limited to the applicable compliance requirement described
by the Consolidated Audit Guide for Audits of HUD Programs (the "Guide") issued
by the U.S. Department of Housing and Urban Development, Office of Inspector
General. Our procedures were substantially less in scope than an audit, the
objective of which is the expression of an opinion on Osuna Apartments Company's
compliance with the Fair Housing and Non-Discrimination requirements.
Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are
required to be reported herein under the Guide.
This report is intended solely for the information and use of management and the
Department of Housing and Urban Development and is not intended to be and should
not be used by anyone other than these specified parties.
Kirkpatrick, Klein & Mathis, P.L.L.C.
Dallas, Texas
January 21, 2000
65
Schedule 6
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Schedule of Findings and Questioned Costs
December 31, 1999
There were no findings, including material questioned costs, noted during the
audit.
66
Schedule 7
AUDITORS' COMMENTS ON
AUDIT RESOLUTION MATTERS
RELATING TO HUD PROGRAMS
To the Partners of
Osuna Apartments Company
We have audited the financial statements of Osuna Apartments Company (a limited
partnership) as of and for the year ended December 31, 1999, and have issued our
report thereon dated January 21, 2000.
During the 1998 audit, no material matters involving internal control and its
operation or compliance with specific requirements applicable to its major HUD
program were noted. Accordingly corrective action was not required during 1999.
Based on our discussions with management, a physical inspection of the property
occurred in the fall of 1999. However, the management company had not received a
copy of the results of the inspection and as such, we were unable to review that
report.
Kirkpatrick, Klein & Mathis, P.L.L.C.
Dallas, Texas
January 21, 2000
67
Schedule 8
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Corrective Action Plan
December 31, 1999
Section I - Internal Control Review
There were no findings or recommendations which require comment.
Section II - Compliance Review
There were no instances of noncompliance with laws and regulations which require
comment.
NOTE: As a result of the above, there is no need for a separate mortgagor
letter proposing a corrective action plan.
68
Schedule 9
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Partners' Certification
We hereby certify that we have examined the accompanying financial statements
and supplemental data of Osuna Apartments Company for the year ended December
31, 1999, and, to the best of our knowledge and belief, the same are complete
and accurate.
By:
DATE GENERAL PARTNER (Printed Name)
By:
DATE GENERAL PARTNER (Printed Name)
Employer Identification
No. 74-2347236
69
Schedule 10
OSUNA APARTMENTS COMPANY
(A Limited Partnership)
Management Agent's Certification
I hereby certify that I have examined the accompanying financial statements and
supplemental data of Osuna Apartments Company for the year ended December 31,
1999, and, to the best of my knowledge and belief, the same are complete and
accurate.
The Sovereign Management Corporation
DATE 3-14-2000 MANAGING AGENT
BY: /s/ Joyce Brow
Joyce Brow
(Printed Name)
TITLE: Director of Management
Employer Identification No.
74-1705931
70
INDEPENDENT AUDITORS' REPORT
To the Partners
Liberty Housing Partners Limited Partnership
Our report on the 1999 and 1998 financial statements of Liberty Housing
Partners Limited Partnership is included on page 41 of this Form 10-K. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page 19 of this
Form 10-K. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
Boston, Massachusetts REZNICK FEDDER & SILVERMAN
March 21, 2000
71
LIBERTY HOUSING PARTNERS LIMITED PARTNERSHIP
(A Massachusetts Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY OWNED
BY LOCAL LIMITED PARTNERSHIPS IN WHICH REGISTRANT HAS INVESTED
At December 31,1999
Net Life on
Cost at Interest Improvements Gross Amount At Which Carried Which
Acquisition Date Capitalized At December 31, 1999 Accumu- Depreci-
Number Total Buildings Subsequent Buildings lated ation is
Of Encum- And to And Depre- Date Computed
Property Units brances Land Improvements Acquisition Land Improvements Total ciation Built (Years)
Garden Apartment Complexes - Elderly Housing:
Surry Manor 44 $878,561 $50,239 $1,259,177 76,332 $69,489 $1,316,259 $1,385,748 $685,156 1981 3-30
Apartments,
Dobson, NC
Glendale Manor 50 798,374 53,652 1,187,181 13,851 53,652 1,201,032 1,254,684 632,861 1980 3-30
Apartments,
Clinton, SC
Fuquay-Varina 60 684,843 72,396 1,401,073 24,566 79,276 1,418,759 1,498,035 748,754 1977 3-30
Homes,
Fuquay, NC
Williamston 50 540,397 60,967 1,096,520 38,604 81,067 1,115,024 1,196,091 587,500 1978 3-30
Homes,
Williamston,
NC
Oxford Homes, 50 543,797 64,360 1,085,939 27,630 67,950 1,109,979 1,177,929 584,475 1978 3-30
Oxford,
NC
Garden Apartment Complexes - Low and Moderate Income Housing:
Compass West 200 2,778,497 397,105 4,822,593 355,609 469,020 5,106,287 5,575,307 2,655,786 1974 7-30
Apartments,
Austintown, OH
Meadowwood 80 681,661 90,146 1,337,358 39,379 90,146 1,376,737 1,466,883 852,085 1977 10-25
Apartments,
Tifton, GA
Brierwood 56 833,523 76,325 1,024,970 (26,931) 76,325 998,039 1,074,364 592,887 1979 10-25
Apartments,
Bainbridge, GA
Pine Forest 64 1,204,691 44,588 1,491,921 1,380 44,588 1,493,301 1,537,889 922,566 1980 10-25
Apartments,
Cairo, GA
Osuna Apartments, 110 1,171,647 255,230 1,987,767 43,900 255,230 2,031,667 2,286,897 1,095,127 1975 5-30
Albuquerque, NM
