1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------------------------
FOR THE FISCAL YEAR ENDED MARCH 31, 2001
COMMISSION FILE NUMBER 33-24537
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. EMPLOYER IDENTIFICATION NO. 95-4178283
1925 CENTURY PARK EAST, SUITE 1900, LOS ANGELES, CA 90067
REGISTRANT'S TELEPHONE NUMBER: (310) 208-1888
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months (or such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-K is not contained in this form and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference to part III of this Form
10-K or any amendment to this Form 10-K (X).
Yes No X
----- -----
No documents are incorporated into the text by reference.
Exhibit Index is located on Page 15
Registrant's Prospectus dated January 4, 1989, as amended (the Prospectus)
and the Registrant's Supplement No. 2 dated November 21, 1989 to Prospectus
dated January 4, 1989 (Supplement No. 2) but only to the extent expressly
incorporated by reference in Parts I through IV hereof. Capitalized terms
which are not defined herein have the same meaning as in the Prospectus.
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TABLE OF CONTENTS
PART I
ITEM 1 BUSINESS 3
ITEM 2 PROPERTIES 4
ITEM 3 LEGAL PROCEEDINGS 5
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 5
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS 6
ITEM 6 SELECTED FINANCIAL DATA 6
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS 7
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 10
ITEM 8 FINANCIAL STATEMENTS 10
ITEM 9 CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 11
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 12
ITEM 11 EXECUTIVE COMPENSATION 13
ITEM 12 PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT 14
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 14
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES 15
EXHIBIT INDEX 15
SIGNATURES 16
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PART I
ITEM I. BUSINESS
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Century Pacific Tax Credit Housing Fund-II (CPTCHF-II or the Partnership) was
formed on September 2, 1988 as a limited partnership under the laws of the
State of California to invest in multifamily housing developments (the
Properties). The Partnership's business is to invest primarily in other
limited partnerships (Operating Partnerships) that are organized for the
purposes of either constructing or acquiring and operating existing
affordable multifamily rental apartments (the Properties) that are eligible
for the Low Income Housing Tax Credit, or to a lesser extent, the
Rehabilitation Tax Credit, both enacted by the Tax Reform Act of 1986
(sometimes referred to as Credits or Tax Credits). The Partnership has
invested in two Properties, each of which qualifies for the Low Income
Housing Tax Credit. Both of these Properties receive one or more forms of
assistance from Federal, state or local governments. A summary of the
Partnership's objectives and a summary of the Tax Credits are provided in the
Prospectus under "Investment Objectives and Policies" and "Federal Income Tax
Aspects" on pages 45 and 79, respectively, and are incorporated herein by
reference.
The partnership does not employ any persons. Alternatively, the partnership
reimburses an affiliate for allocated overhead, consisting primarily of
payroll costs.
In order to stimulate private investment in low and moderate income housing
of the types in which CPTCHF-II has invested, the federal government, through
the Department of Housing and Urban Development (HUD), has provided investors
with significant ownership incentives, such as interest subsidies, rent
supplements, mortgage insurance and other measures, with the intent of
reducing the risks and providing the investors/owners with certain tax
benefits, limited cash distributions and the possibility of long-term capital
gains. However, there are significant risks inherent in this type of
housing. Long-term investments in real estate limit the ability of CPTCHF-II
to vary its portfolio in response to changing economic, financial and
investment conditions, rising operating costs and vacancies, rent controls
and collection difficulties, costs and availability of energy, as well as
other factors which normally affect real estate values. In addition, these
Properties usually are rent restricted and are subject to Government Agency
programs which may or may not require prior consent to transfer ownership.
The Partnership acquired the Properties by investing as the limited partner
in Operating Partnerships which own the Properties. As a limited partner,
CPTCHF-II's liability for obligations of the Operating Partnerships is
limited to its investment. The Partnership made capital contributions to the
Operating Partnerships in amounts sufficient to pay the Operating
Partnerships' expenses and to reimburse the General Partners for their costs
incurred in forming the Operating Partnerships, if any, and acquiring the
Properties. For each acquisition, this typically included a cash down
payment (in one or more installments), acceptance of the Property's mortgage
indebtedness, and execution of a Purchase Money Note in favor of the seller
of the Property.
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4
The Partnership's primary objective is to provide Low-Income Housing Tax
Credits to its limited partners generally over a 10-year period. Each of the
Partnership's Operating Partnerships has been allocated, by the relevant
state tax credit agency, an annual amount of the Low-Income Housing Tax
Credits for 10 years from the date the Property was placed in service. The
required holding period of the Properties is 15 years (the Compliance
Period). The Properties must satisfy rent restriction, tenant income
limitations and other requirements (the Low-Income Housing Tax Credit
Requirements) in order to maintain eligibility for recognition of the
Low-Income Housing Tax Credits at all times during the Compliance Period. Once
an Operating Partnership has become eligible for the Low-Income Housing Tax
Credits, it may lose such eligibility and suffer an event of recapture if its
Property fails to remain in compliance with the Low-Income Housing Tax Credit
Requirements. To date, neither of the Operating Partnerships have suffered
an event of recapture of Low-Income Housing Tax Credit.
ITEM 2. PROPERTIES
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As of March 31, 2001, CPTCHF-II had acquired equity interests in the
Operating Partnerships set forth in the table below. Each of the Properties
acquired by the Operating Partnerships receives benefits under government
assistance programs provided by HUD. One of the Properties also receives
benefits from the Illinois Housing Development Authority (IHDA). The table
below summarizes the Operating Partnerships acquired and the government
assistance programs benefiting each Property. Further information concerning
these Properties may be found in Supplement No. 2 to the Prospectus, pages 4
through 66, which information is incorporated herein by reference and is
summarized below.
Capital
Contribution Obligation
-----------------------------
Date of Percent Paid
Property Name, Average Acquisition Interest in Total at through
Location and Rental Occupancy of Operating March 31, March 31,
Units 2001 Interest Partnership 2001 2001
- --------------------- -------- ----------- ----------- ---------- -----------
Washington Courts
Chicago, IL
103 Residential
Units 85% 5/1/89 90% $2,743,413 $2,743,413
Plumley Village
Boston, MA
430 Residential Units 99% 8/1/89 60% 1,648,026 1,648,026
------------------------------
$4,391,439 $4,391,439
==============================
December 31, 2000
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Property Name, Government
Location and Rental Mortgage Residual Purchase Other Assistance
Units Notes Note Note Note Program
- --------------------- ------------ ---------- ---------- -------- ----------------
Washington Courts HUD Insured
Chicago, IL Section 22(d)(4)
103 Residential IHDA HAP
Units $ 4,948,643 $ -- $ -- $ -- Contract
Plumley Village HUD
Boston, MA Section 236
430 Residential Units 6,938,228 5,114,890 7,757,641 405,895 Section 8
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$11,886,871 $5,114,890 $7,757,641 $405,895
================================================================
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ITEM 3. LEGAL PROCEEDINGS
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As of June 20, 2001, there were no pending legal proceedings against
CPTCHF-II or any Operating Partnership in which it has invested.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
As of March 31, 2001, there were no submissions of matters to a vote of
security holders.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS
-------------------------------------------------
There is at present no public market for the units of limited partnership
interests (the Units), and it is unlikely that any public market for the
Units will develop. See the Prospectus under "Transferability of Interests"
on pages 24 and 52 of the Prospectus, which information is incorporated
herein by reference. The number of owners of Units as of June 20, 2001 was
approximately 519, holding 5,754 units.
As of June 20, 2001, there were no cash distributions.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The following summary of selected financial date should be read in
conjunction with ITEM 14, herein, which also includes a summary of
CPTCHF-II's significant accounting policies.
Year Ended March 31,
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Operations 2001 2000 1999 1998 1997
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Revenues $ 500 $ 500 $ 1,600 $ 200 $ 1,200
Operating Expenses (189,874) (192,624) (191,110) (182,183) (178,611)
Equity in Net Losses
of Operating
Partnerships (430,306) (251,269) (318,696) (247,924) (146,872)
- -------------------------------------------------------------------------------------------------------
Net Loss $(619,680) $(443,393) $(508,206) $ (429,907) $ (324,283)
=======================================================================================================
Net Loss per Unit of
Limited Partnership
Interest $ (108) $ (77) $ (88) $ (75) $ (56)
=======================================================================================================
March 31,
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Financial position 2001 2000 1999 1998 1997
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Total Assets $ 3,433 $ 433,553 $ 684,322 $1,001,485 $1,249,411
=======================================================================================================
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
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RESULTS OF OPERATIONS
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Liquidity and Capital Resources
- -------------------------------
The Partnership offered limited partnership interests to the public during
calendar year 1989, pursuant to a Registration Statement filed under the
Securities Act of 1933. The Partnership raised $5,754,000 in equity capital
and, thereafter, invested in Operating Partnerships, which own multifamily
Properties located in Illinois and Massachusetts representing approximately
$25,000,000 of Property value. These properties under Section 42 of the
Internal Revenue Code earn low-income housing tax credits which are passed
through to the individual partners of the Partnership. Low-Income housing
tax credits earned by the Partnership for calendar years 2000, 1999 and 1998
were $23,744, $384,429, and $870,477, respectively.
As of March 31, 2001, the Partnership portfolio consists of two Properties
totalling 533 units. For a summary of the combined financial status of the
Operating Partnerships and the Properties, see the financial information
contained under ITEM 14.
Although the economy has been strong, the effects of the gradually improving
market conditions on the Partnership's operating property investments, while
positive, are limited by the government restrictions on rental rate
increases. A substantial amount of the revenue generated by these properties
comes from rental subsidy payments made by federal or state housing agecies.
These features, which are characteristic of all low-income housing
properties, limit the pool of potential buyers for these real estate assets.
As a limited partner of the Operating Partnerships, the Partnership does not
control property disposition decisions, and management is not aware of any
plans or intentions of the general partners of these partnerships to sell any
of the investment properties in the near future.
The Partnership is currently experiencing a liquidity problem. Under the
Partnership Agreement, the Partnership is entitled to receive distributions
of surplus cash from the Operating Partnerships which is to provide the funds
necessary for the Partnership to meet its administrative expenses and pay the
Partnerships management fee. At the present time, the Operating Partnerships
have not generated sufficient cash distributions to fund the Partnership's
expenses. As a result of the foregoing, the Partnership has been dependent
upon its affiliates and the General Partners for continued financial support
to meet its expenses. Though there can be no assurance, management believes
that affiliates and/or the General Partners, though not required to do so,
will continue to fund operations of the Partnership and defer receipt of
payment of allocated overhead administrative expenses and partnership
management fees. Allocated administrative expenses paid or accrued to
affiliates and the General Partners represent reimbursement of the actual
cost of goods and materials used for or by the Partnership, salaries, related
payroll costs and other administrative items incurred or allocated, and
direct expenses incurred in rendering legal, accounting/bookkeeping,
computer, printing and public relations services. Items excluded from the
overhead allocation include overhead expenses of the General Partners,
including rent and salaries of employees not specifically performing the
services described above. Unpaid allocated administrative expenses and
partnership management fees, an annual amount up to .5% of invested assets,
will accrue for payment in future operating years.
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The Partnership is not expected to have access to any significant sources of
financing. Accordingly, if unforeseen contingencies arise that cause an
Operating Partnership to require additional capital to sustain operations, in
addition to that previously contributed by the Partnership, the source of the
required capital needs may be from (i) limited reserves from the Partnership
(which may include distributions received from Operating Partnerships that
would otherwise be available for distribution to partners), (ii) debt
financing at the Operating partnership level (which may not be available), or
(iii) additional equity contributions from the general partner of the
Operating Partnerships (which may not be available). There can be no
assurance that any of these sources would be readily available to provide for
possible additional capital requirements which may be necessary to sustain
the operations of the Operating Partnerships.
Tax Reform Act of 1986, Ominbus Budget Reconciliation Act of 1987, Technical
- ----------------------------------------------------------------------------
and Miscellaneous Revenue Act of 1988, Ominbus Budget Reconciliation Act of
- ---------------------------------------------------------------------------
1989 and Ominbus Budget Reconciliation Act of 1990 and all subsequent tax
- -------------------------------------------------------------------------
acts.
- -----
The Partnership is organized as a limited partnership and is a "pass through"
tax entity which does not, itself, pay federal income tax. However, the
partners of the Partnership, who are subject to federal income tax, may be
affected by the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act
of 1987, the Technical and Miscellaneous Revenue Act of 1988, the Ominbus
Budget Reconciliation Act of 1989 and the Ominbus Budget Reconciliation Act
of 1990 and all subsequent tax acts (collectively the Tax Acts). The
Partnership will consider the effect of certain aspects of the Tax Acts on
the partners when making investment decisions. The Partnership does not
anticipate that the Tax Acts will have a material adverse impact on the
Partnership's business operations, capital resources, plans or liquidity.
Results of Operations
- ---------------------
The fiscal year of the Partnership ends on March 31 of each year, however,
the fiscal year of each Operating Partnership ends on December 31.
Therefore, the earnings and losses of the Operating Partnerships reflected on
the equity method in the Partnership's financial statements for its current
fiscal year are for the calendar year ended December 31, 2000.
2001 Compared to 2000
- ---------------------
For the fiscal year ended March 31, 2001, the Partnership recorded a net loss
of approximately $620,000, as compared to a net loss of approximately
$443,000 for the prior fiscal year. The increase in net loss is the result
of the increase in the Partnership's equity in net losses of the Operating
Partnerships of approximately $179,000, offset by a small decrease in the
expenses of approximately $3,000 for the current fiscal year.
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9
In accordance with the equity method of accounting for limited partnership
interests, the Partnership does not recognize losses from investment
properties when losses exceed the Partnership's equity method basis in these
properties. One of the two investments has had an equity method basis of
zero since March 31, 1993. The Partnership's recorded share of the Operating
Partnerships' losses in the current fiscal period consists of losses of
approximately $430,000 from the Washington Courts Limited Partnership. The
losses from Washington Courts Limited Partnership have reduced the
Partnership's investment in the operating partnership to zero. In the prior
fiscal year, losses of approximately $251,000 from the operations of
Washington Courts was recorded. The carrying value of the Partnership's
investment in Laurel-Clayton was reduced to zero during fiscal 1993.
In the aggregate, combined rental revenue of the Operating Partnerships
decreased during the current calendar year. The average occupancy level for
Laurel-Clayton remained constant at 99% in calendar year 2000, but Washington
Court decreased to 85% occupancy level in the current year. The combined
total expenses of the two operating properties increased by approximately
$60,000 in the current year primarily due to an increase in utilities, other
operating expenses, and interest, partially offset by lower depreciation
expense.
2000 Compared To 1999
- ---------------------
For the fiscal year ended March 31, 2000, the Partnership recorded a net loss
of approximately $443,000, as compared to a net loss of approximately
$508,000 for the prior fiscal year. The decrease in net loss in the result
of a decrease in the Partnership's equity in net losses of the Operating
Partnerships of approximately $67,000 and an increase in the expenses of
approximately $2,000 for the current fiscal year. General and administrative
expenses, namely allocated administrative expenses and partnership management
fees, continue each fiscal year to comprise an increasing portion of the
Partnership's net loss.
In accordance with the equity method of accounting for limited partnership
interests, the Partnership does not recognize losses from investment
properties when losses exceed the partnership's equity method basis in these
properties. One of the two investments has had an equity method basis of
zero since March 31, 1993. The Partnership's recorded share of the Operating
Partnership's losses in the current fiscal period consists of losses of
approximately $251,000 from the Washington Courts Limited Partnership. In
the prior fiscal year, losses of approximately $319,000 from the operations
of Washington Courts were recorded. The carrying value of the Partnership's
investment in Laurel-Clayton was reduced to zero during fiscal 1993.
