UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
Housing Programs Limited
(Name of Registrant as Specified In Its Charter)
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[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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HOUSING PROGRAMS LIMITED
CONSENT SOLICITATION STATEMENT
Dear Limited Partner:
We are writing to recommend and seek your consent to amendments to the
agreement of limited partnership (the "Partnership Agreement") of Housing
Programs Limited (the "Partnership"). We believe that these amendments (the
"Amendments") will facilitate the sale of the Partnership's interests (the
"Project Interests") in the local limited partnerships that own the low income
housing projects (the "Projects") in which the Partnership has invested. We are
seeking your consent to amend the Partnership Agreement to:
o eliminate the requirement that the cash proceeds from the sale of an
individual Project or Project Interest must be at least as great as
the tax liability to the limited partners resulting from that sale;
and
o modify the provision in the Partnership Agreement that requires
limited partner approval for a sale of all or substantially all assets
so that a sale of a single Project (or a sale of Project Interests
related to a single Project) does not require limited partner
approval, even if all Projects or Project Interests are ultimately
sold.
We believe that the Amendments are fair to the limited partners, and we
recommend that you "CONSENT" to the Amendments. You should note, however, that
our recommendation is subject to the following conflicts of interest and risks,
as described more fully in this Consent Solicitation Statement in the section
entitled "THE PROPOSED AMENDMENTS--Risks and Disadvantages of the Amendments":
o The Amendments will permit the general partners to initiate or consent
to a sale of a Project or Project Interests in transactions that
result in tax liabilities to limited partners in excess of the cash
proceeds arising from such disposition.
o NAPICO and HPC II, general partners of the Partnership, have a
conflict of interest in determining when, and at what price, to
initiate or consent to the sale of a Project or Project Interest,
because their controlling stockholder and the limited partners, both
of whom are owed fiduciary duties, could have conflicting interests in
such a sale.
o The general partners are entitled to receive disposition fees upon a
sale of a Project, which they would not receive in a foreclosure, and
therefore have a conflict of interest in recommending the Amendments.
o Expenses, including disposition fees paid to the general partners, may
consume all or substantially all of the net proceeds from a
disposition.
o The Amendments will permit the general partners to initiate or consent
to a sale of all or substantially all of the Partnership's assets
without limited partner approval if the assets are sold in multiple
transactions that do not involve, and are not part of a series of
related transactions involving, the sale of all or substantially all
of the Projects (or Project Interests) or if the asset to be sold is a
single Project (or the Project Interests related to a single Project).
We urge you to read carefully this Consent Solicitation Statement before
completing your consent card. Your consent is important. Approval requires the
consent of a majority of the outstanding limited partner interests. Failure to
return your consent card by 5:00 p.m. EST on January 25, 2006 will be treated
as a consent to the Amendments. Please sign, date and return the enclosed
consent card as promptly as possible.
We urge you to consult your tax advisor regarding the federal, state,
local and other tax consequences to you of a sale or other disposition of a
Project or Project Interests.
If you have any questions about this consent solicitation, please do not
hesitate to contact The Altman Group, the Partnership's consent solicitation
agent, at (800) 217-9608.
Very truly yours,
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
HOUSING PROGRAMS CORPORATION II,
General Partner of Housing Programs Limited
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of this consent solicitation statement
or determined if this consent solicitation statement is truthful or complete.
Any representation to the contrary is a criminal offense.
This Consent Solicitation Statement and the enclosed form of Consent Card
are first being mailed to limited partners on or about January 5, 2006.
BACKGROUND
The Partnership is a limited partnership that was formed under the
laws of the State of California in 1984. As of January 4, 2006, there were
6,105 units (the "Units") of limited partnership interest outstanding. The
general partners of the Partnership are National Partnership Investments Corp.,
a California corporation ("NAPICO"), National Partnership Investments
Associates (also known as "Coast Housing Investments Associates"), a California
limited partnership ("NPIA"), and Housing Programs Corporation II, a Delaware
corporation ("HPC II"). NAPICO has primary responsibility for the performance
of any duties required to be performed by the general partners, and NAPICO has
the sole and final discretion to manage and control the business of the
Partnership and make all decisions relating to it. The Partnership has no
employees of its own.