Brierwood II 18 366,081 27,288 423,387 - 27,288 423,387 450,675 264,279 1984 10-25
Apartments,
Bainbridge, GA ---- --------- ------- --------- ------ ------- --------- --------- ---------
Total Local
Limited
Partnership
Real Estate 782 $10,482,072 $1,192,296 $17,117,886 $594,320 $1,314,031 $17,590,471 $18,904,502 $9,621,476
The aggregate cost of the above properties for Federal income tax purposes at
December 31, 1999 is $24,388,132
A reconciliation of summarized carrying value of the above properties for the
years ended December 31, 1999, 1998 and 1997 is a follows:
1999 1998 1997
Balance at beginning of year $29,309,512 $28,802,902 $28,708,988
Additions during the period - Improvements subse-
equent to acquisition, net of dispositions 59,485 506,610 93,914
Sale of Partnership interests (10,464,495)
----------- ----------- -----------
Balance at end of year $18,904,502 $29,309,512 $28,802,902
A reconciliation of summarized accumulated depreciation on the above properties
for the years ended December 31, 1998, 1997 and 1996 is as follows:
1999 1998 1997
Balance at beginning of year ($13,216,585) ($12,276,725) ($11,329,357)
Current provision for depreciation, net of dispositions (772,311) (939,860) (947,368)
Sale of Partnership interests 4,367,418
------------ ------------ ------------
Balance at end of year ($9,621,476) ($13,216,585) ($12,276,725)
72
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Partnership
(a-b) Identification of Directors and Executive Officers
The Partnership has no directors or officers. As indicated in Item 1 of
this report, the Managing General Partner of the Partnership, as of December 27,
1995, is TNG Properties Inc., a Massachusetts corporation. Under the Partnership
Agreement, the Managing General Partner is solely responsible for the operation
of the Partnership's properties, and the Limited Partners have no right to
participate in the control of such operations. The names and ages of the
directors and executive officers of the Managing General Partner, TNG Properties
Inc., are as follows as of March 21, 2000:
Name Title Age
- ---- ----- ---
Michael A. Stoller President, Chief Executive Officer and Director 43
Wilma R. Brooks Vice President, Treasurer and Director 42
Barbara A. Gilman Vice President and Director of Management 50
Stephen D. Puliafico Director 44
James C. Coughlin Director 35
The directors of the Managing General Partner generally are elected at
the annual meeting of stockholders of the Managing General Partner, to serve
until the next such annual meeting, and until their successors are duly elected
and qualified, or until their earlier death, resignation or removal. The
executive officers the Managing General Partner generally are elected at the
annual meeting of directors of the Managing General Partner, to serve until the
next such annual meeting, and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.
(c) Identification of certain significant persons.
None.
(d) Family relationship
Mr. Stoller and Ms. Brooks are husband and wife.
73
Item 10. Directors and Executive Officers of the Partnership, continued
(e) Business experience
Michael A. Stoller is President, CEO, and a Director of the Managing
General Partner and The Newton Group, LLC. From 1992 to 1994, Mr. Stoller was
President and Director of MBMC, Inc. of Boston, and the Managing General Partner
of MB Management Company Limited Partnership, of Boston, a property management
company. From 1983 to 1992, Mr. Stoller was employed by REMAS, Inc. and was a
Partner and Chief Operating Officer of MB Associates, which companies engaged in
the development and management of government assisted housing properties. Mr.
Stoller holds a B.S. from Babson College and is a Certified Public Accountant.
Stephen D. Puliafico is Director of the Managing General Partner. Since
August 1995 Mr. Puliafico has been Executive Vice President of The Newton Group,
LLC. From 1994 to 1995 Mr. Puliafico was a Regional Sales Manager for Staples, a
seller of office supplies. From 1982 to 1994, Mr. Puliafico was a General
Manager for Lechmere, a discount department store chain. Mr. Puliafico holds a
B.S. from Southeastern Massachusetts University.
James C. Coughlin is a Director of the Managing General Partner. Since
September 1997 Mr. Coughlin has been Vice President of Acquisitions of The
Newton Group, LLC. Mr. Coughlin is responsible for corporate finance, project
finance, project acquisitions, site selection and strategic planning. From 1995
to 1997, Mr. Coughlin was a principal of Peacock Associates, a real estate
consulting and financial advisory firm. From 1992 to 1995, Mr. Coughlin was a
real estate finance specialist for The Berkshire Group. Mr. Coughlin received
his B.A. from Stonehill College and his M.B.A. from Suffolk University. Mr.
Coughlin is a licensed Massachusetts real estate broker and a candidate at
Boston University's Real Estate Finance Certificate Program.
Wilma R. Brooks is Vice President, Treasurer and a Director of the
Managing General Partner and Vice President and Treasurer of The Newton Group,
LLC. From 1987 to 1993, Ms. Brooks was Chief Financial Officer and Treasurer of
Congress Group Ventures, Inc., of Cambridge, Massachusetts, a commercial real
estate developer. Ms. Brooks holds a B.S. from the University of Vermont and is
a Certified Public Accountant.
Barbara A. Gilman is Vice President and Director of Management of the
Managing General Partner. For the seven years prior to joining the Managing
General Partner in 1994, Ms. Gilman was Director of Management of Beacon
Management Company, of Boston, Massachusetts, a property management company. Ms.