In the aggregate, combined rental revenue of the Operating Partnerships
increased during the current calendar year. The average occupancy level for
Laurel-Clayton increased to 99% in calendar year 1999, but Washington Court
remained at 92% occupancy level in the current year. The combined total
expenses of the two operating properties decreased by approximately $485,000
in the current year primarily due to a decrease in interest expense and
repairs and maintenance, partially offset by an increase in other operating
expenses and depreciation.
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1999 Compared To 1998
- ---------------------
For the fiscal year ended March 31, 1999, the Partnership recorded a net loss
of approximately $508,000, as compared to a net loss of approximately
$430,000 for the prior fiscal year. The increase in net loss is the result
of an increase in the Partnership's equity in net losses of the Operating
Partnerships of approximately $70,000 and an increase in the expenses of
approximately $8,000 for the current fiscal year. General and administrative
expenses, namely allocated administrative expenses and partnership management
fees, continue each fiscal year to comprise an increasing portion of the
Partnership's net loss.
In accordance with the equity method of accounting for limited partnership
interests, the Partnership does not recognize losses from investment
properties when losses exceed the Partnership's equity method basis in these
properties. One of the two investments has had an equity method basis of
zero since March 31, 1993. The Partnership's recorded share of the Operating
Partnership's losses in the current fiscal period consists of losses of
approximately $319,000 from the Washington Courts Limited Partnership. In
the prior fiscal year, losses of approximately $248,000 from the operations
of Washington Courts were recorded. The carrying value of the Partnership's
investment in Laurel-Clayton was reduced to zero during fiscal 1993.
In the aggregate, combined rental revenue of the Operating partnerships
increased during the current calendar year. The combined total rental
revenue increased by approximately $40,000 in the current calendar year, with
the largest increase occurring at Laurel-Clayton. The average occupancy
levels for Laurel-Clayton remained at 98% in both calendar years, but
Washington Court had a decrease to 92% occupancy level in the current year.
The combined total expenses of the two operating properties increased by
approximately $110,000 in the current year primarily due to an increase in
repairs and maintenance and depreciation and a decrease in other operating
expenses.
Inflation
- ---------
Inflation is not expected to have a material adverse impact on the
Partnership's operations during its period of ownership of the Properties.
Other
- -----
The Partnership's operations are not subject to any significant seasonal
fluctuations. The Partnership believes it is in compliance with
environmental regulations and does not anticipate material effects of
continued compliance.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
----------------------------------------------------------
Not applicable.
ITEM 8. FINANCIAL STATEMENTS
--------------------
The financial statements together with the report of the independent auditors
thereon are set forth on the pages indicated in ITEM 14.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
Not applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
The Partnership has no officers or directors. Management of the Partnership
is vested in Irwin Jay Deutch and Century Pacific Capital II Corporation
(CPII) (the General Partners). The General Partners will involve themselves
in the day-to-day affairs of the Partnership as required to protect the
Limited Partners' investment and advance the Partnership's investment
objectives. Mr. Deutch, the Managing General Partner, has the overall
responsibility for the preparation and transmittal of periodic reports to the
Limited Partners, preparation and filing of the Partnership's tax returns
with the IRS and the appropriate state tax authorities, and the preparation
and filing of reports to HUD and other Government Agencies.
Following is biographical information on Mr. Deutch and the Executive
Officers of CPII:
IRWIN JAY DEUTCH
Irwin Jay Deutch, age 60, is Chairman of the Board, President, and Chief
Executive Officer of Century Pacific Realty Corporation (CPRC), a General
Partner of the Operating Partnerships that own the Properties in which
CPTCHF-II has invested, and its Affiliates. Mr. Deutch has been involved
with low-income housing investments since 1968. He is the individual general
partner in 62 private limited partnerships and two public limited
partnerships investing in 209 properties, including 196 multifamily
properties with 33,700 apartment units, 10 commercial projects, and 3 hotel
properties. Fifty-eight of the 62 private limited partnerships have invested
in affordable housing. In his capacity as general partner and officer of
CPRC, he oversees the management of these partnerships and assumes overall
responsibility for the development, direction, and operation of all
affiliated CPRC companies. Mr. Deutch is recognized as an expert in the
field of affordable housing and frequently addresses professional groups on
topics of real estate investment, syndication, tax law, and the Low-Income
Housing Tax Credit program.
Mr. Deutch received a B.B.A. with distinction from the University of Michigan
School of Business Administration in 1962 and a Juris Doctor degree with
honors from the University of Michigan Law School in 1965. He is a member of
the Order of the Coif. Mr. Deutch served in the Honors Program in the Office
of the Chief Counsel of the Internal Revenue Service from 1965 to 1967, where
he was assigned to the Interpretative Division in Washington, D.C. He
attended Georgetown Law Center and received his Master of Laws degree in
taxation in 1967. Mr. Deutch is a member of the State Bars of Michigan and
California, as well as the American, Federal, Los Angeles, and Beverly Hills
Bar Associations.
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KEY OFFICERS OF CPII AND AFFILIATES
ESSIE SAFAIE, age 51, is Chief Financial Officer and Chief Operating Officer
of CPRC. Prior to joining CPRC in 1988, from 1985-88, he was Vice President
and Chief Financial Officer of Sunrise Investments, Inc., a real estate
syndication firm with $450 million of real estate under management. During
this period, Mr. Safaie was also President of an affiliated property
management firm, S&L Property Management, Inc., with over 12,000 residential
units and 800,000 square feet of commercial office space under direct
management. From 1982 to 1985, Mr. Safaie was assistant controller of
Standard Management Company, builders and managers of luxury hotels,
commercial offices and residential units. From 1980-1982, he served as
financial officer of Diamond "M" Drilling Company. Mr. Safaie received a BA
degree in Business Administration from California State University with a
major in accounting.
CHARLES L. SCHWENNESEN, age 55, is Vice President of Acquisition Finance for
CPRC and is responsible for financial analysis and "due diligence" reviews of
all properties acquired by CPRC. Prior to joining CPRC in 1987, he was a
consultant to companies which provided investment opportunities through
private placements. From 1984 to 1985, Mr. Schwennesen was Vice President of
Cranston Securities Company and was responsible for the structuring of more
than $30 million of mortgage revenue bond financing for affordable housing
projects. From 1977 to 1984, Mr. Schwennesen was a manager with the
accounting firm of Price Waterhouse where he specialized in providing
auditing and consulting services to publicly held California real estate
development companies involved in the affordable housing industry. Mr.
Schwennesen is a Certified Public Accountant and holds a Masters degree in
Business Administration from the UCLA Graduate School of Management and a
B.A. degree in Mathematics from UCLA.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
The Partnership has no officers or directors. However, in connection with
the operations of the partnership and the Operating Partnerships, the General
Partners and their Affiliates will or may receive certain fees, compensation,
income and other payments which are described in the Prospectus under
"Compensation, Fees and Reimbursements" on page 17, the terms of which are
incorporated herein by reference.
During the fiscal years ended March 31, 2001, 2000 and 1999, CPII, a General
Partner of the Partnership, earned $150,049, $146,244, and $144,440,
respectively, of partnership management fees. During the fiscal years ended
March 31, 2001, 2000 and 1999, the Partnership accrued $37,600, $37,600, and
$37,600, respectively, for the reimbursement of overhead allocation from
Century Pacific Investment Corporation (CPIC). During fiscal year 2001, the
General Partners received no payments from the Operating Partnerships.
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ITEM 12. PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
---------------------------------------------------------------
MANAGEMENT
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No partner in CPTCHF-II owns more than 5% of the total number of partnership
interests outstanding. Irwin J. Deutch, the Managing General Partner, holds
a one-half percent General Partnership Interest.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Irwin J. Deutch is the Managing General Partner of CPTCHF-II, and CPII is
also a General Partner. Irwin J. Deutch is the sole Director and President
of CPII, and the stock of CPII is solely owned by the Deutch Family Trust.
Mr. Deutch is also the President, sole Director and the Deutch Family Trust
is the sole stockholder of Century Pacific Realty Corporation (CPRC), a
General Partner of the Operating Partnerships that own the Properties in
which CPTCHF-II has invested. CPII received a partnership management fee for
its services in managing and advising the Partnership and its business.
CPEC, an affiliate, provides all the services and materials necessary for the
operation of the Partnership and is reimbursed for actual costs. These
transactions are more particularly set forth in the financial statements
found under ITEM 14.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a) (1) Financial Statements:
Independent Auditors' Report F-1
Balance Sheet as of March 31, 2001 and 2000 F-2
Statement of Partners' Equity (Deficit) for the Years
Ended March 31, 2001, 2000 and 1999 F-3
Statement of Operations for the Years Ended March 31,
2001, 2000 and 1999 F-4
Statement of Cash Flows for the Years Ended March 31,
2001, 2000 and 1999 F-5
Notes to Financial Statements F-6
(2) Financial Statement Schedules:
Schedule III - Real Estate and Accumulated Depreciation of
Operating Partnerships in which CPTCHF-II has
Limited Partnership Interests F-14
Notes to Schedule III - Real Estate and Accumulated
Depreciation of Operating Partnerships in which
CPTCHF-II has Limited Partnership Interests F-15
Schedule IV - Mortgage Loans on Real Estate of Operating
Partnerships in which CPTCHF-II has Limited
Partnership Interests F-16
Notes to Schedule IV - Mortgage Loans on Real Estate of
Operating Partnerships in which CPTCHF-II has
Limited Partnership Interests F-17
All other schedules are omitted because they are not applicable,
or the required information is shown in the financial
statements or notes thereto.
(3) Exhibits
Not applicable
(b) Reports on Form 8-K
Not applicable
(c) Exhibits
Not applicable
(d) Financial Statement Schedule
Financial Statements of Washington Courts Limited Partnership
for the Years Ended December 31, 2000, 1999, and 1998
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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 amendment to be
signed on its behalf by the undersigned, thereunto duly authorized.
CENTURY PACIFIC TAX CREDIT HOUSING
FUND
Date: June 29, 2001 /s/ Irwin Jay Deutch
---------------------------------------
By: Irwin Jay Deutch, as Managing
General Partner
and
Century Pacific Capital II Corporation,
as Corporate General Partner and as
attorney-in-fact for all Investor
Limited Partners
Date: June 29, 2001 /s/ Irwin Jay Deutch
---------------------------------------
By: Irwin Jay Deutch, President
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INDEPENDENT AUDITORS' REPORT
Partners
Century Pacific Tax Credit Housing Fund - II
We have audited the accompanying balance sheet of Century Pacific Tax Credit
Housing Fund - II as of March 31, 2001 and, 2000, and the related statements
of operations, partners' equity (deficit) and cash flows for each of the
three years in the period ended March 31, 2001. 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 conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Century Pacific Tax Credit
Housing Fund - II as of March 31, 2001 and 2000 and the results of its
operations and its cash flows for each of the three years in the period ended
March 31, 2001, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As discussed in Note 6 to the
financial statements, the Partnership has suffered recurring losses from
operations and has a net capital deficiency that raises substantial doubt
about its ability to continue as a going concern. Management's plans
regarding these matters also are described in Note 6. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
We have also prepared, from information audited by us, the related financial
statement schedules listed in Item 14(a)(2) as of December 31, 2000 and 1999.
In our opinion the financial statement schedules present fairly, in all
material respects, the information required to be set forth therein.
/s/ Rubin, Brown, Gornstein & Co. LLP
St. Louis, Missouri
June 20, 2001
F-1
18
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------------------------------------
BALANCE SHEET
ASSETS
MARCH 31,
------------------------------
2001 2000
------------------------------
Cash $ 2,562 $ 2,376
Advance to a general partner (Note 3) 871 871
Investments in operating partnerships (Note 4) -- 430,306
- ------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 3,433 $ 433,553
============================================================================================================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES
Accounts payable and accrued expenses $ 5,800 $ 6,680
Due to affiliates (Note 3) 1,854,951 1,664,511
Loan payable - affiliate (Note 3) 40,594 40,594
- ------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,901,345 1,711,785
- ------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 5) -- --
- ------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT)
General partners (68,033) (61,836)
Limited partners, $1,000 stated value per unit,
25,000 units authorized, 5,754 units issued
and outstanding (1,829,879) (1,216,396)
- ------------------------------------------------------------------------------------------------------------
TOTAL PARTNERS' EQUITY (DEFICIT) (1,897,912) (1,278,232)
- ------------------------------------------------------------------------------------------------------------
$ 3,433 $ 433,553
============================================================================================================
F-2
- ------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements.
19
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------------------------------------
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED MARCH 31, 2001, 2000 AND 1999
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
----------------------------------------------
PARTNERS' EQUITY (DEFICIT) - APRIL 1, 1998 $(52,320) $ (274,313) $ (326,633)
NET LOSS (5,082) (503,124) (508,206)
- ------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1999 (57,402) (777,437) (834,839)
NET LOSS (4,434) (438,959) (443,393)
- ------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 2000 (61,836) (1,216,396) (1,278,232)
NET LOSS (6,197) (613,483) (619,680)
- ------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY (DEFICIT) - MARCH 31, 2001 $(68,033) $(1,829,879) $(1,897,912)
============================================================================================================
PERCENTAGE INTEREST - MARCH 31, 2001 1% 99% 100%
============================================================================================================
F-3
- ------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements.
20
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED MARCH 31,
----------------------------------------------
2001 2000 1999
----------------------------------------------
REVENUES
Transfer fees $ 500 $ 500 $ 1,600
- ------------------------------------------------------------------------------------------------------------
EXPENSES
Partnership management fee - affiliate (Note 3) 150,049 146,244 144,440
Allocated overhead expenses - affiliate (Note 3) 37,600 37,600 37,600
Other general and administrative expenses 2,225 8,780 9,070
- ------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 189,874 192,624 191,110
- ------------------------------------------------------------------------------------------------------------
LOSS BEFORE EQUITY IN NET LOSSES OF
OPERATING PARTNERSHIPS (189,374) (192,124) (189,510)
EQUITY IN NET LOSSES OF OPERATING
PARTNERSHIPS (NOTE 4) (430,306) (251,269) (318,696)
- ------------------------------------------------------------------------------------------------------------
NET LOSS $(619,680) $(443,393) $(508,206)
============================================================================================================
ALLOCATION OF NET LOSS
General partners $ (6,197) $ (4,434) $ (5,082)
Limited partners (613,483) (438,959) (503,124)
- ------------------------------------------------------------------------------------------------------------
$(619,680) $(443,393) $(508,206)
============================================================================================================
NET LOSS PER UNIT OF LIMITED PARTNERSHIP
INTEREST $ (108) $ (77) $ (88)
============================================================================================================
AVERAGE NUMBER OF OUTSTANDING UNITS 5,754 5,754 5,754
============================================================================================================
F-4
- ------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements.
21
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31,
----------------------------------------------
2001 2000 1999
----------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(619,680) $(443,393) $(508,206)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Equity in net losses of operating partnerships 430,306 251,269 318,696
Change in assets and liabilities:
Increase (decrease) in accounts payable
and accrued expenses (880) (1,620) 5,000
Increase in due to affiliates 190,440 194,244 186,043
- ------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 186 500 1,533
- ------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH 186 500 1,533
CASH - BEGINNING OF YEAR 2,376 1,876 343
- ------------------------------------------------------------------------------------------------------------
CASH - END OF YEAR $ 2,562 $ 2,376 $ 1,876
============================================================================================================
F-5
- ------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements.
22
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2001, 2000 AND 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Partnership maintains its financial records on the tax basis.
Memorandum entries, while not recorded in the records of the
Partnership, have been made in order to prepare the financial statements
in accordance with generally accepted accounting principles.
On August 7, 1991, management of the Partnership changed from a calendar
year end to a fiscal year end of March 31 for financial reporting
purposes. Accordingly, the Partnership's quarterly periods end June 30,
September 30 and December 31. The Operating Partnerships, for financial
reporting purposes, have a calendar year. The Partnership, as well as
the Operating Partnerships, have a calendar year for income tax
purposes.