The principal business of the Partnership is to invest, directly or
indirectly, in other limited partnerships that own or lease and operate
federal, state and local government-assisted housing projects. The
Partnership's original objectives were to own and operate real estate assets
for investment so as to obtain (i) tax benefits for the limited partners, (ii)
reasonable protection for the Partnership's capital investments, (iii)
potential for appreciation, subject to considerations of capital preservation
and (iv) potential for future cash distributions from operations (on a limited
basis), refinancings or sales of assets. We have been successful in
accomplishing the Partnership's original objectives. Through December 31, 1999,
the Partnership had provided the limited partners with cumulative tax benefits
(assuming the maximum applicable individual federal income tax rates and
passive loss limitations) and cash distributions of approximately 74.5% of
their original capital contributions. In 1986, however, the tax laws changed in
such a way as to substantially reduce the ongoing tax benefits to the limited
partners. As a result, we determined that the best course of action was to
facilitate the sale of a majority of the Partnership's interests in real
property, subject to the consent of general partners of local limited
partnerships where required.
The Partnership currently holds Project Interests in four Projects.
The mortgage loans of these Projects are payable to or insured by various
governmental agencies. The Partnership, as a limited partner of the local
limited partnerships, does not exercise control over the activities and
operations of the local limited partnerships that own the Projects. However,
the general partner of one of the local limited partnerships has indicated that
it will take action pursuant to NAPICO's direction. The general partner of each
local limited partnership retains responsibility for maintaining, operating and
managing the Projects. In some cases, the Partnership has the right to initiate
(or to cause the general partner of the local limited partnership to initiate)
the sale of a Project. In other cases, the sale of a Project requires the
consent of the general partner of the local limited partnership that owns that
Project. In some cases, the sale of a Project requires the Partnership's
consent. In some cases, the sale of Project Interests in a local limited
partnership requires the consent of the general partner of that partnership. As
a limited partner, the Partnership's risk of loss related to any local limited
partnership is limited to the amount of its investment in that partnership.
One of the Projects, Cloverdale Heights Apartments ("Cloverdale"), a
100-unit Project in Crawfordsville, Indiana, is subject to a purchase money
note secured by the Partnership's (and the local general partner's) interests
in the local limited partnership that owns Cloverdale. This note matured in
December 2000, with an aggregate of over $2.5 million in unpaid principal and
accrued interest as of September 30, 2005. Cloverdale does not have sufficient
funds to pay off the note, and there is substantial doubt that a future sale of
Cloverdale or the income from operations of Cloverdale will be sufficient to
pay off the note. As a result, the Partnership's interest in Cloverdale has
been at risk of foreclosure for several years. Currently, Cloverdale operates
at a deficit. An entity unaffiliated with NAPICO has offered to buy Cloverdale
for a purchase price of $1.25 million. This sale is contingent on, among other
things, approval of the U.S. Department of Housing and Urban Development. The
holder of the purchase money note has agreed to substantially discount the note
such that the Partnership would receive $75,000 from the sale. If the purchase
money note were not discounted, the Partnership would not receive any proceeds
from the sale. We believe that it would be in the best interest of the limited
partners for the Partnership to consent to this sale because the Partnership
will receive $0 if its interest in Cloverdale is foreclosed. We estimate that
the net cash proceeds from the sale would be $12 per Unit. We estimate that the
resulting taxable income to a limited partner who acquired Units in the
original offering would be $182 per Unit. As a result, the tax liability of the
limited partners resulting from the sale could exceed the cash proceeds from
the sale. The Partnership Agreement currently prohibits a sale under these
circumstances. The first Amendment described below would eliminate this
prohibition and allow the Partnership to consent to the proposed sale of
Cloverdale.
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THE PROPOSED AMENDMENTS
The full text of the Amendments is attached as Annex A hereto. The
opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the legality of the
proposed Amendments is attached as Annex B hereto. We are seeking your consent
to amend the Partnership Agreement in the following ways:
Permit Sales Where the Cash Proceeds Would Be Less Than the Tax Liability
The Partnership Agreement currently prohibits the Partnership from
selling any Project or Project Interest if the cash proceeds from such sale
would be less than the taxes at the then maximum state and federal tax rates.