Gilman holds a B.S. from Stonehill College.
(f-g) Involvement in certain legal proceedings
The Partnership is not aware of any legal proceedings during the past
five years which may be material to the evaluation of the ability and integrity
of any director or executive officer of the Managing General Partner.
74
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Partnership's officers and directors, and persons who own more than
ten percent of a registered class of the Partnership's equity securities, to
file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with
the Securities and Exchange Commission.
Item 10. Directors and Executive Officers of the Partnership, continued
Such officers, directors and ten-percent security holders are also required by
applicable rules to furnish the Partnership with copies of all Section 16(a)
reports they file. Although the Partnership has no directors or officers, the
rules promulgated under ss. 16(a) provide that, for purposes of ss. 16, officers
of the Managing General Partner are considered to be officers of the
Partnership. Based solely on its review of the copies of such forms received by
it, or written representation from certain reporting persons that no Forms 3, 4
or 5 were required for such persons. The Partnership believes that, during the
fiscal year ended December 31, 1999 its officers and ten percent security
holders complied with all Section 16(a) filing requirements applicable to such
individuals.
Item 11. Executive Compensation
(a), (b), (c), (d), and (e): The officers and directors of the Managing
General Partner are compensated as employees of the Managing General Partner,
but receive no compensation from the Partnership. The Managing General Partner
and its affiliates receive compensation and expense reimbursement from the
Partnership, as more fully described in Note 6 of the Notes to Financial
Statements of the Partnership included in Item 8 of this report.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
(a) Security ownership of certain beneficial owners and management.
Because it is organized as a limited partnership, the Partnership has
issued no securities possessing traditional voting rights. However, the
Partnership Agreement provides that certain matters require the approval of a
majority in interest of the Limited Partners. Such matters include:
(1) Amendment of the Limited Partnership Agreement;
(2) Termination of the Partnership;
(3) Removal of any General Partner; and
(4) Sale of substantially all the assets of the Partnership.
75
Item 12. Security Ownership of Certain Beneficial Owners and
Management, continued
Under the Partnership Agreement, the Managing General Partner is solely
responsible for the operation of the Partnership's properties, and the Limited
Partners have no right to participate in the control of such operations. On
December 27, 1995, the Former Managing General Partner and Former Associate
General Partner withdrew from the Partnership and TNG Properties Inc. was
admitted in their place as Successor General Partner and became Managing General
Partner of the Partnership.
No person or group is known by the Managing General Partner to own
beneficially more than 5% of the Partnership's 21,566 Units outstanding as of
December 31, 1999
(b) Security ownership of management.
By virtue of its organization as a limited partnership, the Partnership
has no officers or directors. The Former Associate General Partner owned 10
Units, which have been assigned, as of January 1, 1997, to the current Managing
General Partner.
(c) Changes in Control.
None.
Item 13. Certain Relationships and Related Transactions
(a), (b), and (c): The Managing General Partner of the Partnership is TNG
Properties, Inc., a Massachusetts corporation. See Note 6 to the Financial
Statements of the Partnership contained in Item 8 of this report for a
description of the fees and expense reimbursement paid by the Partnership to the
current Managing General Partner and its affiliates. Directors and executive
officers of TNG Properties, Inc. are identified in Item 10 of this report.
During 1999, the Partnership was not involved in any transaction involving any
of these directors or officers of the Corporation or any member of the immediate
family of these individuals, nor did any of these persons provide services to
the Partnership for which they received direct or indirect remuneration.
Similarly, there exists no business relationship between the Partnership and any
of the directors or officers of the Managing General Partner, nor were any of
the individuals indebted to the Partnership. Liberty LGP, formerly an affiliate
of the predecessor general partners and now an affiliate of the Managing General
Partner is entitled to receive certain administrative fees from the Local
Limited Partnerships. At January 1, 1999 an aggregate of $124,417 in accrued and
unpaid administrative fees were due to Liberty LGP from the Local Limited
Partnerships. During 1999, Liberty LGP accrued $68,500 in administrative fees
due from the Local Limited Partnership and received payment aggregating
$140,917. At December 31, 1999 accrued and unpaid administrative fees aggregated
$52,000. Liberty LGP is not entitled to interest on the accrued and unpaid
amount.
76
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) 1. Financial Statements
See Index included in Item 8, on page 19 of this Report.
2. Financial Statement Schedules
See Index included in Item 8 on page 19 of this Report for
schedules applicable to registrant.
3. Exhibits
See (c) below
(b) Reports on Form 8-K
See (c) below
(c) Index to Exhibits
Except as set forth below, all Exhibits to Form 10-K, as set forth in
Item 601 of Regulation S-K, are not applicable.
77
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
4. Instruments defining the rights of security holders:
4.1 The Amended and Restated Certificate of Limited Partnership Exhibit 4.1 to the registrants Annual
Report on Form 10-K, for the period
ended December 31, 1995.
4.2 First Amendment to Second Amended and Restated Certificate of Exhibit 4.2 to the registrants Annual
Limited Partnership Report on Form 10-K, for the period
ended December 31, 1995.
*4.39 Amended Agreement of Limited Partnership Exhibit A to the prospectus contained
in Form S-11 Registration Statement
(File 2-90617)
4.4 Amendment to the Amended Agreement of Limited Partnership Exhibit 4.4 to the registrants Annual
(withdrawal of Liberty Real Estate Corporation and Admission of Report on Form 10-K, for the period
TNG Properties Inc. ended December 31, 1995.