ESTIMATES AND ASSUMPTIONS
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 revenues and expenses
during the reported period. Actual results could differ from those
estimates.
INVESTMENTS IN OPERATING PARTNERSHIPS
The Partnership uses the equity method to account for its investments
in the Operating Partnerships (Note 4). Under the equity method of
accounting, the investments are carried at cost and adjusted for the
Partnership's share of the Operating Partnerships' results of operations
and by cash distributions received. Equity in the loss of each
Operating Partnership allocated to the Partnership is not recognized to
the extent that the investment balance would become negative.
SYNDICATION COSTS
Public offering costs have been recorded as a direct reduction to the
capital accounts of the Limited Partners.
F-6
- ------------------------------------------------------------------------------
23
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes and/or the recapture of the
Low-Income Housing Tax Credit benefits received, if any, are the
liability of the individual partners. The Partnership uses the accrual
method of accounting for tax purposes.
NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST
Net loss per unit of limited partnership interest is calculated based
upon the weighted average number of units of limited partnership
interest (units) outstanding.
2. OPERATIONS
Century Pacific Tax Credit Housing Fund-II, a California limited
partnership, (the Partnership or CPTCHF-II), was formed on September 2,
1988 for the purpose of raising capital by offering and selling limited
partnership interests and then acquiring limited partnership interests
in partnerships (the Operating Partnerships) owning and operating
existing residential apartment rental properties (the Properties).
The general partners of the Partnership are Century Pacific Capital II
Corporation, a California corporation (CPII), and Irwin Jay Deutch, an
individual (collectively, the general partners). The general partners
and affiliates of the general partners (the general partners and
affiliates) have interests in the Partnership and receive compensation
from the Partnership and the Operating Partnerships (Note 3).
The Properties qualify for the Low-Income Housing Tax Credit established
by Section 42 of the Tax Reform Act of 1986 (the Low-Income Housing Tax
Credit). These properties are leveraged low-income multifamily
residential complexes and receive one or more forms of assistance from
federal, state or local governments, or agencies (the Government
Agencies).
In September 1988, the Partnership began raising capital from sales of
limited partnership interests, at $1,000 per unit, to limited partners.
The Partnership authorized the issuance of a maximum of 25,000
Partnership Units of which 5,754 were subscribed and issued. The
limited partnership interest offering closed as of December 31, 1989.
As of March 31, 2001, the Partnership has acquired limited partnership
interests of 90% in Washington Courts Limited Partnership and 60% in
Laurel-Clayton Limited Partnership, two existing Operating Partnerships
which own apartment rental properties.
F-7
- ------------------------------------------------------------------------------
24
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
The Partnership is currently experiencing a liquidity problem as the
Partnership's Operating Partnerships have not achieved operating
results required to provide the Partnership with sufficient cash
distributions to fund the Partnership's administrative costs. As a
result of the foregoing, the Partnership has been dependent upon its
affiliates and the general partners for continued financial support to
meet its expenses. Though there can be no assurance, management
believes that affiliates and/or the general partners, though not
required to do so, will continue to fund operations of the Partnership
and defer receipt of payment on management fees and allocated overhead
expenses. Unpaid management fees and allocated overhead expenses will
accrue for payment in future operating years. Management believes that
these factors do not permanently impair the net carrying value of the
Partnership's investment in the Operating Partnerships.
3. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES OF THE
GENERAL PARTNERS
Century Pacific Placement Corporation (CPPC), an affiliate of the
general partners, served as the broker-dealer-manager for sales of the
limited partnership interests in the Partnership. Century Pacific
Realty Corporation (CPRC), an affiliate of CPII, is a general partner in
each of the Operating Partnerships.
The general partners have an aggregate one percent interest in the
Partnership. CPRC has a one-half percent interest in each of the
Operating Partnerships.
The general partners and affiliates receive compensation and
reimbursement of expenses from the Partnership, as set forth in the
limited partnership agreement, for their services in managing the
Partnership and its business. Pursuant to the partnership agreement,
the Partnership is required to pay CPII an annual management fee for its
services in connection with the management of the affairs of the
Partnership. The annual management fee is equal to .5% of invested
assets (as defined by the partnership agreement). The general partners
and affiliates also receive compensation and reimbursement of expenses
from the Operating Partnerships. This compensation and reimbursement
includes services provided to the Partnership during its offering stage,
acquisition stage and operational stage.
F-8
- ------------------------------------------------------------------------------
25
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
The general partners and affiliates earned the following fees for
services provided to the Partnership and were entitled to reimbursement
for costs incurred by the general partners and affiliates on behalf of
the Partnership and the Operating Partnerships for the years ended
March 31, 2001, 2000 and 1999 as follows:
2001 2000 1999
----------------------------------------
Fees and reimbursement from the Partnership:
Partnership management fee (CPII) $150,049 $146,244 $144,440
Reimbursement for overhead allocated from
Century Pacific Investment Corporation
(CPIC) 37,600 37,600 37,600
-------------------------------------------------------------------------------------------
$187,649 $183,844 $182,040
===========================================================================================
At March 31, 2001 and 2000, non-interest bearing amounts due to
affiliates consist of fees and certain general and administrative costs
payable by the Partnership to the general partners and affiliates
totaling $1,374,369 and $1,224,380 respectively.
At March 31, 2001 and 2000, CPII owed the Partnership for an unsecured,
noninterest bearing advance of $871.
At March 31, 2001 and 2000, CPRC was owed $40,594 for a noninterest
bearing, demand, cash advance to the Partnership.
As of March 31, 2001 and 2000, CPII was owed $480,523 and $440,132
respectively for a noninterest bearing, demand cash advance made during
the current fiscal year to the Partnership.
The general partners may advance funds to the Partnership to fund
operating deficits, but are not obligated to do so. Such advances shall
be evidenced by a promissory note of a term no more than 12 months in
length and at a rate of interest no lower than the prime rate. All such
loans shall be repaid prior to any distributions of net cash. At
March 31, 2001 and 2000, the Partnership had no outstanding advances
due to the general partners.
4. INVESTMENTS IN OPERATING PARTNERSHIPS
At March 31, 2001 and 2000, the Partnership owned limited partnership
interests in two Operating Partnerships, each of which has invested in
a Property.
F-9
- ------------------------------------------------------------------------------
26
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
Investments in Operating Partnerships consist of the following:
2001 2000
------------------------------
Cash contributions to Operating Partnerships
to fund purchase of properties and
acquisition and organization costs $ 4,536,020 $ 4,536,020
Equity in net losses of Operating Partnerships (4,536,020) (4,105,714)
------------------------------------------------------------------------------------
$ -- $ 430,306
====================================================================================
The names and locations of the Properties in which the Operating
Partnerships hold beneficial interests are as follows:
NAME OF NAME AND
OPERATING PARTNERSHIP LOCATION OF PROPERTY
---------------------------------------------------------------------
Washington Courts Limited Partnership Washington Courts
Chicago, Illinois
Laurel-Clayton Limited Partnership Plumley Village
Boston, Massachusetts
A summarized combined balance sheet as of December 31, 2000 and 1999 and
statements of operations of the aforementioned Operating Partnerships
for the years then ended follows:
COMBINED BALANCE SHEET
ASSETS
2000 1999
------------------------------
Cash $ 735,368 $ 360,534
Reserve for replacements 1,819,911 1,613,398
Land and buildings 17,708,695 17,985,342
Other assets 968,975 981,278
------------------------------------------------------------------------------------
$21,232,949 $20,940,552
====================================================================================
F-10
- ------------------------------------------------------------------------------
27
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
2000 1999
-------------------------------
Notes payable $25,165,297 $24,885,119
Other liabilities 1,428,659 717,893
---------------------------------------------------------------------------------
26,593,956 25,603,012
Partners' equity (deficit) (5,361,007) (4,662,460)
---------------------------------------------------------------------------------
$21,232,949 $20,940,552
=================================================================================
COMBINED STATEMENT OF OPERATIONS
2000 1999
-------------------------------
REVENUES
Rental income $ 5,152,488 $ 5,160,145
Other income 232,088 125,423
---------------------------------------------------------------------------------
TOTAL REVENUES 5,384,576 5,285,568
---------------------------------------------------------------------------------
EXPENSES
Utilities 792,452 751,408
Repairs and maintenance 1,149,341 1,136,678
Management fees 292,926 298,401
Other operating expenses 1,528,381 1,452,309
Interest 1,274,094 1,230,352
Depreciation and amortization 1,056,692 1,164,774
---------------------------------------------------------------------------------
TOTAL EXPENSES 6,093,886 6,033,922
---------------------------------------------------------------------------------
NET LOSS $ (709,310) $ (748,354)
=================================================================================
ALLOCATION OF LOSS
General partners and other limited partners $ (115,467) $ (204,520)
CPTCHF-II (593,843) (543,834)
---------------------------------------------------------------------------------
$ (709,310) $ (748,354)
=================================================================================
5. COMMITMENTS AND CONTINGENCIES
The Federal Housing Administration (FHA) and the Department of Housing
and Urban Development (HUD) exercise control over the projects through
provisions of Regulatory Agreements (the Agreements). The Agreements
restrict the Projects, without prior written approval from HUD, from
encumbering, acquiring, altering or disposing of land, buildings and
equipment; using the Properties for any purpose other than the use
originally intended; engaging in any other business or activity; and
paying distributions to partners, compensation to officers or directors,
or for any purpose other than reasonable operating expenses. The
Agreements also stipulate that FHA and HUD shall control the rental
rates, rate of return on investment and method of operation.
F-11
- ------------------------------------------------------------------------------
28
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
In addition, the Agreements require the Properties to make cash deposits
on a monthly basis into a reserve fund for replacements. The respective
mortgagees are the designated custodians of the reserve funds and
withdrawals can only be made with HUD approval.
6. GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Partnership as a going concern. However, the
Partnership's Operating Partnerships have not achieved the operating
results required to provide the Partnership with sufficient cash
distributions to fund the Partnership's administrative costs.
Additionally, the Partnership has incurred allocated losses from both
of its Operating Partnerships to the extent of the Partnership's cash
contributions. As a result of the foregoing, the Partnership is
dependent upon the general partners and affiliates for continued
financial support.
Management maintains that the general partners and affiliates, though
not required to do so, will continue to fund operations by deferring
payment to related parties of allocated overhead expenses, and by
funding any Partnership operating costs. Unpaid allocated overhead
expenses will accrue and become payable when the Operating Partnerships
generate sufficient cash distributions to the Partnership to cover such
expenses. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
F-12
- ------------------------------------------------------------------------------
29
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:
CASH
The carrying amount approximates fair value because of the short
maturity of those instruments.
RELATED PARTY RECEIVABLES
The carrying amount approximates fair value because of the short-term
nature of the receivables.
ADVANCE FROM AFFILIATE
The carrying amount approximates fair value because of the short-term
nature of the advance.
PAYABLE TO RELATED PARTIES
The carrying amount approximates fair value because the terms of the
payable are similar to currently available terms and conditions for
similar instruments.
F-13
- ------------------------------------------------------------------------------
30
Schedule III
------------
Page 1 Of 1
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ----------------------------------------------------------------------------------------------------------------------
REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING
PARTNERSHIPS IN WHICH CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 2000
COST CAPITALIZED
INITIAL COST TO SUBSEQUENT
OPERATING PARTNERSHIP TO ACQUISITION
------------------------------- -----------------------------
ENCUMBRANCES BUILDINGS AND BUILDINGS AND
DESCRIPTION (2) LAND IMPROVEMENTS LAND IMPROVEMENTS
- ----------------------------------------------------------------------------------------------------------------------
Washington Courts Apartments
Chicago, Illinois
103 Residential Units $ 4,948,643 $ 75,300 $ 1,720,666 $ -- $5,479,295
Plumley Village Apartments
Boston, Massachusetts
430 Residential Units 20,216,654 1,100,000 17,383,785 -- 4,250,761
- ----------------------------------------------------------------------------------------------------------------------
$25,165,297 $1,175,300 $19,104,451 $ -- $9,730,056
======================================================================================================================
LIFE UPON
WHICH
GROSS AMOUNT AT WHICH ACCUMULATED DEPRECIATION
CARRIED AT CLOSE OF YEAR DEPRECIATION IN LATEST
------------------------------------ ------------ INCOME
BUILDINGS AND BUILDINGS AND DATE OF DATE STATEMENT
DESCRIPTION LAND IMPROVEMENTS TOTAL IMPROVEMENTS CONSTRUCTION ACQUIRED IS COMPUTED
- ----------------------------------------------------------------------------------------------------------------------
Washington Courts Apartments
Chicago, Illinois
103 Residential Units $ 75,300 $ 7,199,961 $ 7,275,261 $ 2,895,402 1991 1/89 27.5 years
Plumley Village Apartments
Boston, Massachusetts
430 Residential Units 1,100,000 21,634,546 22,734,546 9,405,710 1973 9/89 27.5 years
- ----------------------------------------------------------------------------------------------------------------------
$1,175,300 $28,834,507 $30,009,807 $12,301,112
======================================================================================================================
See notes to schedule
F-14
31
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED
DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH
CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 2000
NOTE 1 - DESCRIPTION OF PROPERTIES
- ----------------------------------
The Properties held by the Operating Partnerships in which CPTCHF-II has
invested are housing projects, primarily for families and elderly or
handicapped individuals of low and moderate income.
NOTE 2 - SCHEDULE OF ENCUMBRANCES
- ---------------------------------
OPERATING PARTNERSHIP MORTGAGE RESIDUAL PURCHASE OTHER
NAME AND PROPERTY NAME NOTES NOTE NOTE NOTES TOTAL
- -------------------------------------------------------------------------------------------------------
Washington Courts L/P
Washington Courts $ 4,948,643 $ -- $ -- $ -- $ 4,948,643
Laurel-Clayton L/P
Plumley Village 6,938,228 5,114,890 7,757,641 405,895 20,216,654
- -------------------------------------------------------------------------------------------------------
$11,886,871 $5,114,890 $7,757,641 $405,895 $25,165,297
=======================================================================================================
NOTE 3 - RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION
- -------------------------------------------------------------------
ACCUMULATED
COST DEPRECIATION
-----------------------------
Balance at December 31, 1997 $28,141,545 $ 9,080,821
Additions during year:
Depreciation -- 1,036,792
Improvements 746,354 --
----------------------------------------------------------------
Balance at December 31, 1998 28,887,899 10,117,613
Additions during year:
Depreciation -- 1,145,790
Improvements 360,846 --
----------------------------------------------------------------
Balance at December 31, 1999 29,248,745 11,263,403
Additions during year:
Depreciation -- 1,037,709
Improvements 761,062 --
----------------------------------------------------------------
$30,009,807 $12,301,112
================================================================
F-15
32
Schedule IV
-----------
Page 1 of 1
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------------------------------------
MORTGAGE LOANS ON REAL ESTATE OF OPERATING
PARTNERSHIPS IN WHICH CPTCHF-II HAS
LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 2000
MONTHLY
FINAL PAYMENTS TO ORIGINAL CARRYING
MATURITY MATURITY (NET OF FACE AMOUNT OF
DESCRIPTION (1) INTEREST RATE DATE HUD SUBSIDY) OF MORTGAGE MORTGAGE (2)
- ------------------------------------------------------------------------------------------------------------
First mortgages assumed
by Operating Partnerships:
Washington Courts Limited
Partnership
Washington Courts 9.25% 2031 $40,841 $ 5,165,400 $ 4,948,643
Laurel-Clayton Limited
Partnership
Plumley Village 8.5% 2012 24,035 10,635,000 6,938,228
----------------------------------------------
Total $64,876 $15,800,400 $11,886,871
==============================================
See notes to schedule
F-16
33
CENTURY PACIFIC TAX CREDIT HOUSING FUND-II
- ------------------------------------------------------------------------------
NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL
ESTATE OF OPERATING PARTNERSHIPS IN WHICH
CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS
DECEMBER 31, 2000
NOTE 1 - DESCRIPTION
-----------
Each Operating Partnership has invested in a Property.