We are seeking your approval to amend the Partnership Agreement to eliminate
this prohibition. This Amendment would allow the Partnership to initiate or
consent to the sale of a Project or Project Interests in situations where the
cash proceeds are less than the limited partners' tax liability associated with
the sale. We urge you to consult your tax advisor regarding the federal, state,
local and other tax consequences to you of a sale or other disposition of a
Project or Project Interests.
Amend the "Sale of All or Substantially All Assets" Provision
The Partnership Agreement currently prohibits the Partnership from
selling all or substantially all of the Partnership's assets without limited
partner consent. We are seeking your consent to modify this provision so that a
sale of a single Project (or a sale of Project Interests related to a single
Project) that is not part of a series of related transactions involving the
sale of multiple Projects (or Project Interests related to multiple Projects)
that constitute all or substantially all of the Projects does not require
limited partner approval, even if all Projects (or Project Interests) are
ultimately sold.
Benefits of the Amendments
We believe that the Amendments will benefit the Partnership for the
following reasons:
o The Amendments will give the Partnership greater flexibility in initiating
or consenting to sales of Projects or Project Interests. In some cases, we
believe that the Partnership should be permitted to initiate or consent to
a sale of a Project or Project Interests at a price that results in cash
proceeds less than the resulting tax liability to the limited partners.
The first Amendment would allow such sales without the delay and expense
of soliciting the consent of limited partners each time such a sale is
proposed. We believe that the vast majority of potential benefits from
investment in the Partnership have been realized, and that most limited
partners are not realizing material benefits from continuing to own their
limited partnership interests. The Partnership is not currently realizing
sufficient cash flow from operating activities to generate distributions
to the limited partners and does not anticipate realizing sufficient cash
flow from future operating activities to enable it to make distributions
to limited partners. The Partnership realized net losses of approximately
$69,000 and $190,000 for the year ended December 31, 2004 and the nine
months ended September 30, 2005, respectively. The Partnership realized a
net increase of approximately $58,000 and a net decrease of approximately
$70,000 in cash and cash equivalents for the year ended December 31, 2004
and the nine months ended September 30, 2005, respectively. As of
September 30, 2005, the Partnership had approximately $214,000 in cash and
cash equivalents, but had approximately $39,000 in accounts payable,
$55,000 in loans due to NAPICO and $5.8 million in principal and accrued
interest payable on matured notes. Although we review potential
dispositions of Projects or Project Interests on a case-by-case basis, in
light of our recent losses and the limited cash flow currently generated
by the Projects' operations, we believe that it is in the best interest of
the Partnership and its limited partners to facilitate the disposition of
Projects and Project Interests. Accordingly, the Partnership's current
business strategy is to facilitate the orderly disposition of the Projects
and Project Interests, subject to the consent of general partners of local
limited partnerships where required. We believe that the proposed
Amendments will improve our ability to divest the Projects and Project
Interests more quickly and, as a result, may enable us to make
distributions of net sales proceeds to the limited partners sooner (and,
potentially, in greater amounts) than if the Amendments are not made.
However, we cannot assure you that approval of the Amendments will result
in larger or more rapid distributions to the limited partners.
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o The Amendments will help reduce the risk of foreclosure (and the
consequent forfeiture of Projects or Project Interests) by facilitating
alternative dispositions. All of the Projects are subject to mortgage
loans, and some of the Project Interests serve as collateral for notes
issued by the Partnership or the local limited partnerships. If a Project
or the Project Interests in a Project are foreclosed, they could be
forfeited to the holder(s) of the note in satisfaction of the indebtedness
evidenced by such note. Foreclosure of a Project or the Project Interests
in a Project would eliminate any potential future returns that the limited
partners might receive from continued ownership or more advantageous
dispositions of such Projects or Project Interests. Additionally, if a
Project or Project Interests are foreclosed, limited partners could
recognize a tax liability without any corresponding cash distribution.