4.5 Amendment to the Amended Agreement of Limited Partnership Exhibit 4.5 to the registrants Annual
(withdrawal of LHP Associates Limited Partnership) Report on Form 10-K, for the period
ended December 31, 1995.
10. Material Contracts and Other Documents
10.4 Documents Relating to Partnership Interest in Surry Manor, Ltd.
*10.4 (a) Escrow Agreement dated August 31, 1984 between Billy P. Shadrick, Exhibit 10.4 (a) Effective to
Bobby Ray Badgett, Housing Projects, Inc. and Liberty Housing Post-Amendment No. 1 to Form S-11
Partners Limited Partnership. Registration Statement (File 2-90617)
*10.4 (b) Amended and Restated Certificate and Agreement of Limited Exhibit 10.4 (b) to Post- Effective
Partnership of Surry Manor, Ltd. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
78
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.4 (c) Promissory Notes dated August 31, 1984 from Liberty Housing Exhibit 10.4 (c) to Post-Effective
Partners Limited Partnership to Billy P. Shadrick and from Liberty Amendment No. 1 to Form S-11
Housing Partners Limited Partnership to Bobby Joe Davis. Registration Statement (File 2-90617)
*10.4 (d) Purchase Money Notes dated August 31, 1984 from Liberty Housing Exhibit 10.4 (d) to Post-Effective
Partners to Billy P. Shadrick and from Liberty Housing Partners Amendment No. 1 to Form S-11
Limited Partnership to Bobby Joe Davis. Registration Statement (File 2-90617)
*10.4 (e) Pledge Agreements dated August 31, 1984 between Billy P. Shadrick Exhibit 10.4 (e) to Post-Effective
and Liberty Housing Partners Limited Partnership and between Bobby Amendment No. 1 to Form S-11
Joe Davis and Liberty Housing Partners Limited Partnership. Registration Statement (File 2-90617)
*10.4 (f) Deed of Trust Note dated July 11, 1980 from Surry Manor, Ltd. to Exhibit 10.4 (f) to Post-Effective
Highland Mortgage Company and related Deed of Trust dated July 11, Amendment No. 1 to Form S-11
1980 among Surry Manor, Ltd., James M. Tanner, and Highland Registration Statement (File 2-90617)
Mortgage Company.
*10.4 (g) Regulatory Agreement dated July 11, 1980 between Surry Manor, Ltd. Exhibit 10.4 (g) to Post-Effective
and the Secretary of Housing and Urban Development. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.4 (h) Housing Assistance Payments Contract dated April 9, 1981 between Exhibit 10.4 (h) to Post-Effective
Surry Manor, Ltd. and the Secretary of Housing and Urban Amendment No. 1 to Form S-11
Development. Registration Statement (File 2-90617)
10.5 Documents Relating to Partnership Interest in Glendale Manor
Apartments
*10.5 (a) Escrow Agreement dated August 31, 1984 between Billy P. Shadrick, Exhibit 10.5 (a) to Post-Effective
Bobby Ray Badgett, Housing Projects, Inc. and Liberty Housing Amendment No. 1 to Form S-11
Partners Limited Partnership. Registration Statement (File 2-90617)
*10.5 (b) Amended and Restated Certificate and Agreement of Limited Exhibit 10.5 (b) to Post-Effective
Partnership of Glendale Manor Apartments. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
79
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.5 (c) Promissory Notes dated August 31, 1984 from Liberty Housing Exhibit 10.5 (c) to Post-Effective
Partners Limited Partnership to Billy P. Shadrick, from Liberty Amendment No. 1 to Form S-11
Housing Partners Limited Partnership to Bobby Joe Davis and from Regis-tration Statement (File 2-90617)
Liberty Housing Partners Limited Partnership to Bobby R. Badgett.
*10.5 (d) Purchase Money Notes dated August 31, 1984 from Liberty Housing Exhibit 10.5 (d) to Post-Effective
Partners Limited Partnership to Billy P. Shadrick and from Liberty Amendment No. 1 to Form S-11
Housing Partners Limited Partnership to Bobby Joe Davis. Registration Statement (File 2-90617)
*10.5 (e) Pledge Agreements dated August 31, 1984 between Billy P. Shadrick Exhibit 10.5 (e) to Post-Effective
and Liberty Housing Partners Limited Partnership, between Bobby Joe Amendment No. 1 to Form S-11
Davis and Liberty Housing Partners Limited Partnership and between Registraton Statement (File 2-90617)
Bobby R. Badgett and Liberty Housing Partners Limited Partnership.
*10.5 (f) Mortgage Note dated April 11, 1979 from Glendale Manor Exhibit 10.5 (f) to Post-Effective
Apartments to Cincinnati Mortgage Corporation and related Amendment No. 1 to Form S-11
Mortgage dated April 11, 1979 between Glendale Manor Apartments Registration Statement (File 2-90617)
and Cincinnati Mortgage Corporation.