Laurel-Clayton Limited Partnership assumed a mortgage loan obligation from
the seller of the Property. The mortgage loan obligation is insured by the
United States Department of Housing and Urban Development and is secured by
the land and buildings of the Property.
Washington Courts Limited Partnership has obtained permanent financing in
the principal amount of $5,165,400 which is insured by the Federal Housing
Administration. The loan bears interest at 9.25% per annum. The note will
be amortized over a period of 40 years. Prepayment is prohibited during
the construction period and for ten years from the date of completion of
construction.
NOTE 2 - RECONCILIATION OF MORTGAGES
---------------------------
FOR THE YEAR
ENDED DECEMBER 31, 2000
-------------------------------
MORTGAGE RESIDUAL
LOANS NOTES
-------------------------------
Balance at December 31, 1997 $12,884,235 $4,442,890
Additions during year:
Accrued interest -- 224,000
Deductions during year:
Payments 304,523 --
-------------------------------------------------------------------
Balance at December 31, 1998 12,579,712 4,666,890
Additions during year:
Accrued interest -- 224,000
Deductions during year:
Payments 331,649 --
-------------------------------------------------------------------
Balance at December 31, 1999 12,248,063 4,890,890
Additions during year:
Accrued interest -- 224,000
Deductions during year:
Payments 361,192 --
-------------------------------------------------------------------
$11,886,871 $5,114,890
===================================================================
F-17
- ------------------------------------------------------------------------------
34
S2100-020 INDEPENDENT AUDITORS' REPORT
To The Partners
Washington Courts Limited Partnership
We have audited the accompanying balance sheet of Washington Courts Limited
Partnership, Project No. 071-35593, a limited partnership, as of December 31,
2000 and 1999, and the related statements of profit and loss, partners'
equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits 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 audits 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Washington Courts Limited
Partnership as of December 31, 2000 and 1999, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
March 2, 2001
- ------------------------------------------------------------------------------
Page 1
35
WASHINGTON COURTS LIMITED PARTNERSHIP
071-35593
- --------------------------------------------------------------------------------------
BALANCE SHEET
PAGE 1 OF 2
ASSETS
DECEMBER 31,
-------------------------------
2000 1999
-------------------------------
CURRENT ASSETS
1120 Cash - operations $ 175,451 $ 23,640
1190 Miscellaneous current assets 100 100
1200 Miscellaneous prepaid expenses 47,779 33,103
- -------------------------------------------------------------------------------------------
1100T TOTAL CURRENT ASSETS 223,330 56,843
- -------------------------------------------------------------------------------------------
DEPOSITS HELD IN TRUST - FUNDED
1191 Tenant deposits held in trust 15,385 12,934
- -------------------------------------------------------------------------------------------
RESTRICTED DEPOSITS AND FUNDED RESERVES
1310 Escrow deposits 36,289 32,640
1320 Replacement reserve 91,874 69,479
- -------------------------------------------------------------------------------------------
1300T TOTAL DEPOSITS 128,163 102,119
- -------------------------------------------------------------------------------------------
FIXED ASSETS
1410 Land 75,300 75,300
1420 Buildings 7,104,391 7,080,053
1440 Building equipment - portable 29,985 8,061
1465 Office furniture and equipment 65,585 65,585
- -------------------------------------------------------------------------------------------
1400T Total Fixed Assets 7,275,261 7,228,999
1495 Less: Accumulated depreciation 2,895,402 2,626,835
- -------------------------------------------------------------------------------------------
1400N NET FIXED ASSETS 4,379,859 4,602,164
- -------------------------------------------------------------------------------------------
OTHER ASSETS
1520 Intangible assets 520,837 539,822
- -------------------------------------------------------------------------------------------
1000T TOTAL ASSETS $5,267,574 $5,313,882
===========================================================================================
- -------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 2
36
WASHINGTON COURTS LIMITED PARTNERSHIP
071-35593
- --------------------------------------------------------------------------------------
BALANCE SHEET
PAGE 2 OF 2
LIABILITIES
DECEMBER 31,
-------------------------------
2000 1999
-------------------------------
CURRENT LIABILITIES
2110 Accounts payable - operations $ 167,724 $ 65,790
2113 Accounts payable - entity 68,269 68,269
2120 Accrued wages payable -- 4,916
2123 Accrued management fee payable 14,644 14,644
2131 Accrued interest payable - first mortgage 38,146 38,383
2150 Accrued property taxes 33,593 35,755
2170 Mortgage payable - first mortgage (short-term) 34,007 31,013
2190 Miscellaneous current liabilities 429,061 45,750
2210 Prepaid revenue 66,333 --
- -------------------------------------------------------------------------------------------
2122T TOTAL CURRENT LIABILITIES 851,777 304,520
- -------------------------------------------------------------------------------------------
DEPOSIT AND PREPAYMENT LIABILITIES
2191 Tenant deposits held in trust (contra) 13,878 12,817
- -------------------------------------------------------------------------------------------
LONG-TERM LIABILITIES
2320 Mortgage payable - first mortgage 4,914,636 4,948,406
- -------------------------------------------------------------------------------------------
2000T TOTAL LIABILITIES 5,780,291 5,265,743
PARTNERS' EQUITY (DEFICIT)
3130 Partners' equity (deficit) (512,717) 48,139
- -------------------------------------------------------------------------------------------
2033T TOTAL LIABILITIES AND PARTNERS' EQUITY
(DEFICIT) $5,267,574 $5,313,882
===========================================================================================
- -------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 3
37
WASHINGTON COURTS LIMITED PARTNERSHIP
071-35593
- ---------------------------------------------------------------------------------------------------------------------
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED DECEMBER 31, 2000
- ---------------------------------------------------------------------------------------------------------------------
PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Rent Revenue - Gross Potential 5120 $331,905
--------------------------------------------------------------------------------------------------
Tenant Assistance Payments 5121 $692,113
--------------------------------------------------------------------------------------------------
Rent Revenue - Stores and Commercial 5140 $
--------------------------------------------------------------------------------------------------
Garage and Parking Spaces 5170 $
--------------------------------------------------------------------------------------------------
Flexible Subsidy Revenue 5180 $
RENT --------------------------------------------------------------------------------------------------
REVENUE Miscellaneous Rent Revenue 5190 $
5100 --------------------------------------------------------------------------------------------------
Excess Rent 5191 $
--------------------------------------------------------------------------------------------------
Rent Revenue/Insurance 5192 $
--------------------------------------------------------------------------------------------------
Special Claims Revenue 5193 $
--------------------------------------------------------------------------------------------------
Retained Excess Income 5194 $
--------------------------------------------------------------------------------------------------
TOTAL RENT REVENUE 5100T $1,024,018
- ---------------------------------------------------------------------------------------------------------------------
Apartments 5220 $151,553
--------------------------------------------------------------------------------------------------
Stores and Commercial 5240 $
--------------------------------------------------------------------------------------------------
Rental Concessions 5250 $
VACANCIES --------------------------------------------------------------------------------------------------
5200 Garage and Parking Space 5270 $
--------------------------------------------------------------------------------------------------
Miscellaneous 5290 $
--------------------------------------------------------------------------------------------------
TOTAL VACANCIES 5200T $ 151,553
--------------------------------------------------------------------------------------------------
NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 872,465
- ---------------------------------------------------------------------------------------------------------------------
5300 Nursing Homes/Assisted Living/Board and Care/
Other Elderly Care/Coop/ and Other Revenues 5300 $
- ---------------------------------------------------------------------------------------------------------------------
Financial Revenue - Project Operations 5410 $ 114
--------------------------------------------------------------------------------------------------
Revenue from Investments - Residual Receipts 5430 $
FINANCIAL --------------------------------------------------------------------------------------------------
REVENUE Revenue from Investments - Replacement Reserve 5440 $ 2,302
5400 --------------------------------------------------------------------------------------------------
Revenue from Investments - Miscellaneous 5490 $
--------------------------------------------------------------------------------------------------
TOTAL FINANCIAL REVENUE 5400T $ 2,416
- ---------------------------------------------------------------------------------------------------------------------
Laundry and Vending Revenue 5910 $
--------------------------------------------------------------------------------------------------
Tenant Charges 5920 $ 1,250
--------------------------------------------------------------------------------------------------
Interest Reduction Payments Revenue 5945 $
OTHER --------------------------------------------------------------------------------------------------
REVENUE Miscellaneous Revenue (Schedule) 5990 $103,735
5900 --------------------------------------------------------------------------------------------------
TOTAL OTHER REVENUE 5900T $ 104,985
--------------------------------------------------------------------------------------------------
TOTAL REVENUE 5000T $ 979,866
- ---------------------------------------------------------------------------------------------------------------------
Conventions and Meetings 6203 $
--------------------------------------------------------------------------------------------------
Management Consultants 6204 $ 17,956
--------------------------------------------------------------------------------------------------
Advertising and Marketing 6210 $
--------------------------------------------------------------------------------------------------
Other Renting Expenses 6250 $ 3,494
--------------------------------------------------------------------------------------------------
Office Salaries 6310 $ 10,186
--------------------------------------------------------------------------------------------------
Office Expenses 6311 $ 22,604
--------------------------------------------------------------------------------------------------
Office or Model Apartment Rent 6312 $
--------------------------------------------------------------------------------------------------
Management Fee 6320 $ 35,466
ADMINISTRATIVE --------------------------------------------------------------------------------------------------
EXPENSES Manager or Superintendent Salaries 6330 $ 17,402
6200/6300 --------------------------------------------------------------------------------------------------
Administrative Rent Free Unit 6331 $
--------------------------------------------------------------------------------------------------
Legal Expense - Project 6340 $ 1,981
--------------------------------------------------------------------------------------------------
Audit Expense 6350 $ 8,700
--------------------------------------------------------------------------------------------------
Bookkeeping Fees/Accounting Services 6351 $ 3,971
--------------------------------------------------------------------------------------------------
Bad Debts 6370 $ 66,664
--------------------------------------------------------------------------------------------------
Miscellaneous Administrative Expenses (Schedule) 6390 $127,143
--------------------------------------------------------------------------------------------------
TOTAL ADMINISTRATIVE EXPENSES 6263T $ 315,567
- ---------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
--------------------------------------------------------------------------------------------------
Electricity 6450 $ 2,590
UTILITIES --------------------------------------------------------------------------------------------------
EXPENSE Water 6451 $ 14,252
6400 --------------------------------------------------------------------------------------------------
Gas 6452 $ 99,166
--------------------------------------------------------------------------------------------------
Sewer 6453 $ 167
--------------------------------------------------------------------------------------------------
TOTAL UTILITIES EXPENSE 6400T $ 116,175
--------------------------------------------------------------------------------------------------
TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) 6400T $ 431,742
- ---------------------------------------------------------------------------------------------------------------------
Page 1 of 2
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 4
38
Project Name: Washington Courts Limited Partnership
- ---------------------------------------------------------------------------------------------------------------------
BALANCE CARRIED FORWARD $ 431,742
- ---------------------------------------------------------------------------------------------------------------------
Payroll 6510 $ 35,285
--------------------------------------------------------------------------------------------------
Supplies 6515 $ 85,525
--------------------------------------------------------------------------------------------------
Contracts 6520 $ 71,264
--------------------------------------------------------------------------------------------------
Operating and Maintenance Rent Free Unit 6521 $
--------------------------------------------------------------------------------------------------
Garbage and Trash Removal 6525 $ 9,874
OPERATING --------------------------------------------------------------------------------------------------
MAINTENANCE Security Payroll/Contract 6530 $ 33,278
EXPENSES --------------------------------------------------------------------------------------------------
6500 Security Rent Free Unit 6531 $
--------------------------------------------------------------------------------------------------
Heating/Cooling Repairs and Maintenance 6546 $
--------------------------------------------------------------------------------------------------
Snow Removal 6548 $
--------------------------------------------------------------------------------------------------
Vehicle and Maintenance Equipment Operation and Repairs 6570 $ 2,345
--------------------------------------------------------------------------------------------------
Miscellaneous Operating and Maintenance Expenses 6590 $ 8,668
--------------------------------------------------------------------------------------------------
TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 246,239
- ---------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 35,052
--------------------------------------------------------------------------------------------------
Payroll Taxes (Project's Share) 6711 $ 9,434
--------------------------------------------------------------------------------------------------
Property and Liability Insurance (Hazard) 6720 $ 26,908
TAXES --------------------------------------------------------------------------------------------------
AND Fidelity Bond Insurance 6721 $
INSURANCE --------------------------------------------------------------------------------------------------
6700 Workmen's Compensation 6722 $ 3,694
--------------------------------------------------------------------------------------------------
Health Insurance and Other Employee Benefits 6723 $ 1,655
--------------------------------------------------------------------------------------------------
Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 4,837
--------------------------------------------------------------------------------------------------
TOTAL TAXES AND INSURANCE 6700T $ 81,580
- ---------------------------------------------------------------------------------------------------------------------
Interest on Mortgage Payable 6820 $459,914
--------------------------------------------------------------------------------------------------
Interest on Notes Payable (LongTerm) 6830 $
FINANCIAL --------------------------------------------------------------------------------------------------
EXPENSES Interest on Notes Payable (ShortTerm) 6840 $
6800 --------------------------------------------------------------------------------------------------
Mortgage Insurance Premium/Service Charge 6850 $ 26,244
--------------------------------------------------------------------------------------------------
Miscellaneous Financial Expenses 6890 $ 7,453
--------------------------------------------------------------------------------------------------
TOTAL FINANCIAL EXPENSES 6800T $ 493,611
- ---------------------------------------------------------------------------------------------------------------------
6900 Nursing Homes/ Assisted Living/ Board and Care/
Other Elderly Care Expenses 6900 $
- ---------------------------------------------------------------------------------------------------------------------
TOTAL COST OF OPERATIONS BEFORE
DEPRECIATION AND AMORTIZATION 6000T $1,253,172
--------------------------------------------------------------------------------------------------
PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ (273,306)
--------------------------------------------------------------------------------------------------
Depreciation Expense 6600 $268,566
--------------------------------------------------------------------------------------------------
Amortization Expense 6610 $ 18,984
--------------------------------------------------------------------------------------------------
TOTAL DEPRECIATION AND AMORTIZATION $ 287,550
--------------------------------------------------------------------------------------------------
OPERATING PROFIT OR (LOSS) 5060N $ (560,856)
- ---------------------------------------------------------------------------------------------------------------------
Officer's Salaries 7110 $
--------------------------------------------------------------------------------------------------
Legal Expenses 7120 $
--------------------------------------------------------------------------------------------------
Federal, State, and Other Income Taxes 7130 $
--------------------------------------------------------------------------------------------------
CORPORATE OR Interest Income 7140 $
MORTGAGOR --------------------------------------------------------------------------------------------------
ENTITY Interest on Notes Payable 7141 $
EXPENSES --------------------------------------------------------------------------------------------------
7100 Interest on Mortgage Payable 7142 $
--------------------------------------------------------------------------------------------------
Other Expenses (Asset supervisory fees) 7190 $
--------------------------------------------------------------------------------------------------
NET ENTITY EXPENSES 7100T $ 0
--------------------------------------------------------------------------------------------------
PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $ (560,856)
- ---------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense
sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or
more, attach a separate schedule describing or explaining the miscellaneous income or expense.
- ---------------------------------------------------------------------------------------------------------------------
PART II
- ---------------------------------------------------------------------------------------------------------------------
1. Total mortgage principal payments required during the audit year (12 monthly payments).
This applies to all direct loans and HUD-held and fully insured mortgages.
Any HUD approved second mortgages should be included in the figures.