Limited partners would often be better off if the Project or Project
Interests were sold to avoid foreclosure, even if the cash proceeds are
less than the limited partners' tax liability associated with the sale.
Such a sale may generate net cash proceeds that the Partnership could
distribute to the limited partners. Such a distribution would enable the
limited partners to partially offset their tax liability resulting from
the sale. The Partnership Agreement currently prohibits the Partnership
from making such a sale to avoid foreclosure. The Amendments would allow
the Partnership to initiate or consent to such sales. In addition, if a
Project is operating at a deficit and is likely to continue to do so, it
may be in the limited partners' best interest for the Partnership to
initiate or consent to the sale of the Project or related Project
Interests, even if the cash proceeds are less than the limited partners'
tax liability associated with the sale. Such a sale could result in an
economic loss for the limited partners, but it could save the Partnership
and limited partners from future losses. The Partnership Agreement
currently prohibits the Partnership from making such a sale. The
Amendments would allow the Partnership to initiate or consent to such
sales.
One Project and the Project Interests in three of the four Projects
have been at risk of foreclosure for several years. The local limited
partnerships that own the Jenny Lind Hall and Cloverdale Projects are each
obligated on a matured purchase money note secured by the Partnership's
interests in these local limited partnerships. The Jenny Lind Hall note
matured in December 1999. The local limited partnership that owns Jenny
Lind Hall has not made the payments due at maturity and, according to the
lender, is in default under the terms of the note. The matured Jenny Lind
Hall note has an aggregate of approximately $4.3 million in unpaid
principal and accrued interest as of September 30, 2005. There is
substantial doubt that the Jenny Lind Hall partnership's income from
operations will be sufficient to make these payments. As a result, the
Partnership's Project Interests in Jenny Lind Hall have been at risk of
foreclosure for several years. The Cloverdale note matured in December
2000. The local limited partnership that owns Cloverdale has not made the
payments due at maturity and, according to the lender, is in default under
the terms of the note. The matured Cloverdale note has an aggregate of
over $2.5 million in unpaid principal and accrued interest as of September
30, 2005. There is substantial doubt that the Cloverdale partnership's
income from operations will be sufficient to make these payments. As a
result, the Partnership's Project Interests in Cloverdale have been at
risk of foreclosure for several years. Cloverdale also currently operates
at a deficit. As a result, there is substantial doubt about the ability of
the local limited partnership that owns Cloverdale to make payments on the
related mortgage debt. If these payments are not made, Cloverdale could be
foreclosed.
The Partnership is obligated on a purchase money note secured by all
of the Partnership's Project Interests in one of the Projects, Plaza
Village. This note matured in 1999. The Partnership has not made the
payments due at maturity and, according to the lender, is in default under
the terms of the note. The matured Plaza Village note has an aggregate of
approximately $3.85 million in unpaid principal and accrued interest as of
September 30, 2005. There is substantial doubt that the Partnership's
income from operations will be sufficient to make these payments. As a
result, the Partnership's Project Interests in Plaza Village have been at
risk of foreclosure for several years. The entity that owns NAPICO and HPC
II has a 15% interest in the Plaza Village note and is the custodian for
the holder of the 85% interest in the Plaza Village note. As discussed
below under "Risks and Disadvantages of the Amendments," NAPICO and HPC II
therefore have a conflict of interest in determining when and at what
price to initiate or consent to the sale of Plaza Village.
o We believe that current conditions in the real estate markets make this an
opportune time for the Partnership to initiate or consent to disposition
of the Projects or Project Interests. We believe that property valuations,
the current interest rate environment and the availability of capital for
real estate investments may facilitate the disposition of the Projects or
Project Interests more quickly and provide the Partnership with an
opportunity to maximize the value of the Projects or Project Interests.