*10.5 (g) Regulatory Agreement dated April 11, 1979 between Glendale Manor Exhibit 10.5 (g) to Post-Effective
Apartments and the Secretary of Housing and Urban Development. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.5 (h) Housing Assistance Payments Contract dated May 30, 1980 between Exhibit 10.5 (h) to Post-Effective
Glendale Manor Apartments and the Secretary of Housing and Urban Amendment No. 1 to Form S-11
Development Registration Statement (File 2-90617)
10.6 Documents Relating to Partnership Interest in Fiddlers Creek
Apartments
*10.6 (a) Escrow Agreement dated September 28, 1984 between Billy P. Exhibit 10.6 (a) To Post-Effective
Shadrick, Bobby Ray Badgett, J. Thomas Dotson and Liberty Housing Amendment No. 1 to Form S-11
Partners Limited Partnership. Registration Statement (File 2-90617)
80
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.6 (b) Amended and Restated Certificate and Agreement of Limited Exhibit 10.6 (b) to Post-Effective
Partnership of Fiddlers Creek Apartments. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.6 (c) Promissory Note form dated September 28, 1984, Purchase Money Note Exhibit 10.6 (c) to Post Effective
form dated September 28, 1984, Pledge Agreement form dated Amendment No. 1 to Form S-11
September 28, 1984 and Schedule of Promissory Notes, Purchase Money Registration Statement (File 2-90617)
Notes and Pledge Agreements between Liberty Housing Partners
Limited Partnership and the partners of Fiddlers Creek Apartments.
*10.6 (d) Deed of Trust Note dated September 1, 1975 from Fiddlers Creek Exhibit 10.6 (d) to Post-Effective
Apartments to Guaranty Mortgage Company of Nashville and related Amendment No. 1 to Form S-11
Deed of Trust dated September 1, 1975 between Fiddlers Creek Registration Statement (File 2-90617)
Apartments and Guaranty Mortgage Company of Nashville.
*10.6 (e) Regulatory Agreement dated September 1, 1975 between Fiddlers Creek Exhibit 10.6 (e) to Post-Effective
Apartments and the Secretary of Housing and Urban Development. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
10.7 Documents Relating to Partnership Interest Fuquay-Varina Homes for
the Elderly, Ltd.
*10.7 (a) Escrow Agreement dated September 28, 1984 between Billy P. Exhibit 10.7 (a) to Post-Effective
Shadrick, Bobby Ray Badgett and Liberty Housing Partners Limited Amendment No. 1 to Form S-11
Partnership. Registration Statement (File 2-90617)
81
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.7 (b) Amended and Restated Certificate and Agreement of Limited Exhibit 10.7 (b) to Post-Effective
Partnership of Fuquay-Varina Homes for the Elderly, Ltd. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.7 (c) Promissory Note form dated September 28, 1984, Purchase Money Note Exhibit 10.7 (c) to Post-Effective
form dated September 28, 1984, Pledge Agreement form dated Amendment No. 1 to Form S-11
September 28, 1984 and Schedule of Promissory Notes, Purchase Money Registration Statement (File 2-90617)
Notes and Pledge Agreements between Liberty Housing Partners
Limited Partnership and the partners of Fuquay-Varina Apartments.
*10.7 (d) Deed of Trust Note dated May 23, 1977 from Fuquay-Varina Homes for Exhibit 10.7 (d) to Post-Effective
Elderly, Ltd. to Cincinnati Mortgage Corporation and related Deed Amendment No. 1 to Form S-11
of Trust dated May 23, 1977 between Fuquay-Varina Homes for the Registration Statement (File 2-90617)
Elderly, Ltd. and Cincinnati Mortgage Corporation.
*10.7 (e) Regulatory Agreement dated May 23, 1977 between Fuquay-Varina Homes Exhibit 10.7 (e) to Post-Effective
for the Elderly, Ltd. and the Secretary of Housing and Urban Amendment No. 1 to Form S-11
Development. Registration Statement (File 2-90617)
*10.7 (f) Housing Assistance Payments Contract dated May 3, 1978 between Exhibit 10.7 to
Fuquay-Varina Homes for the Elderly, Ltd. and the Secretary of Post-Effective
Housing and Urban Development. Amendment No. 1 to
Form S-11 Registration (File 2-90617)
10.8 Documents Relating to Partnership Interest in Oxford Homes for the
Elderly, Ltd.
82
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.8 (a) Escrow Agreement dated September 28, 1984 between Billy P. Exhibit 10.8 (a) to Post-Effective
Shadrick, Bobby Ray Badgett and Liberty Housing Partners Limited Amendment No. 1 to Form S-11
Partnership. Registration Statement (File 2-90617)
*10.8 (b) Amended and Restated Certificate and Agreement of Limited Exhibit 10.8 (b) to Post-Effective
Partnership of Oxford Homes for the Elderly, Ltd. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.8 (c) Promissory Note form dated September 28, 1984, Purchase Money Note Exhibit 10.8 (c) to Post-Effective
form dated September 28, 1984, Pledge Agreement form dated Amendment No. 1 to Form S-11
September 28, 1984 and Schedule of Promissory Notes, Purchase Money Registration Statement (File 2-90617)
Notes and Pledge Agreements between Liberty Housing Partners
Limited Partnership and the partners of Oxford Homes for the
Elderly, Ltd.
*10.8 (d) Mortgage Note dated May 23, 1977 from Oxford Homes for the Elderly, Exhibit 10.8 (d) to Post-Effective
Ltd. to Cincinnati Mortgage Corporation and related Mortgage dated Amendment No. 1 to Form S-11
May 23, 1977 between Oxford Homes for the Elderly, Ltd. and Registration Statement (File 2-90617)
Cincinnati Mortgage Corporation.