(Account S1000-010) $ 30,776
- ---------------------------------------------------------------------------------------------------------------------
2. Total of 12 monthly deposits in the audit year into the Replacement Reserve account,
as required by the Regulatory Agreement even if payments may be temporarily
suspended or reduced. (Account S1000-020) $ 20,093
- ---------------------------------------------------------------------------------------------------------------------
3. Replacement Reserve or Residual Receipts releases which are included as expense
items on this Profit and Loss Statement. (Account S1000-030) $ --
- ---------------------------------------------------------------------------------------------------------------------
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that
are included as expense items on this Profit and Loss Statement.
(Account S1000-040) $ --
- ---------------------------------------------------------------------------------------------------------------------
Page 2 of 2
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 5
39
WASHINGTON COURTS LIMITED PARTNERSHIP
071-35593
- ---------------------------------------------------------------------------------------------------------------------
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED DECEMBER 31, 1999
- ---------------------------------------------------------------------------------------------------------------------
PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Rent Revenue - Gross Potential 5120 $227,522
--------------------------------------------------------------------------------------------------
Tenant Assistance Payments 5121 $792,564
--------------------------------------------------------------------------------------------------
Rent Revenue - Stores and Commercial 5140 $
--------------------------------------------------------------------------------------------------
Garage and Parking Spaces 5170 $
--------------------------------------------------------------------------------------------------
Flexible Subsidy Revenue 5180 $
RENT --------------------------------------------------------------------------------------------------
REVENUE Miscellaneous Rent Revenue 5190 $
5100 --------------------------------------------------------------------------------------------------
Excess Rent 5191 $
--------------------------------------------------------------------------------------------------
Rent Revenue/Insurance 5192 $
--------------------------------------------------------------------------------------------------
Special Claims Revenue 5193 $
--------------------------------------------------------------------------------------------------
Retained Excess Income 5194 $
--------------------------------------------------------------------------------------------------
TOTAL RENT REVENUE 5100T $1,020,086
- ---------------------------------------------------------------------------------------------------------------------
Apartments 5220 $ 52,881
--------------------------------------------------------------------------------------------------
Stores and Commercial 5240 $
--------------------------------------------------------------------------------------------------
Rental Concessions 5250 $
VACANCIES --------------------------------------------------------------------------------------------------
5200 Garage and Parking Space 5270 $
--------------------------------------------------------------------------------------------------
Miscellaneous 5290 $
--------------------------------------------------------------------------------------------------
TOTAL VACANCIES 5200T $ 52,881
--------------------------------------------------------------------------------------------------
NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 967,205
- ---------------------------------------------------------------------------------------------------------------------
5300 Nursing Homes/Assisted Living/Board and Care/
Other Elderly Care/Coop/ and Other Revenues 5300 $
- ---------------------------------------------------------------------------------------------------------------------
Financial Revenue - Project Operations 5410 $ 309
--------------------------------------------------------------------------------------------------
Revenue from Investments - Residual Receipts 5430 $
FINANCIAL --------------------------------------------------------------------------------------------------
REVENUE Revenue from Investments - Replacement Reserve 5440 $ 1,474
5400 --------------------------------------------------------------------------------------------------
Revenue from Investments - Miscellaneous 5490 $
--------------------------------------------------------------------------------------------------
TOTAL FINANCIAL REVENUE 5400T $ 1,783
- ---------------------------------------------------------------------------------------------------------------------
Laundry and Vending Revenue 5910 $ 6,556
--------------------------------------------------------------------------------------------------
Tenant Charges 5920 $
--------------------------------------------------------------------------------------------------
Interest Reduction Payments Revenue 5945 $
OTHER --------------------------------------------------------------------------------------------------
REVENUE Miscellaneous Revenue (Schedule) 5990 $ 36,697
5900 --------------------------------------------------------------------------------------------------
TOTAL OTHER REVENUE 5900T $ 43,253
--------------------------------------------------------------------------------------------------
TOTAL REVENUE 5000T $1,012,241
- ---------------------------------------------------------------------------------------------------------------------
Conventions and Meetings 6203 $
--------------------------------------------------------------------------------------------------
Management Consultants 6204 $ 3,338
--------------------------------------------------------------------------------------------------
Advertising and Marketing 6210 $ 726
--------------------------------------------------------------------------------------------------
Other Renting Expenses 6250 $ 4,871
--------------------------------------------------------------------------------------------------
Office Salaries 6310 $ 23,427
--------------------------------------------------------------------------------------------------
Office Expenses 6311 $ 13,718
--------------------------------------------------------------------------------------------------
Office or Model Apartment Rent 6312 $
--------------------------------------------------------------------------------------------------
Management Fee 6320 $ 46,800
ADMINISTRATIVE --------------------------------------------------------------------------------------------------
EXPENSES Manager or Superintendent Salaries 6330 $ 12,476
6200/6300 --------------------------------------------------------------------------------------------------
Administrative Rent Free Unit 6331 $
--------------------------------------------------------------------------------------------------
Legal Expense - Project 6340 $ 16,840
--------------------------------------------------------------------------------------------------
Audit Expense 6350 $ 7,200
--------------------------------------------------------------------------------------------------
Bookkeeping Fees/Accounting Services 6351 $ 9,117
--------------------------------------------------------------------------------------------------
Bad Debts 6370 $
--------------------------------------------------------------------------------------------------
Miscellaneous Administrative Expenses (Schedule) 6390 $ 21,320
--------------------------------------------------------------------------------------------------
TOTAL ADMINISTRATIVE EXPENSES 6263T $ 159,833
- ---------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
--------------------------------------------------------------------------------------------------
Electricity 6450 $ 7,200
UTILITIES --------------------------------------------------------------------------------------------------
EXPENSE Water 6451 $ 12,508
6400 --------------------------------------------------------------------------------------------------
Gas 6452 $ 53,307
--------------------------------------------------------------------------------------------------
Sewer 6453 $ 9,462
--------------------------------------------------------------------------------------------------
TOTAL UTILITIES EXPENSE 6400T $ 82,477
--------------------------------------------------------------------------------------------------
TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) $ 242,310
- ---------------------------------------------------------------------------------------------------------------------
Page 1 of 2
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 6
40
Project Name: Washington Courts Limited Partnership
- ---------------------------------------------------------------------------------------------------------------------
BALANCE CARRIED FORWARD $ 242,310
- ---------------------------------------------------------------------------------------------------------------------
Payroll 6510 $ 61,725
--------------------------------------------------------------------------------------------------
Supplies 6515 $ 58,418
--------------------------------------------------------------------------------------------------
Contracts 6520 $ 51,130
--------------------------------------------------------------------------------------------------
Operating and Maintenance Rent Free Unit 6521 $
--------------------------------------------------------------------------------------------------
Garbage and Trash Removal 6525 $ 22,094
OPERATING --------------------------------------------------------------------------------------------------
MAINTENANCE Security Payroll/Contract 6530 $ 7,543
EXPENSES --------------------------------------------------------------------------------------------------
6500 Security Rent Free Unit 6531 $
--------------------------------------------------------------------------------------------------
Heating/Cooling Repairs and Maintenance 6546 $ 3,585
--------------------------------------------------------------------------------------------------
Snow Removal 6548 $
--------------------------------------------------------------------------------------------------
Vehicle and Maintenance Equipment Operation and Repairs 6570 $ 1,371
--------------------------------------------------------------------------------------------------
Miscellaneous Operating and Maintenance Expenses 6590 $ 9,099
--------------------------------------------------------------------------------------------------
TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 214,965
- ---------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 36,382
--------------------------------------------------------------------------------------------------
Payroll Taxes (Project's Share) 6711 $ 8,118
--------------------------------------------------------------------------------------------------
Property and Liability Insurance (Hazard) 6720 $ 15,152
TAXES --------------------------------------------------------------------------------------------------
AND Fidelity Bond Insurance 6721 $
INSURANCE --------------------------------------------------------------------------------------------------
6700 Workmen's Compensation 6722 $ 2,646
--------------------------------------------------------------------------------------------------
Health Insurance and Other Employee Benefits 6723 $ 12,621
--------------------------------------------------------------------------------------------------
Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 2,555
--------------------------------------------------------------------------------------------------
TOTAL TAXES AND INSURANCE 6700T $ 77,474
- ---------------------------------------------------------------------------------------------------------------------
Interest on Mortgage Payable 6820 $461,805
--------------------------------------------------------------------------------------------------
Interest on Notes Payable (LongTerm) 6830 $
FINANCIAL --------------------------------------------------------------------------------------------------
EXPENSES Interest on Notes Payable (ShortTerm) 6840 $
6800 --------------------------------------------------------------------------------------------------
Mortgage Insurance Premium/Service Charge 6850 $ 22,946
--------------------------------------------------------------------------------------------------
Miscellaneous Financial Expenses 6890 $ 2,620
--------------------------------------------------------------------------------------------------
TOTAL FINANCIAL EXPENSES 6800T $ 487,371
- ---------------------------------------------------------------------------------------------------------------------
6900 Nursing Homes/ Assisted Living/ Board and Care/
Other Elderly Care Expenses 6900 $
- ---------------------------------------------------------------------------------------------------------------------
TOTAL COST OF OPERATIONS BEFORE
DEPRECIATION AND AMORTIZATION 6000T $1,022,120
--------------------------------------------------------------------------------------------------
PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ (9,879)
--------------------------------------------------------------------------------------------------
Depreciation Expense 6600 $267,437
--------------------------------------------------------------------------------------------------
Amortization Expense 6610 $ 18,984
--------------------------------------------------------------------------------------------------
TOTAL DEPRECIATION AND AMORTIZATION $ 286,421
--------------------------------------------------------------------------------------------------
OPERATING PROFIT OR (LOSS) 5060N $ (296,300)
- ---------------------------------------------------------------------------------------------------------------------
Officer's Salaries 7110 $
--------------------------------------------------------------------------------------------------
Legal Expenses 7120 $
--------------------------------------------------------------------------------------------------
Federal, State, and Other Income Taxes 7130 $
--------------------------------------------------------------------------------------------------
CORPORATE OR Interest Income 7140 $
MORTGAGOR --------------------------------------------------------------------------------------------------
ENTITY Interest on Notes Payable 7141 $
EXPENSES --------------------------------------------------------------------------------------------------
7100 Interest on Mortgage Payable 7142 $
--------------------------------------------------------------------------------------------------
Other Expenses (Asset Supervisory Fee) 7190 $ 19,772
--------------------------------------------------------------------------------------------------
NET ENTITY EXPENSES 7100T $ 19,772
--------------------------------------------------------------------------------------------------
PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $ (316,072)
- ---------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense
sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or
more, attach a separate schedule describing or explaining the miscellaneous income or expense.
- ---------------------------------------------------------------------------------------------------------------------
PART II
- ---------------------------------------------------------------------------------------------------------------------
1. Total mortgage principal payments required during the audit year (12 monthly payments).
This applies to all direct loans and HUD-held and fully insured mortgages.
Any HUD approved second mortgages should be included in the figures.
(Account S1000-010) $ 28,068
- ---------------------------------------------------------------------------------------------------------------------
2. Total of 12 monthly deposits in the audit year into the Replacement Reserve
account, as required by the Regulatory Agreement even if payments may be temporarily
suspended or reduced. (Account S1000-020) $ 20,093
- ---------------------------------------------------------------------------------------------------------------------
3. Replacement Reserve or Residual Receipts releases which are included as expense
items on this Profit and Loss Statement. (Account S1000-030) $ 16,612
- ---------------------------------------------------------------------------------------------------------------------
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that
are included as expense items on this Profit and Loss Statement.
(Account S1000-040) $
- ---------------------------------------------------------------------------------------------------------------------
Page 2 of 2
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 7
41
WASHINGTON COURTS LIMITED PARTNERSHIP
071-35593
- -----------------------------------------------------------------------------------------------
SCHEDULE OF SUB-ACCOUNTS
FOR THE YEARS
ENDED DECEMBER 31,
--------------------------
ACCOUNT 2000 1999
-----------------------------------------
5990 - MISCELLANEOUS REVENUE
5990-010 Insurance proceeds 5990-020 $ -- $25,104
5990-010 Drug Elimination grant 5990-020 103,735 11,593
- -----------------------------------------------------------------------------------------------
TOTAL MISCELLANEOUS REVENUE $103,735 $36,697
===============================================================================================
6390 - MISCELLANEOUS ADMINISTRATIVE EXPENSES
6390-010 Drug Elimination expenses 6390-020 $104,924 $17,336
6390-010 Miscellaneous 6390-020 22,219 3,984
- -----------------------------------------------------------------------------------------------
TOTAL MISCELLANEOUS ADMINISTRATIVE
EXPENSES $127,143 $21,320
===============================================================================================
- -----------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 8a
42
WASHINGTON COURTS LIMITED PARTNERSHIP
071-35593
- ------------------------------------------------------------------------------
STATEMENT OF PARTNERS' EQUITY
FOR THE YEARS
ENDED DECEMBER 31,
-----------------------------
2000 1999
-----------------------------
S1100-010 BEGINNING OF YEAR $ 48,139 $ 364,211
3250 NET LOSS (560,856) (316,072)
- ------------------------------------------------------------------------------
3130 END OF YEAR $(512,717) $ 48,139
==============================================================================
- ------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 9
43
WASHINGTON COURTS LIMITED PARTNERSHIP
071-35593
- ---------------------------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
PAGE 1 OF 2
FOR THE YEARS
ENDED DECEMBER 31,
------------------------------
ACCOUNT 2000 1999
------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts:
S1200-010 Rental receipts $ 932,027 $ 980,953
S1200-020 Interest receipts 2,416 1,783
S1200-030 Other operating receipts 104,985 43,253
- ---------------------------------------------------------------------------------------------------------------------
S1200-040 Total Receipts 1,039,428 1,025,989
- ---------------------------------------------------------------------------------------------------------------------
Disbursements:
S1200-050 Administrative 256,301 65,643
S1200-070 Management fee 35,466 52,900
S1200-090 Utilities 121,179 84,248
S1200-100 Salaries and wages 67,789 96,069
S1200-110 Operating and maintenance 63,338 109,358
S1200-120 Real estate taxes 37,214 35,955
S1200-140 Property insurance 38,294 15,928
S1200-150 Miscellaneous taxes and insurance 14,391 25,820
S1200-160 Tenant security deposits 1,389 117
S1200-180 Interest on mortgages 460,151 462,021
S1200-210 Mortgage insurance premium (MIP) 26,090 24,891
S1200-220 Miscellaneous financial 7,453 2,620
- ---------------------------------------------------------------------------------------------------------------------
S1200-230 Total Disbursements 1,129,055 975,570
- ---------------------------------------------------------------------------------------------------------------------
S1200-240 NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES (89,627) 50,419
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
S1200-245 Net deposits to the mortgage escrow account (3,649) (3,013)
S1200-250 Net deposits to the reserve for replacement
account (22,395) (4,955)
S1200-330 Net purchases of fixed assets (46,262) (13,358)
- ---------------------------------------------------------------------------------------------------------------------
S1200-350 NET CASH USED IN INVESTING ACTIVITIES (72,306) (21,326)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
S1200-360 Mortgage principal payments (30,776) (28,068)
S1200-455 Entity/construction financing activities:
S1200-456 Advance from general partner S1200457 344,520 --
- ---------------------------------------------------------------------------------------------------------------------
S1200-460 NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 313,744 (28,068)
- ---------------------------------------------------------------------------------------------------------------------
S1200-470 NET INCREASE IN CASH 151,811 1,025
S1200-480 BEGINNING OF PERIOD CASH 23,640 22,615
- ---------------------------------------------------------------------------------------------------------------------
S1200T END OF PERIOD CASH $ 175,451 $ 23,640
=====================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 10
44
WASHINGTON COURTS LIMITED PARTNERSHIP
071-35593
- ------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
PAGE 2 OF 2
FOR THE YEARS
ENDED DECEMBER 31,
----------------------------
2000 1999
----------------------------
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED
BY (USED IN) OPERATING ACTIVITIES
3250 Net loss $(560,856) $(316,072)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
6600 Depreciation 268,566 267,437
6610 Amortization 18,984 18,984
Change in assets and liabilities:
S1200-490 Decrease in tenant accounts receivable -- 2,378
S1200-520 Increase in prepaid expenses (14,676) (2,721)
S1200-530 Increase in cash restricted for tenant
security deposits (2,451) (134)
S1200-540 Increase in accounts payable 101,934 46,286
S1200-560 Increase in accrued liabilities 31,715 35,227
S1200-570 Decrease in accrued interest payable (237) (216)
S1200-580 Increase in tenant security deposits held
in trust 1,061 17
S1200-590 Increase (decrease) in prepaid revenue 66,333 (767)
- ------------------------------------------------------------------------------------------------
S1200-610 NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES $ (89,627) $ 50,419
================================================================================================
- ------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 11
45
WASHINGTON COURTS LIMITED PARTNERSHIP
071-35593
- ------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (S3100-010)
ORGANIZATION (S3100-010)
Washington Courts Limited Partnership (the Partnership) was organized
as a limited partnership formed April 6, 1988 to acquire an interest
in real property located in Chicago, Illinois and to construct and
operate thereon an apartment complex (the Project) of 103 units under
Section 221(d)(4) of the National Housing Act. Such projects are
regulated by the U.S. Department of Housing and Urban Development (HUD)
and the Illinois Housing Development Authority (IHDA) as to rent charges
and operating methods. The regulatory agreements limit annual
distributions of net operating receipts to surplus cash available at the
end of each year. There was no available surplus cash at December 31,
2000 and 1999.