*10.8 (e) Regulatory Agreement dated May 23, 1977 between Oxford Homes for Exhibit 10.8 (e) to Post-Effective
the Elderly, Ltd. and the Secretary of Housing and Urban Amendment No. 1 to Form S-11
Development. Registration Statement (File 2-90617)
*10.8 (f) Housing Assistance Payments Contract dated July 3, 1978 between Exhibit 10.8 (f) to Post-Effective
Oxford Homes for the Elderly, Ltd. and the Secretary of Housing and Amendment No. 1 to Form S-11
Urban Development. Registration Statement (File 2-90617)
83
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
10.9 Documents Relating to Partnership Interest in Williamston Homes for
the Elderly, Ltd.
*10.9 (a) Escrow Agreement dated September 28, 1984 between Billy P. Exhibit 10.9 (a) to Post-Effective
Shadrick, Bobby Ray Badgett and Liberty Housing Partners Limited Amendment No. 1 to Form S-11
Partnership. Registration Statement (File 2-90617)
*10.9 (b) Amended and Restated Certificate and Agreement of Limited Exhibit 10.9 (b) to Post-Effective
Partnership of Williamston Homes for the Elderly, Ltd. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.9 (c) Promissory Note form dated September 28, 1984, Purchase Money Note Exhibit 10.9 (c) to Post-Effective
form dated September 28, 1984, Pledge Agreement form dated Amendment No. 1 to Form S-11
September 28, 1984 and Schedule of Promissory Notes, Purchase Money Registration Statement (File 2-90617)
Notes and Pledge Agreements between Liberty Housing Partners
Limited Partnership and the partners of Williamston Homes for the
Elderly, Ltd.
*10.9 (d) Deed of Trust Note dated May 24, 1977 from Williamston Homes for Exhibit 10.9 (d) to Post-Effective
the Elderly, Ltd. and Cincinnati Mortgage Corporation and related Amendment No. 1 to Form S-11
Deed of Trust between Williamston Homes for the Elderly, Ltd. and Registration Statement (File 2-90617)
Cincinnati Mortgage Corporation.
*10.9 (e) Regulatory Agreement dated May 24, 1977 between Williamston Homes Exhibit 10.9 (e) to Post-Effective
for the Elderly, Ltd. and the Secretary of Housing and Urban Amendment No. 1 to Form S-11
Development. Registration Statement (File 2-90617)
*10.9 (f) Housing Assistance Payments Contract dated September 19, 1978 Exhibit 10.9 (f) to Post-Effective
between Williamston Homes for the Elderly, Ltd. and the Secretary Amendment No. 1 to Form S-11
of Housing and Urban Development. Registration Statement (File 2-90617)
84
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
10.10 Documents Relating to Partnership Interest in Austintown Associates
*10.10 (a) Escrow Agreement dated October 30, 1984 between James P. Manchi, Exhibit 10.10 (a) to Post-Effective
Robert P. Baker, First March Realty Corporation and Liberty Housing Amendment No. 1 to Form S-11
Partners Limited Partnership. Registration Statement (File 2-90617)
*10.10 (b) Amended and Restated Certificate of Formation and Agreement of Exhibit 10.10 (b) to Post-Effective
Limited Partnership of Austintown Associates. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.10 (c) Promissory Note form dated October 30, 1984, Purchase Money Note Exhibit 10.10 (c) to Post-Effective
form dated October 30, 1984, Pledge Agreement form dated October 30, Amendment No. 1 to Form S-11
1984 and Schedule of Promissory Notes, Purchase Money Notes and Registration Statement (File 2-90617)
Pledge Agreements between Liberty Housing Partners Limited
Partnership and the partners of Austintown Associates.
*10.10 (d) Mortgage Note dated February 22, 1973 from Austintown Associates to Exhibit 10.10 (d) to Post-Effective
Metropolitan Mortgage Corporation of Ohio, Supplementary Mortgage Amendment No. 1 to Form S-11
Note dated November, 1975 from Austintown Associates to The Registration Statement (File 2-90617)
Cleveland Trust Company, Supplementary Mortgage Note dated March 24,
1978 from Austintown Associates to Diversified Financial & Mortgage
Services, Inc. and the related Mortgage dated February 22, 1973
between Austintown Associates and Metropolitan Mortgage Corporation
of Ohio.
85
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.10 (e) Regulatory Agreement dated February 22, 1973 between Austintown Exhibit 10.10 (e) to Post-Effective
Associates and the Secretary of Housing and Urban Development. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.10 (f) Housing Assistance Payments Contracts dated December 1, 1983 and Exhibit 10.10 (f) to Post-Effective
June 1, 1984 between Austintown Associates and the Secretary of Amendment No. 1 to Form S-11
Housing and Urban Development. Registration Statement (File 2-90617)
10.11 Documents Relating to Partnership Interest in Meadowwood, Ltd.
*10.11 (a) Second Amended and Restated Certificate and Agreement of Limited Exhibit 10.11 (a) to Post-Effective
Partnership of Meadowwood, Ltd. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.11 (b) Promissory Note form dated October 30, 1984, Purchase Money Note Exhibit 10.11 (b) to Post-Effective
form dated October 30, 1984, Pledge Agreement form dated October Amendment No. 1 to Form S-11
30, 1984 and Schedule of Promissory Notes, Purchase Money Notes Registration Statement (File 2-90617)
and Pledge Agreements between Liberty Housing Partners Limited
Partnership and the partners of Meadowwood, Ltd.
*10.11 (c) Promissory Notes dated October 3, 1977 and October 25, 1978 from Exhibit 10.11 (c) to Post-Effective
Meadowwood, Ltd. to Farmers Home Administration and related Deed Amendment No. 1 to Form S-11
to Secure Debt dated October 25, 1978 between Meadowwood, Ltd. Registration Statement (File 2-90617)
and Farmers Home Administration.