The following significant accounting policies have been followed in the
preparation of the financial statements:
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses.
The Partnership provides an allowance for doubtful accounts equal
to the estimated collection losses that will be incurred in
collection of all receivables. The estimated losses are based
on a review of the current status of the existing receivables.
No allowance for doubtful accounts was provided for at December 31,
2000 or 1999 as none was deemed necessary by management.
Depreciation is provided using primarily the straight-line method
over the estimated useful lives of the assets ranging from seven to
twenty-seven and a half years.
The replacement reserve can only be used for improvements to
buildings upon prior approval of HUD.
- ------------------------------------------------------------------------------
Page 12
46
WASHINGTON COURTS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
Deferred loan costs consist of fees for obtaining the HUD insured
mortgage loan and are being amortized using the straight-line
method over the life of the mortgage loan.
Low-income housing credit fees are amortized over ten years.
In December 1999, a portion of the general partnership interest was
converted to a special limited partner interest. Due to this, at
December 31, 1999 income or loss of the Partnership will be allocated
1.005% to the general partners and 98.995% to the limited partners.
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 partners on their respective income tax returns. No adjustment of
financial statement loss to tax loss is required.
2. OTHER ASSETS (S3100-X3X) (S3100-240)
Other assets consist of:
2000 1999
-------------------------
Loan costs, less amortization $520,837 $538,795
Low-income housing credit fees, less amortization -- 1,027
-------------------------------------------------------------------------------
$520,837 $539,822
===============================================================================
3. MORTGAGE PAYABLE (S3100-050)
The 9.25% mortgage note payable is insured by HUD and is payable in
monthly installments of $40,841 (including principal and interest)
through February 2031. The note is secured by a first deed of trust
on real estate.
- ------------------------------------------------------------------------------
Page 13
47
WASHINGTON COURTS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
The scheduled maturities of the mortgage payable at December 31, 2000
are as follows: (S3100-x1x)
YEAR ACCOUNT AMOUNT
-------------------------------------------------------
2001 S3100-060 $ 34,007
2002 S3100-070 37,289
2003 S3100-080 40,575
2004 S3100-090 44,492
2005 S3100-100 48,787
Thereafter S3100-110 4,743,493
-------------------------------------------------------
$4,948,643
=======================================================
4. MISCELLANEOUS CURRENT LIABILITIES (S3100-X3X) (S3100-240)
Miscellaneous current liabilities consist of:
2000 1999
----------------------------
Advances - General Partner - operations $383,192 $38,674
Advances - General Partner - Drug Elimination
Grant 9,931 7,076
Accrued expenses - Drug Elimination Grant 33,818 --
Accrued payroll taxes 2,120 --
-------------------------------------------------------------------------------------
$429,061 $45,750
=====================================================================================
5. COMMITMENTS (S3100-X3X) (S3100-240)
The Partnership has entered into regulatory agreements with HUD and IHDA
which regulate, among other things, the rents which may be charged for
apartment units in the Project, prohibit the sale of the Project without
HUD and IHDA consent, limit the annual distribution of cash flow to the
partners and otherwise regulate the relationship between the
Partnership, HUD and IHDA.
- ------------------------------------------------------------------------------
Page 14
48
WASHINGTON COURTS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
Pursuant to an agreement with HUD, under Section 8 of the Housing
Assistance Payment Program, the Partnership is entitled to receive
housing assistance payments on behalf of qualified tenants. The term
of the agreement is for a maximum of 15 years. The Partnership cannot
sell of otherwise substantially liquidate its assets during such period
that the agreement for housing assistance program with HUD is in
existence without their approval.
6. RELATED PARTY TRANSACTIONS (S3100-200)
On December 10, 1999, a transaction occurred which converted Century
Pacific Realty Corporation (CPRC) to a Special Limited Partner and
Shorebank Development assumed CPRC's previous role of Supervising
General Partner. Shorebank Development Corporation also remains the
Managing General Partner.
INCENTIVE MANAGEMENT FEE
Commencing in 1990, the Managing General Partner will receive from
Permissible Sources a non-cumulative incentive management fee equal to
the lesser of (i) 10% of the gross income of the Partnership for such
fiscal year less the management fee paid or payable in respect of such
fiscal year or (ii) seventy percent (70%) of the amount of the
Partnership's Available Cash remaining after payment of the Preferred
Distribution, the Administration Fee, and repayment of any Operating
Deficit Advances made to the Partnership.
For its services in administering the Local Affairs of the Partnership
within the state, including, without limitation, coordinating the
activities of the Partnership relating to HUD, the lender and the
agency, and overseeing local compliance with applicable regulations, the
Partnership shall be required to pay the local general partners from
Permissible Sources an annual Administrative Fee of $19,772 beginning in
1990. A portion of the Administrative Fee equal to one percent (1%) of
the gross income of the Partnership shall be payable each year from the
Partnership's Available Cash (to the extent that such Available Cash
constitutes Permissible Sources remaining after payment of the Preferred
Distribution). The balance of the Administration Fee shall be payable
from available cash (to the extent that such Available Cash constitutes
a Permissible Source) remaining after full payment of the Preferred
Distribution and repayment of any operating deficit advances. Such
payment shall be made dollar-for-dollar with payments of the Preferred
Distribution (plus unpaid amounts thereof accruing from prior taxable
years) until one of such fees is paid in full, with any remainder of
such Available Cash applied to any balance of the other such fee.
The Partnership owes the Managing General Partner $68,269 at
December 31, 2000 and 1999, respectively.
- ------------------------------------------------------------------------------
Page 15
49
WASHINGTON COURTS LIMITED PARTNERSHIP
- ------------------------------------------------------------------------------
Notes To Financial Statements (Continued)
The Investor Limited Partner will, beginning in 1989, receive from
Permissible Sources an annual cumulative cash distribution (the Annual
Preferred Distribution) of $39,545. Beginning in 1990, a portion of the
Annual Preferred Distribution equal to one percent (1%) of the annual
gross income of the Partnership (the Guaranteed Portion) shall be
distributed to the Investor Limited Partner from Permissible Sources
without regard to Partnership income. An amount of the Annual Preferred
Distribution equal to $19,772 (the Priority Portion), reduced by the
Guaranteed Portion payable for such year, shall be payable from the
Partnership's Available Cash (to the Permissible Source) after payment
of the Primary Portion of the Administration Fee and repayment of any
outstanding Operating Deficit Advances. Such payment shall be made
dollar-for-dollar with repayments of the Administration Fee (other than
the Primary Portion thereof) until one of such items is paid in full,
with any remainder of such Available Cash applied to any balance of the
other such item. Any unpaid amount of the Priority Portion with respect
to any year after 1989 shall accrue, without interest, and be
distributable to the Investor Limited Partner from Available Cash (to
the extent that such Available Cash constitutes a Permissible Source)
after payment of the Primary Portion of the Administration Fee and
repayment of any outstanding Operating Deficit Advances. Such payment
shall be made dollar-for-dollar with payments of the Administration Fee
(other than the Primary Portion thereof) until one of such items is paid
in full, with any remainder of such Available Cash (to the extent that
such Available Cash constitutes a Permissible Source) applied to any
balance of the other such item. Any remaining amounts of the Annual
Preferred Distribution after 1989, including any unpaid amount of the
Priority Portion, shall be distributable to the Investor Limited
Partner, without interest, from cash available for distribution from
Capital Transactions. The remaining unpaid balance at December 31, 2000
and 1999 amounted to $268,329 and $248,557, respectively, and is not
reflected in the accompanying balance sheet.
MANAGEMENT FEE (S3100-230)
The apartment project was managed by Century Pacific Management
Corporation, an affiliate of the general partner until November 1999
and received a fee of 5.55% of rents collected. In November 1999,
HJ Russell & Company began managing the Project. They have received
a management fee of 5.65% of rents collected.
In December 2000, DSSA Management, Inc. took over management of the
Project. They are receiving a fee of 5.65% of gross collections.
At December 31, 2000 and 1999, the outstanding management fee payable
was $14,644.
S3100-210 COMPANY NAME HJ Russell & Company
S3100-220 AMOUNT RECEIVED $35,466
- ------------------------------------------------------------------------------
Page 16
50
S2300-020 INDEPENDENT AUDITORS' REPORT
To The Partners
Washington Courts Limited Partnership
Los Angeles, California
We have audited the accompanying balance sheet of Washington Courts Limited
Partnership, Project No. 071-35593, a limited partnership, as of December 31,
1998 and 1997, and the related statements of profit and loss, partners'
equity and cash flows for the years then ended. These financial statements
are the responsibility of the Partnership's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits 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 audits 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Washington Courts Limited
Partnership as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
January 28, 1999
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
--------------------------------------------------------------------------------------
BALANCE SHEET
PAGE 1 OF 2
51
ASSETS
DECEMBER 31,
-------------------------------
1998 1997
-------------------------------
CURRENT ASSETS
1120 Cash - operations $ 22,615 $ 148,343
1130 Tenant accounts receivable 2,378 15,110
1135 Accounts receivable - HUD -- 6,870
1190 Miscellaneous current assets 100 100
1200 Miscellaneous prepaid expenses 30,382 31,174
- -------------------------------------------------------------------------------------------
1100T TOTAL CURRENT ASSETS 55,475 201,597
- -------------------------------------------------------------------------------------------
DEPOSITS HELD IN TRUST - FUNDED
1191 Tenant deposits held in trust 12,800 13,683
- -------------------------------------------------------------------------------------------
RESTRICTED DEPOSITS AND FUNDED RESERVES
1310 Escrow deposits 29,627 22,804
1320 Replacement reserve 64,524 72,078
- -------------------------------------------------------------------------------------------
1300T TOTAL DEPOSITS 94,151 94,882
- -------------------------------------------------------------------------------------------
FIXED ASSETS
1410 Land 75,300 75,300
1420 Buildings 7,066,695 7,048,175
1440 Building equipment - portable 8,061 --
1465 Office furniture and equipment 65,585 65,585
- -------------------------------------------------------------------------------------------
1400T Total Fixed Assets 7,215,641 7,189,060
1495 Less: Accumulated depreciation 2,359,398 2,093,234
- -------------------------------------------------------------------------------------------
1400N NET FIXED ASSETS 4,856,243 5,095,826
- -------------------------------------------------------------------------------------------
OTHER ASSETS
1520 Intangible assets 558,807 577,790
- -------------------------------------------------------------------------------------------
1000T TOTAL ASSETS $5,577,476 $5,983,778
===========================================================================================
- -------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 2
52
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
--------------------------------------------------------------------------------------
BALANCE SHEET
PAGE 2 OF 2
LIABILITIES
DECEMBER 31,
-------------------------------
1998 1997
-------------------------------
CURRENT LIABILITIES
2110 Accounts payable - operations $ 19,504 $ 64,320
2113 Accounts payable - entity 68,269 69,876
2120 Accrued wages payable 3,357 4,205
2123 Accrued management fee payable 20,744 5,612
2131 Accrued interest payable - first mortgage 38,599 34,350
2150 Accrued property taxes 35,328 38,120
2170 Mortgage payable - first mortgage (short-term) 28,282 25,793
2190 Miscellaneous current liabilities 6,410 2,509
2210 Prepaid revenue 767 --
- -------------------------------------------------------------------------------------------
2122T TOTAL CURRENT LIABILITIES 221,260 244,785
- -------------------------------------------------------------------------------------------
DEPOSIT AND PREPAYMENT LIABILITIES
2191 Tenant deposits held in trust (contra) 12,800 12,618
- -------------------------------------------------------------------------------------------
LONG-TERM LIABILITIES
2320 Mortgage payable - first mortgage 4,979,205 5,007,290
- -------------------------------------------------------------------------------------------
2000T TOTAL LIABILITIES 5,213,265 5,264,693
PARTNERS' EQUITY
3130 Partners' equity 364,211 719,085
- -------------------------------------------------------------------------------------------
2033T TOTAL LIABILITIES AND PARTNERS' EQUITY $5,577,476 $5,983,778
===========================================================================================
- -------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 3
53
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ---------------------------------------------------------------------------------------------------------------------
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED DECEMBER 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Rent Revenue - Gross Potential 5120 $217,046
--------------------------------------------------------------------------------------------------
Tenant Assistance Payments 5121 $815,521
--------------------------------------------------------------------------------------------------
Rent Revenue - Stores and Commercial 5140 $
--------------------------------------------------------------------------------------------------
Garage and Parking Spaces 5170 $
--------------------------------------------------------------------------------------------------
Flexible Subsidy Revenue 5180 $
RENT --------------------------------------------------------------------------------------------------
REVENUE Miscellaneous Rent Revenue 5190 $
5100 --------------------------------------------------------------------------------------------------
Excess Rent 5191 $
--------------------------------------------------------------------------------------------------
Rent Revenue/Insurance 5192 $
--------------------------------------------------------------------------------------------------
Special Claims Revenue 5193 $
--------------------------------------------------------------------------------------------------
Retained Excess Income 5194 $
--------------------------------------------------------------------------------------------------
TOTAL RENT REVENUE 5100T $1,032,567
- ---------------------------------------------------------------------------------------------------------------------
Apartments 5220 $107,608
--------------------------------------------------------------------------------------------------
Stores and Commercial 5240 $
--------------------------------------------------------------------------------------------------
Rental Concessions 5250 $
VACANCIES --------------------------------------------------------------------------------------------------
5200 Garage and Parking Space 5270 $
--------------------------------------------------------------------------------------------------
Miscellaneous 5290 $
--------------------------------------------------------------------------------------------------
TOTAL VACANCIES 5200T $ 107,608
--------------------------------------------------------------------------------------------------
NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 924,959
- ---------------------------------------------------------------------------------------------------------------------
5300 Nursing Homes/Assisted Living/Board and Care/
Other Elderly Care/Coop/ and Other Revenues 5300 $
- ---------------------------------------------------------------------------------------------------------------------
Financial Revenue - Project Operations 5410 $ 919
--------------------------------------------------------------------------------------------------
Revenue from Investments - Residual Receipts 5430 $
FINANCIAL --------------------------------------------------------------------------------------------------
REVENUE Revenue from Investments - Replacement Reserve 5440 $ 1,630
5400 --------------------------------------------------------------------------------------------------
Revenue from Investments - Miscellaneous 5490 $ 190
--------------------------------------------------------------------------------------------------
TOTAL FINANCIAL REVENUE 5400T $ 2,739
- ---------------------------------------------------------------------------------------------------------------------
Laundry and Vending Revenue 5910 $
--------------------------------------------------------------------------------------------------
Tenant Charges 5920 $ 590
--------------------------------------------------------------------------------------------------
Interest Reduction Payments Revenue 5945 $ 1,595
OTHER --------------------------------------------------------------------------------------------------
REVENUE Miscellaneous Revenue 5990 $
5900 --------------------------------------------------------------------------------------------------
TOTAL OTHER REVENUE 5900T $ 2,185
--------------------------------------------------------------------------------------------------
TOTAL REVENUE 5000T $ 929,883
- ---------------------------------------------------------------------------------------------------------------------
Conventions and Meetings 6203 $
--------------------------------------------------------------------------------------------------
Management Consultants 6204 $
--------------------------------------------------------------------------------------------------
Advertising and Marketing 6210 $ 509
--------------------------------------------------------------------------------------------------
Other Renting Expenses 6250 $ 588
--------------------------------------------------------------------------------------------------
Office Salaries 6310 $ 11,617
--------------------------------------------------------------------------------------------------
Office Expenses 6311 $ 5,788
--------------------------------------------------------------------------------------------------
Office or Model Apartment Rent 6312 $
--------------------------------------------------------------------------------------------------
Management Fee 6320 $ 47,068
ADMINISTRATIVE --------------------------------------------------------------------------------------------------
EXPENSES Manager or Superintendent Salaries 6330 $ 11,868
6200/6300 --------------------------------------------------------------------------------------------------
Administrative Rent Free Unit 6331 $
--------------------------------------------------------------------------------------------------
Legal Expense - Project 6340 $ 5,945
--------------------------------------------------------------------------------------------------
Audit Expense 6350 $ 7,761
--------------------------------------------------------------------------------------------------
Bookkeeping Fees/Accounting Services 6351 $ 3,011
--------------------------------------------------------------------------------------------------
Bad Debts 6370 $ 15,110
--------------------------------------------------------------------------------------------------
Miscellaneous Administrative Expenses 6390 $ 7,838
--------------------------------------------------------------------------------------------------
TOTAL ADMINISTRATIVE EXPENSES 6263T $ 117,103
- ---------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
--------------------------------------------------------------------------------------------------
Electricity 6450 $ 3,110
UTILITIES --------------------------------------------------------------------------------------------------
EXPENSE Water 6451 $ 14,226
6400 --------------------------------------------------------------------------------------------------
Gas 6452 $ 65,998
--------------------------------------------------------------------------------------------------
Sewer 6453 $ 7,894
--------------------------------------------------------------------------------------------------
TOTAL UTILITIES EXPENSE 6400T $ 91,228
--------------------------------------------------------------------------------------------------
TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) $ 208,331
- ---------------------------------------------------------------------------------------------------------------------
Page 1 of 2
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 4
54
Project Name: Washington Courts Limited Partnership
- ---------------------------------------------------------------------------------------------------------------------
BALANCE CARRIED FORWARD $ 208,331
- ---------------------------------------------------------------------------------------------------------------------
Payroll 6510 $ 30,288
--------------------------------------------------------------------------------------------------
Supplies 6515 $ 86,406
--------------------------------------------------------------------------------------------------
Contracts 6520 $ 50,830
--------------------------------------------------------------------------------------------------
Operating and Maintenance Rent Free Unit 6521 $
--------------------------------------------------------------------------------------------------
Garbage and Trash Removal 6525 $ 14,332
OPERATING --------------------------------------------------------------------------------------------------
MAINTENANCE Security Payroll/Contract 6530 $ 11,489
EXPENSES --------------------------------------------------------------------------------------------------
6500 Security Rent Free Unit 6531 $
--------------------------------------------------------------------------------------------------
Heating/Cooling Repairs and Maintenance 6546 $ 2,987
--------------------------------------------------------------------------------------------------
Snow Removal 6548 $
--------------------------------------------------------------------------------------------------
Vehicle and Maintenance Equipment Operation and Repairs 6570 $ 819
--------------------------------------------------------------------------------------------------
Miscellaneous Operating and Maintenance Expenses 6590 $ 21,325
--------------------------------------------------------------------------------------------------
TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 218,476
- ---------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 32,506
--------------------------------------------------------------------------------------------------
Payroll Taxes (Project's Share) 6711 $ 5,640
--------------------------------------------------------------------------------------------------
Property and Liability Insurance (Hazard) 6720 $ 14,569
--------------------------------------------------------------------------------------------------
TAXES Fidelity Bond Insurance 6721 $
AND --------------------------------------------------------------------------------------------------
INSURANCE Workmen's Compensation 6722 $ 886
6700 --------------------------------------------------------------------------------------------------
Health Insurance and Other Employee Benefits 6723 $ 6,287
--------------------------------------------------------------------------------------------------
Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 1,587
--------------------------------------------------------------------------------------------------
TOTAL TAXES AND INSURANCE 6700T $ 61,475
- ---------------------------------------------------------------------------------------------------------------------
Interest on Mortgage Payable 6820 $464,361
--------------------------------------------------------------------------------------------------
Interest on Notes Payable (LongTerm) 6830 $
FINANCIAL --------------------------------------------------------------------------------------------------
EXPENSES Interest on Notes Payable (ShortTerm) 6840 $
6800 --------------------------------------------------------------------------------------------------
Mortgage Insurance Premium/Service Charge 6850 $ 27,194
--------------------------------------------------------------------------------------------------
Miscellaneous Financial Expenses 6890 $
--------------------------------------------------------------------------------------------------
TOTAL FINANCIAL EXPENSES 6800T $ 491,555
- ---------------------------------------------------------------------------------------------------------------------
6900 Nursing Homes/ Assisted Living/ Board and Care/ Other
Elderly Care Expenses 6900 $
- ---------------------------------------------------------------------------------------------------------------------
TOTAL COST OF OPERATIONS BEFORE
DEPRECIATION AND AMORTIZATION 6000T $ 979,837
--------------------------------------------------------------------------------------------------
PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ (49,954)
--------------------------------------------------------------------------------------------------
Depreciation Expense 6600 $266,164
--------------------------------------------------------------------------------------------------
Amortization Expense 6610 $ 18,984
--------------------------------------------------------------------------------------------------
TOTAL DEPRECIATION AND AMORTIZATION $ 285,148
--------------------------------------------------------------------------------------------------
OPERATING PROFIT OR (LOSS) 5060N $ (335,102)
- ---------------------------------------------------------------------------------------------------------------------
Officer's Salaries 7110 $
--------------------------------------------------------------------------------------------------
Legal Expenses 7120 $
--------------------------------------------------------------------------------------------------
Federal, State, and Other Income Taxes 7130 $
--------------------------------------------------------------------------------------------------
CORPORATE OR Interest Income 7140 $
MORTGAGOR --------------------------------------------------------------------------------------------------
ENTITY Interest on Notes Payable 7141 $
EXPENSES --------------------------------------------------------------------------------------------------
7100 Interest on Mortgage Payable 7142 $
--------------------------------------------------------------------------------------------------
Other Expenses (Asset supervisory fees) 7190 $ 19,772
--------------------------------------------------------------------------------------------------
NET ENTITY EXPENSES 7100T $ 19,772
--------------------------------------------------------------------------------------------------
PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $ (354,874)
- ---------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense
sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or
more, attach a separate schedule describing or explaining the miscellaneous income or expense.
- ---------------------------------------------------------------------------------------------------------------------
PART II
- ---------------------------------------------------------------------------------------------------------------------
1. Total mortgage principal payments required during the audit year (12 monthly payments).
This applies to all direct loans and HUD-held and fully insured mortgages.
Any HUD approved second mortgages should be included in the figures.
(Account S1000-010) $ 25,793
- ---------------------------------------------------------------------------------------------------------------------
2. Total of 12 monthly deposits in the audit year into the Replacement Reserve account,
as required by the Regulatory Agreement even if payments may be temporarily
suspended or reduced. (Account S1000-020) $ 20,093
- ---------------------------------------------------------------------------------------------------------------------
3. Replacement Reserve or Residual Receipts releases which are included as expense
items on this Profit and Loss Statement. (Account S1000-030) $ 21,217
- ---------------------------------------------------------------------------------------------------------------------
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that
are included as expense items on this Profit and Loss Statement. (Account S1000-040) $
- ---------------------------------------------------------------------------------------------------------------------
Page 2 of 2
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 5
55
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ---------------------------------------------------------------------------------------------------------------------
STATEMENT OF PROFIT AND LOSS
FOR THE YEAR ENDED DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------------------------
PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Rent Revenue - Gross Potential 5120 $244,975
--------------------------------------------------------------------------------------------------
Tenant Assistance Payments 5121 $817,588
--------------------------------------------------------------------------------------------------
Rent Revenue - Stores and Commercial 5140 $
--------------------------------------------------------------------------------------------------
Garage and Parking Spaces 5170 $
--------------------------------------------------------------------------------------------------
Flexible Subsidy Revenue 5180 $
RENT --------------------------------------------------------------------------------------------------
REVENUE Miscellaneous Rent Revenue 5190 $
5100 --------------------------------------------------------------------------------------------------
Excess Rent 5191 $
--------------------------------------------------------------------------------------------------
Rent Revenue/Insurance 5192 $
--------------------------------------------------------------------------------------------------
Special Claims Revenue 5193 $
--------------------------------------------------------------------------------------------------
Retained Excess Income 5194 $
--------------------------------------------------------------------------------------------------
TOTAL RENT REVENUE 5100T $1,062,563
- ---------------------------------------------------------------------------------------------------------------------
Apartments 5220 $ 84,065
--------------------------------------------------------------------------------------------------
Stores and Commercial 5240 $
--------------------------------------------------------------------------------------------------
Rental Concessions 5250 $
VACANCIES --------------------------------------------------------------------------------------------------
5200 Garage and Parking Space 5270 $
--------------------------------------------------------------------------------------------------
Miscellaneous 5290 $
--------------------------------------------------------------------------------------------------
TOTAL VACANCIES 5200T $ 84,065
--------------------------------------------------------------------------------------------------
NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 978,498
- ---------------------------------------------------------------------------------------------------------------------
5300 Nursing Homes/Assisted Living/Board and Care/
Other Elderly Care/Coop/ and Other Revenues 5300 $
- ---------------------------------------------------------------------------------------------------------------------
Financial Revenue - Project Operations 5410 $ 4,754
--------------------------------------------------------------------------------------------------
Revenue from Investments - Residual Receipts 5430 $
FINANCIAL --------------------------------------------------------------------------------------------------
REVENUE Revenue from Investments - Replacement Reserve 5440 $ 1,475
5400 --------------------------------------------------------------------------------------------------
Revenue from Investments - Miscellaneous 5490 $
--------------------------------------------------------------------------------------------------
TOTAL FINANCIAL REVENUE 5400T $ 6,229
- ---------------------------------------------------------------------------------------------------------------------
Laundry and Vending Revenue 5910 $ 1,204
--------------------------------------------------------------------------------------------------
Tenant Charges 5920 $ 3,330
--------------------------------------------------------------------------------------------------
Interest Reduction Payments Revenue 5945 $
OTHER --------------------------------------------------------------------------------------------------
REVENUE Miscellaneous Revenue (Schedule) 5990 $ 48,864
5900 --------------------------------------------------------------------------------------------------
TOTAL OTHER REVENUE 5900T $ 53,398
--------------------------------------------------------------------------------------------------
TOTAL REVENUE 5000T $1,038,125
- ---------------------------------------------------------------------------------------------------------------------
Conventions and Meetings 6203 $
--------------------------------------------------------------------------------------------------
Management Consultants 6204 $
--------------------------------------------------------------------------------------------------
Advertising and Marketing 6210 $ 285
--------------------------------------------------------------------------------------------------
Other Renting Expenses 6250 $
--------------------------------------------------------------------------------------------------
Office Salaries 6310 $ 17,046
--------------------------------------------------------------------------------------------------
Office Expenses 6311 $ 1,326
--------------------------------------------------------------------------------------------------
Office or Model Apartment Rent 6312 $
--------------------------------------------------------------------------------------------------
Management Fee 6320 $ 53,731
ADMINISTRATIVE --------------------------------------------------------------------------------------------------
EXPENSES Manager or Superintendent Salaries 6330 $
6200/6300 --------------------------------------------------------------------------------------------------
Administrative Rent Free Unit 6331 $
--------------------------------------------------------------------------------------------------
Legal Expense - Project 6340 $ 22,656
--------------------------------------------------------------------------------------------------
Audit Expense - Project 6350 $ 7,700
--------------------------------------------------------------------------------------------------
Bookkeeping Fees/Accounting Services 6351 $ 1,843
--------------------------------------------------------------------------------------------------
Bad Debts 6370 $ 20,977
--------------------------------------------------------------------------------------------------
Miscellaneous Administrative Expenses (Schedule) 6390 $ 33,301
--------------------------------------------------------------------------------------------------
TOTAL ADMINISTRATIVE EXPENSES 6263T $ 158,865
- ---------------------------------------------------------------------------------------------------------------------
Fuel Oil/Coal 6420 $
--------------------------------------------------------------------------------------------------
Electricity (Light and Misc. Power) 6450 $ 7,584
UTILITIES --------------------------------------------------------------------------------------------------
EXPENSE Water 6451 $ 28,080
6400 --------------------------------------------------------------------------------------------------
Gas 6452 $100,684
--------------------------------------------------------------------------------------------------
Sewer 6453 $
- ---------------------------------------------------------------------------------------------------------------------
TOTAL UTILITIES EXPENSE 6400T $ 136,348
- ---------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) $ 295,213
- ---------------------------------------------------------------------------------------------------------------------
Page 1 of 2
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 6
56
Project Name: Washington Courts Limited Partnership
- ---------------------------------------------------------------------------------------------------------------------
BALANCE CARRIED FORWARD $ 295,213
- ---------------------------------------------------------------------------------------------------------------------
Payroll 6510 $ 41,311
--------------------------------------------------------------------------------------------------
Supplies 6515 $ 32,086
--------------------------------------------------------------------------------------------------
Contracts 6520 $ 40,457
--------------------------------------------------------------------------------------------------
Operating and Maintenance Rent Free Unit 6521 $
--------------------------------------------------------------------------------------------------
Garbage and Trash Removal 6525 $ 16,636
OPERATING --------------------------------------------------------------------------------------------------
MAINTENANCE Security Payroll/Contract 6530 $ 3,220
EXPENSES --------------------------------------------------------------------------------------------------
6500 Security Rent Free Unit 6531 $
--------------------------------------------------------------------------------------------------
Heating/Cooling Repairs and Maintenance 6546 $ 19,583
--------------------------------------------------------------------------------------------------
Snow Removal 6548 $ 294
--------------------------------------------------------------------------------------------------
Vehicle and Maintenance Equipment Operation and Repairs 6570 $ 488
--------------------------------------------------------------------------------------------------
Miscellaneous Operating and Maintenance Expenses 6590 $ 2,563
--------------------------------------------------------------------------------------------------
TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 156,638
- ---------------------------------------------------------------------------------------------------------------------
Real Estate Taxes 6710 $ 37,220
--------------------------------------------------------------------------------------------------
Payroll Taxes (Project's Share) 6711 $ 6,386
--------------------------------------------------------------------------------------------------
Property and Liability Insurance (Hazard) 6720 $ 15,008
TAXES --------------------------------------------------------------------------------------------------
AND Fidelity Bond Insurance 6721 $
INSURANCE --------------------------------------------------------------------------------------------------
6700 Workmen's Compensation 6722 $ 2,168
--------------------------------------------------------------------------------------------------
Health Insurance and Other Employee Benefits 6723 $ 7,432
--------------------------------------------------------------------------------------------------
Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 1,274
--------------------------------------------------------------------------------------------------
TOTAL TAXES AND INSURANCE 6700T $ 69,488
- ---------------------------------------------------------------------------------------------------------------------
Interest on Mortgage Payable 6820 $
--------------------------------------------------------------------------------------------------
Interest on Notes Payable (LongTerm) 6830 $466,566
FINANCIAL --------------------------------------------------------------------------------------------------
EXPENSES Interest on Notes Payable (ShortTerm) 6840 $
6800 --------------------------------------------------------------------------------------------------
Mortgage Insurance Premium/Service Charge 6850 $ 25,267
--------------------------------------------------------------------------------------------------
Miscellaneous Financial Expenses 6890 $ 18,085
--------------------------------------------------------------------------------------------------
TOTAL FINANCIAL EXPENSES 6800T $ 509,918
- ---------------------------------------------------------------------------------------------------------------------
6900 Nursing Homes/ Assisted Living/ Board and Care/ Other
Elderly Care Expenses 6900 $
- ---------------------------------------------------------------------------------------------------------------------
TOTAL COST OF OPERATIONS BEFORE
DEPRECIATION AND AMORTIZATION 6000T $1,031,257
--------------------------------------------------------------------------------------------------
PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ 6,868
--------------------------------------------------------------------------------------------------
Depreciation Expense 6600 $261,542
--------------------------------------------------------------------------------------------------
Amortization Expense 6610 $
--------------------------------------------------------------------------------------------------
TOTAL DEPRECIATION AND AMORTIZATION $ 261,542
--------------------------------------------------------------------------------------------------
OPERATING PROFIT OR (LOSS) 5060N $ (254,674)
- ---------------------------------------------------------------------------------------------------------------------
Officer's Salaries 7110 $
--------------------------------------------------------------------------------------------------
Legal Expenses 7120 $
--------------------------------------------------------------------------------------------------
Federal, State, and Other Income Taxes 7130 $
--------------------------------------------------------------------------------------------------
CORPORATE OR Interest Income 7140 $
MORTGAGOR --------------------------------------------------------------------------------------------------
ENTITY Interest on Notes Payable 7141 $
EXPENSES --------------------------------------------------------------------------------------------------
7100 Interest on Mortgage Payable 7142 $
--------------------------------------------------------------------------------------------------
Other Expenses 7190 $ 20,797
--------------------------------------------------------------------------------------------------
NET ENTITY EXPENSES 7100T $ 20,797
--------------------------------------------------------------------------------------------------
PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $ (275,471)
- ---------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense
sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or
more, attach a separate schedule describing or explaining the miscellaneous income or expense.