*10.11 (d) Farmers Home Administration Loan Agreement between Meadowwood, Exhibit 10.11 (d) to Post-Effective
Ltd. and Farmers Home Administration. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
86
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.11 (e) Interest Credit and Rental Assistance Agreement dated October 1, Exhibit 10.11 (e) to Post-Effective
1983 between Meadowwood, Ltd. and the Farmers Home Administration. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.12 Documents Relating to Partnership Interest in Brierwood, Ltd.
*10.12 (a) Second Amended and Restated Certificate and Agreement of Limited Exhibit 10.12 (a) to Post-Effective
Partnership of Brierwood, Ltd. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.12 (b) Promissory Note form dated October 30, 1984, Purchase Money Note Exhibit 10.12 (b) to Post-Effective
form dated October 30, 1984, Pledge Agreement form dated October Amendment No. 1 to Form S-11
30, 1984 and Schedule of Promissory Notes, Purchase Money Notes Registration Statement (File 2-90617)
and Pledge Agreements between Liberty Housing Partners Limited
Partnership and the partners of Brierwood, Ltd.
*10.12 (c) Promissory Note dated May 4, 1979 from Brierwood, Ltd. to Farmers Exhibit 10.12 (c) to Post-Effective
Home Administration and related Deed to Secure Debt dated May 4, Amendment No. 1 to Form S-11
1979 between Brierwood, Ltd. and Farmers Home Administration. Registration Statement (File 2-90617)
*10.12 (d) Farmers Home Administration Loan Agreement dated June 15, 1978 Exhibit 10.12 (d) to Post-Effective
between Brierwood, Ltd. and Farmers Home Administration. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
*10.12 (e) Interest Credit and Rental Assistance Agreement dated October 1, Exhibit 10.12 (e) to Post-Effective
1980 between Brierwood, Ltd. and the Farmers Home Administration. Amendment No. 1 to Form S-11
Registration Statement (File 2-90617)
87
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
10.13 Documents Relating to Partnership Interest in Pine Forest
Apartments, Ltd.
*10.13 (a) Second Amended and Restated Certificate and Agreement of Limited Exhibit 10.13 (a) to Post-Effective
Partnership of Pine Forest Apartments, Ltd. Amendment No. 1 to Form S-11
Registration Statement
(File 2-90617)
*10.13 (b) Promissory Note form dated October 30, 1984, Purchase Money Note Exhibit 10.13 (b) to Post-Effective
form dated October 30, 1984, Pledge Agreement form dated October Amendment No. 1 to Form S-11
30, 1984 and Schedule of Promissory Notes, Purchase Money Notes Registration Statement (File 2-90617)
and Pledge Agreements between Liberty Housing Partners Limited
Partnership and the partners of Pine Forest Apartments, Ltd.
*10.13 (c) Promissory Note dated August 6, 1980 from Pine Forest Apartments, Exhibit 10.13 (c) to Post-Effective
Ltd. to Farmers Home Administration and related Deed to Secure Amendment No. 1 to Form S-11
Debt dated August 6, 1980 between Pine Forest Apartments, Ltd. Registration Statement (File 2-90617)
and Farmers Home Administration.
*10.13 (d) Farmers Home Administration Loan Agreement dated May 10, 1979 Exhibit 10.13 (d) to Post-Effective
between Pine Forest Apartments, Ltd. and Farmers Home Amendment No. 1 to Form S-11
Administration. Registration Statement (File 2-90617)
*10.13 (e) Interest Credit and Rental Assistance Agreement dated June 1, Exhibit 10.13 (e) to Post-Effective
1982 between Pine Forest Apartments, Ltd. and the Secretary of Amendment No. 1 to Form S-11
Housing and Urban Development. Registration Statement (File 2-90617)
10.14 Documents Relating to Partnership Interest in Osuna Apartments
Company
88
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.14 (a) Amended and Restated Certificate of Formation and Agreement of Exhibit 10.14 (a) to Post-Effective
Limited Partnership of Osuna Apartments Company. Amendment No. 2 To Form S-11
Registration Statement (File 2-90617)
*10.14 (b) Promissory Note form dated November 27, 1984, Purchase Money Note Exhibit 10.14 (b) to Post-Effective
form dated November 27, 1984, Pledge Agreement dated November 27, Amendment No. 2 to Form S-11
1984 between Liberty Housing Partners Limited Partnership, Registration Statement (File 2-90617)
Liberty LGP Limited Partnership and the Sovereign Corporation,
and Schedule of Promissory Notes and Purchase Money Notes between
Liberty Housing Partners Limited Partnership and the partners of
Osuna Apartments Company.
*10.14 (c) Mortgage Note dated March 5, 1974 from Osuna Apartments Company Exhibit 10.14 (c) to Post-Effective
to Housing America Mortgage Co., Inc. and related Mortgage dated Amendment No. 2 to Form S-11
March 5, 1974 from Osuna Apartments Company to Housing Mortgage Registration Statement (File 2-90617)
Co., Inc.