- ---------------------------------------------------------------------------------------------------------------------
PART II
- ---------------------------------------------------------------------------------------------------------------------
1. Total mortgage principal payments required during the audit year (12 monthly payments).
This applies to all direct loans and HUD-held and fully insured mortgages.
Any HUD approved second mortgages should be included in the figures.
(Account S1000-010) $ 21,479
- ---------------------------------------------------------------------------------------------------------------------
2. Total of 12 monthly deposits in the audit year into the Replacement Reserve account,
as required by the Regulatory Agreement even if payments may be temporarily
suspended or reduced. (Account S1000-020) $ 18,414
- ---------------------------------------------------------------------------------------------------------------------
3. Replacement Reserve or Residual Receipts releases which are included as expense
items on this Profit and Loss Statement. (Account S1000-030) $ --
- ---------------------------------------------------------------------------------------------------------------------
4. Project Improvement Reserve Releases under the Flexible Subsidy Program that
are included as expense items on this Profit and Loss Statement.
(Account S1000-040) $
- ---------------------------------------------------------------------------------------------------------------------
Page 2 of 2
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 7
57
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ------------------------------------------------------------------------------
STATEMENT OF PARTNERS' EQUITY
FOR THE YEARS
ENDED DECEMBER 31,
-----------------------------
1998 1997
-----------------------------
S1100-010 BEGINNING OF YEAR $ 719,085 $1,014,328
3250 NET LOSS (354,874) (275,471)
Distributions -- (19,772)
- ------------------------------------------------------------------------------
3130 END OF YEAR $ 364,211 $ 719,085
==============================================================================
- ------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 8
58
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
- ---------------------------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
PAGE 1 OF 2
FOR THE YEARS
ENDED DECEMBER 31,
------------------------------
ACCOUNT 1998 1997
------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts:
S1200-010 Rental receipts $ 945,328 $ 958,685
S1200-020 Interest receipts 2,739 6,229
S1200-030 Other operating receipts 2,185 53,398
- ---------------------------------------------------------------------------------------------------------------------
S1200-040 Total Receipts 950,252 1,018,312
- ---------------------------------------------------------------------------------------------------------------------
Disbursements:
S1200-050 Administrative 98,694 88,043
S1200-070 Management fee 31,936 53,327
S1200-090 Utilities 86,102 136,348
S1200-100 Salaries and wages 54,621 --
S1200-110 Operating and maintenance 182,086 126,918
S1200-120 Real estate taxes 35,298 36,305
S1200-140 Property insurance 22,537 24,118
S1200-150 Miscellaneous taxes and insurance 5,640 7,660
S1200-160 Tenant security deposits (1,065) (194)
S1200-180 Interest on mortgages 460,112 466,746
S1200-210 Mortgage insurance premium (MIP) 27,194 25,267
S1200-220 Miscellaneous financial -- 125
- ---------------------------------------------------------------------------------------------------------------------
S1200-230 Total Disbursements 1,003,155 964,663
- ---------------------------------------------------------------------------------------------------------------------
S1200-240 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (52,903) 53,649
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
S1200-245 Net (deposits to) withdrawals from the
mortgage escrow account (6,823) 5,712
S1200-250 Net (deposits to) withdrawals from the
reserve for replacement account 7,554 (19,889)
S1200-330 Net purchases of fixed assets (26,581) (5,311)
- ---------------------------------------------------------------------------------------------------------------------
S1200-350 NET CASH USED IN INVESTING ACTIVITIES (25,850) (19,488)
- ---------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
S1200-360 Mortgage principal payments (25,596) (21,479)
S1200-450 Other financing activities -- 298
S1200-455 Entity/Construction financing activities:
S1200-456 Administrative fee paid to general
partner S1200-457 (21,379) (39,544)
- ---------------------------------------------------------------------------------------------------------------------
S1200-460 NET CASH USED IN FINANCING ACTIVITIES (46,975) (60,725)
- ---------------------------------------------------------------------------------------------------------------------
S1200-470 NET DECREASE IN CASH AND CASH EQUIVALENTS (125,728) (26,564)
S1200-480 BEGINNING OF PERIOD CASH 148,343 174,907
- ---------------------------------------------------------------------------------------------------------------------
S1200T END OF PERIOD CASH $ 22,615 $ 148,343
=====================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------
See the accompanying notes to financial statements. Page 9
59
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
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STATEMENT OF CASH FLOWS
PAGE 2 OF 2
FOR THE YEARS
ENDED DECEMBER 31,
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ACCOUNT 1998 1997
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RECONCILIATION OF NET LOSS TO NET CASH PROVIDED
BY (USED IN) OPERATING ACTIVITIES
3250 Net loss $ (354,874) $ (275,471)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
6600 Depreciation 266,164 261,543
6610 Amortization 18,984 18,984
Change in assets and liabilities:
S1200-490 Decrease in tenant accounts
receivable 12,732 1,773
S1200-500 (Increase) decrease in accounts
receivable - other 6,870 (786)
S1200-510 Decrease in accrued receivable -- 177
S1200-520 Decrease in prepaid expenses 792 490
S1200-530 (Increase) decrease in cash restricted
for tenant security deposits 883 (157)
S1200-540 Increase (decrease) in accounts payable (44,816) 26,973
S1200-560 Increase in accrued liabilities 15,392 --
S1200-570 Increase in accrued interest payable 4,249 --
S1200-580 Increase in tenant security deposits
held in trust 182 351
S1200-590 Increase in prepaid revenue 767 --
S1200-605 Increase in entity/construction
liability accounts
S1200-606 Administrative fee paid to general
partner S1200457 19,772 19,772
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S1200-610 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ (52,903) $ 53,649
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See the accompanying notes to financial statements. Page 10
60
WASHINGTON COURTS LIMITED PARTNERSHIP
HUD PROJECT NO: 071-35593
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NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (S3100-010)
ORGANIZATION (S3100-010)
The Partnership is organized as a limited partnership formed April 6,
1988 to acquire an interest in real property located in Chicago,
Illinois and to construct and operate thereon an apartment complex of
103 units under Section 221(d)(4) of the National Housing Act. Such
projects are regulated by the U.S. Department of Housing and Urban
Development (HUD) and the Illinois Housing Development Authority (IDHA)
as to rent charges and operating methods. The regulatory agreements
limit annual distributions of net operating receipts to "surplus cash"
available at the end of each year. There was no available "surplus cash"
at December 31, 1998.
The following significant accounting policies have been followed in the
preparation of the financial statements:
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported revenues and expenses.
The Partnership provides an allowance for doubtful accounts equal
to the estimated collection losses that will be incurred in
collection of all receivables. The estimated losses are based on
a review of the current status of the existing receivables.
No allowance for doubtful accounts was provided for at December 31,
1998 or 1997 as none was deemed necessary by management.
Depreciation is provided using primarily the straight-line method
over the estimated useful lives of the assets ranging from seven to
twenty-seven and a half years.
The replacement reserve can only be used for improvements to
buildings upon prior approval of HUD.
Deferred loan costs consist of fees for obtaining the HUD insured
mortgage loan and are being amortized using the straight-line
method over the life of the mortgage loan.
Low income housing credit fees are amortized over ten years.
Income or loss of the Partnership is allocated 1.005% to the general
partners and 98.995%
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WASHINGTON COURTS LIMITED PARTNERSHIP
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Notes To Financial Statements (Continued)
to the limited partners. 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 partners on their respective income tax
returns. No adjustment of financial statement loss to tax loss is
required.
2. OTHER ASSETS (S3100-X3X) (S3100-240)
Other assets consist of:
1998 1997
------------------------
Loan costs, less amortization $556,754 $ --
Low income housing credit fees, less amortization 2,053 --
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$558,807 $ --
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3. MORTGAGE PAYABLE (S3100-050)
The 9.25% mortgage note payable is insured by HUD and is payable in
monthly installments of $40,841 (including principal and interest)
through February 2031. The note is secured by a first deed of trust
on real estate.
The scheduled maturities of the mortgage payable at December 31, 1998
are as follows: (S3100-x1x)
YEAR ACCOUNT AMOUNT
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1999 S3100-060 $ 28,282
2000 S3100-070 31,013
2001 S3100-080 34,007
2002 S3100-090 37,289
2003 S3100-100 40,575
Thereafter S3100-110 4,836,321
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$5,007,487
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WASHINGTON COURTS LIMITED PARTNERSHIP
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Notes To Financial Statements (Continued)
4. COMMITMENTS (S3100-X3X) (S3100-240)
The partnership has entered into regulatory agreements with HUD and
IHDA which regulate, among other things, the rents which may be charged
for apartment units in the Project, prohibit the sale of the Project
without HUD and IHDA consent, limit the annual distribution of cash flow
to the partners and otherwise regulate the relationship between the
Partnership, HUD and IHDA
Pursuant to an agreement with HUD, under Section 8 of the Housing
Assistance Payment Program, the Partnership is entitled to receive
housing assistance payments on behalf of qualified tenants. The term
of the agreement is for a maximum of 15 years. The Partnership cannot
sell of otherwise substantially liquidate its assets during each period
that the agreement for housing assistance program with HUD is in
existence without their approval.
5. RELATED PARTY TRANSACTIONS (S3100-200)
INCENTIVE MANAGEMENT FEE
Commencing in 1990, the Managing General Partner will receive from
Permissible Sources a non-cumulative incentive management fee equal to
the lesser of (i) 10% of the gross income of the Partnership for such
fiscal year less the management fee paid or payable in respect of such
fiscal year or (ii) seventy percent (70%) of the amount of the
Partnership's Available Cash remaining after payment of the Preferred
Distribution, the Administration Fee, and repayment of any Operating
Deficit Advances made to the Partnership.
For its services in administering the Local Affairs of the Partnership
within the state, including, without limitation, coordinating the
activities of the Partnership relating to HUD, the lender and the
agency, and overseeing local compliance with applicable regulations,
the Partnership shall be required to pay the local general partners from
Permissible Sources an annual Administrative Fee of $19,772 beginning in
1990. A portion of the Administrative Fee equal to one percent (1%) of
the gross income of the Partnership shall be payable each year from the
Partnership's Available Cash (to the extent that such Available Cash
constitutes Permissible Sources remaining after payment of the Preferred
Distribution). The balance of the Administration Fee shall be payable
from available cash (to the extent that such Available Cash constitutes
a Permissible Source) remaining after full payment of the Preferred
Distribution and repayment of any operating deficit advances, such
payment to be made dollar-for-dollar with payments of the Preferred
Distribution (plus unpaid amounts thereof accruing from prior taxable
years) until one of such fees is paid in full, with any remainder of
such Available Cash applied to any balance of the other such fee.
The Partnership owes the Managing General Partner $68,269 and $69,876
at December 31, 1998 and 1997, respectively.
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The Investor Limited Partner will, beginning in 1989, receive from
Permissible Sources an annual cumulative cash distribution (the "Annual
Preferred Distribution") of $39,545. Beginning in 1990, a portion of
the Annual Preferred Distribution equal to one percent (1%) of the
annual gross income of the Partnership (the "Guaranteed Portion")
shall be distributed to the Investor Limited Partner from Permissible
Sources without regard to Partnership income. An amount of the Annual
Preferred Distribution equal to $19,772 (the "Priority Portion"),
reduced by the Guaranteed Portion payable for such year, shall be
payable from the Partnership's Available Cash (to the Permissible
Source) after payment of the Primary Portion of the Administration Fee
and repayment of any outstanding Operating Deficit Advances, such
payment to be made dollar-for-dollar with repayments of the
Administration Fee (other than the Primary Portion thereof) until one
of such items is paid in full, with any remainder of such Available
Cash applied to any balance of the other such item. Any unpaid amount
of the Priority Portion with respect to any year after 1989 shall
accrue, without interest, and be distributable to the Investor Limited
Partner from Available Cash (to the extent that such Available Cash
constitutes a Permissible Source) after payment of the Primary Portion
of the Administration Fee and repayment of any outstanding Operating
Deficit Advances, such payment to be made dollar-for-dollar with
payments of the Administration Fee (other than the Primary Portion
thereof) until one of such items is paid in full, with any remainder of
such Available Cash (to the extent that such Available Cash constitutes
a Permissible Source) applied to any balance of the other such item.
Any remaining amounts of the Annual Preferred Distribution after 1989,
including any unpaid amount of the Priority Portion, shall be
distributable to the Investor Limited Partner, without interest, from
cash available for distribution from Capital Transactions. The
remaining unpaid balance at December 31, 1998 amounted to $228,785.
MANAGEMENT FEE (S3100-230)
The apartment project was managed by a corporation which is a general
partner for the first four months of the year and received a fee of
5.55% of rents collected. Century Pacific Management Corporation,
an affiliate of the general partner, took over management on May 1, 1998
and receives a fee of 5.55% of rents collected. The management fee was
$47,068 in 1998 and $53,731 in 1997. Management fees payable at
December 31, 1998 and 1997 are $20,744 and $5,612, respectively.
S3100-210 COMPANY NAME Century Pacific Realty Corporation
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S3100-220 AMOUNT RECEIVED $21,379
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S3100-210 COMPANY NAME Century Pacific Management Corporation
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S3100-220 AMOUNT RECEIVED $15,000
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S3100-210 COMPANY NAME Shorebank Development Corporation
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S3100-220 AMOUNT RECEIVED $16,936
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