*10.14 (d) Regulatory Agreement dated March 5, 1974 between Osuna Apartments Exhibit 10.14 (d) to Post Effective
Company and the Secretary of Housing and Urban Development. Amendment No. 2 to Form S-11
Registration Statement (File 2-90617)
*10.14 (e) Housing Assistance Payments Contracts dated August 7, 1984 Exhibit 10.14 (e) to Post-Effective
between Osuna Apartments Company and the Secretary of Housing and Amendment No. 2 to Form S-11
Urban Development. Registration Statement (File 2-90617)
10.15 Documents Relating to Partnership Interest in Linden Park
Associates Limited Partnership
89
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.15 (a) Certificate and Agreement of Limited Partnership of Linden Park Exhibit 10.15 (a) to Post-Effective
Associates Limited Partnership. Amendment No. 2 to Form S-11
Registration Statement (File 2-90617)
*10.15 (b) Promissory Note form dated December 11, 1984, Purchase Money Note Exhibit 10.15 (b) to Post-Effective
form dated December 11, 1984, Pledge Agreement dated December 11, Amendment No. 2 to Form S-11
1984 by and between Liberty LGP Limited Partnership, John L. Registration Statement (File 2-90617)
Wagner, Liberty Housing Partners Limited Partnership and Graham
Park Venture, and Schedule of Promissory Notes and Purchase Money
Notes between Linden Park Associates Limited Partnership and
Graham Park Venture.
*10.15 (c) Deed of Trust Note and related Deed of Trust both dated December Exhibit 10.15 (c) to Post-Effective
5, 1972 and Allonge of January 29, 1976, Supplemental Deed of Amendment No. 2 to Form S-11
Trust both dated December 17, 1974 and Allonge of January 29, Registration Statement (File 2-90617)
1976, and Second Supplemental Deed of Trust Note and related
Second Supplemental Deed of Trust both dated January 29, 1976 all
documents between Graham Park Venture and Loyola Federal Savings
and Loan Association.
*10.15 (d) Loan Assumption Agreement dated March 23, 1976 between Pennamco, Exhibit 10.15 (d) to Post-Effective
Inc. and Virginia Housing Development Authority. Amendment No. 2 to Form S-11
Registration Statement (File 2-90617)
*10.15 (e) Regulatory Agreement dated December 12, 1984 between Linden Park Exhibit 10.15 (e) to Post-Effective
Associates Limited Partnership and the Secretary of Housing and Amendment No. 2 to Form S-11
Urban Development. Registration Statement (File 2-90617)
90
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.15 (f) Regulatory Agreement dated January 31, 1976 between Graham Park Exhibit 10.15 (f) to Post-Effective
Venture and Virginia Housing Development Authority. Amendment No. 2 to Form S-11
Registration Statement (File 2-90617)
10.16 Documents Relating to Partnership Interest Brierwood II, Ltd.
*10.16 (a) Amended and Restated Certificate and Agreement of Limited Exhibit 10.16 (a) to Post-Effective
Partnership of Brierwood II, Ltd. Amendment No. 2 to Form S-11
Registration Statement (File 2-90617)
*10.16 Promissory Note form dated January 4, 1985, Pledge Agreement form Exhibit 10.16 (b) to Post-Effective
dated January 4, 1985 and Schedule of Promissory Notes and Pledge Amendment No. 2 to Form S-11
Agreements between Liberty Housing Partners Limited Partnership Registration Statement (File 2-90617)
and the partners of Brierwood II, Ltd.
*10.16 (c) Promissory Note dated January 4, 1985 from Brierwood II, Ltd. to Exhibit 10.16 (c) to Post-Effective
Farmers Home Administration and related Deed to Secure Debt dated Amendment No. 2 to Form S-11
January 4, 1985 between Brierwood II, Ltd. and Farmers Home Registration Statement (File 2-90617)
Administration.
*10.16 (d) Farmers Home Administration Loan Agreement dated June 30, 1983 Exhibit 10.16 (d) to Post-Effective
between Brierwood II, Ltd. and Farmers Home Administration. Amendment No. 2 to Form S-11
Registration Statement (File 2-90617)
*10.16 (e) Interest Credit and Rental Assistance Agreement dated January 4, Exhibit 10.16 (e) to Post-Effective
1985 between Brierwood II, Ltd. and the Farmers Home Amendment No. 2 to Form S-11
Administration. Registration Statement (File 2-90617)
*10.17 Letter agreement with John Wagner regarding consulting services Exhibit 10.17 to Form 10-Q
in connection with the liquidation or workout of the for the period ended
Partnership's portfolio September 30, 1998
91
Exhibit Page Number or Filing from Which
Numbers Description Incorporated by Reference
- -------- ----------- ---------------------------------
*10.18 Agreement to Purchase and Sell Partnership Interests in Exhibit 10.18 to Form 10-Q for the
Austintown Associates period ended September 30, 1999
<FN>
*Incorporated by Reference as noted
</FN>
92
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
By: LIBERTY HOUSING PARTNERS LIMITED
PARTNERSHIP
(Registrant)
By: TNG Properties, Inc.,
Managing General Partner
Date: March 30, 2000 By: /s/ Michael A. Stoller
Michael A. Stoller
President, CEO, and Director of
TNG Properties, Inc.
Managing General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Wilma R. Brooks Vice President, Treasurer March 30, 2000
Wilma R. Brooks and Director (principal
financial and accounting officer)
of TNG Properties, Inc. Managing
General Partner
93
Signatures, continued
Signature Title Date
- --------- ----- ----
/s/ Michael A. Stoller President, CEO and Director of March 30, 2000
Michael A. Stoller TNG Properties, Inc. Managing
General Partner
/s/ Stephen D. Puliafico Director of TNG Properties, Inc. March 30, 2000
Stephen D. Puliafico Managing General Partner
- ----------------------- Director of TNG Properties, Inc.
James C. Coughlin Managing General Partner
94