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o The second Amendment will enable the Partnership to initiate or consent to
transactions without the delay and expense of soliciting the consent of
limited partners each time a transaction is proposed, even if all the
Projects or Project Interests are ultimately sold, as long as the
disposition of all or substantially all of the Projects or Project
Interests is not made in a series of related transactions. We are not
contemplating a specific transaction pursuant to which all or
substantially all of the Partnership's assets will be sold, nor do we have
any plans for the Partnership to initiate or consent to a transaction or a
series of related transactions that would result in the sale of all or
substantially all of the Partnership's assets. Rather, we intend to
facilitate liquidation of the Partnership's portfolio through transactions
that will be considered on an individual basis, subject to the consent of
general partners of local limited partnerships where required. A sale of
all or substantially all of the assets in a series of related transactions
would still require limited partner approval.
Risks and Disadvantages of the Amendments
The following sets forth the risks and disadvantages of the
Amendments. Before deciding whether to consent to the Amendments, you should
carefully consider these factors.
o The Amendments will permit the general partners to initiate or consent to
a sale of Projects or Project Interests in transactions that result in tax
liabilities to limited partners in excess of the cash proceeds arising
from such disposition. The Partnership Agreement currently prohibits the
Partnership from selling a Project or Project Interest if the cash
proceeds from such sale would be less than the tax liability to the
limited partners associated with such sale. The Amendments would eliminate
this prohibition. Therefore, the general partners could initiate or
consent to a sale of a Project or Project Interest in a taxable
transaction that results in tax liabilities for the limited partners in
excess of any cash proceeds received from the sale or distributed to the
limited partners.
o NAPICO and HPC II, general partners of the Partnership, are controlled by
AIMCO and have a conflict of interest in determining when, and at what
price, to initiate or consent to the sale of a Project or Project
Interest. NAPICO and HPC II, general partners of the Partnership, have
fiduciary duties to the Partnership and its limited partners. The
directors of NAPICO and the directors of HPC II have fiduciary duties to
their respective stockholders. NAPICO and HPC II are each indirectly owned
by Apartment Investment and Management Company ("AIMCO"), an NYSE-listed
real estate investment trust (REIT), and AIMCO Properties, L.P., the
operating partnership through which AIMCO conducts its operations. The
interests of the Partnership's limited partners may conflict with those of
AIMCO. AIMCO regularly reviews its portfolio to identify properties that
do not meet its long-term investment criteria. As a REIT, AIMCO will not
recognize any tax liability in the event of a sale of a Project or Project
Interest. In addition, AIMCO will benefit to the extent that NAPICO or HPC
II receives a disposition fee upon a sale. AIMCO also has a 15% interest
in a matured purchase money note issued by the Partnership and secured by
the Partnership's Project Interests in one of the Projects, Plaza Village,
and is the custodian for the holder of the 85% interest in this note. As a
noteholder, AIMCO could receive all of the net proceeds from a disposition
of Plaza Village. As a result, there may be a conflict between AIMCO's
objectives and the interests of the Partnership's limited partners.
o The general partners are entitled to receive disposition fees upon a sale
of a Project, which they would not receive in a foreclosure, and therefore
NAPICO and HPC II each has a conflict of interest in recommending the
Amendments. The Partnership Agreement currently prohibits the Partnership
from selling a Project or Project Interest if the cash proceeds from such
sale would be less than the resulting tax liability to the limited
partners, even if such a sale would avoid foreclosure. The Amendments
would permit the general partners to initiate or consent to such a sale
and, therefore, make it easier to achieve a sale for which the general
partners may receive disposition fees. They would not receive these fees
in a foreclosure. As a result, NAPICO and HPC II each has a conflict of
interest in recommending the Amendments.
o Expenses, including disposition fees paid to the general partners, may
consume all or substantially all of the net proceeds from a disposition.
The Partnership Agreement entitles the general partners to receive
disposition fees. No such fees may be paid until the limited partners have
received distributions that add up to the greater of (i) their aggregate
capital contributions or (ii) an amount sufficient to satisfy the
cumulative tax liability of the limited partners resulting from all sales.
However, unpaid disposition fees accrue and may be
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paid on a later disposition. If such accrued fees are ultimately paid on a
later disposition, they could be great enough to consume all of the net
proceeds from such disposition. There is no equivalent limitation on
immediate payment of other Partnership expenses. Therefore, such other
expenses could consume all of the net proceeds from any disposition. The
Amendments would permit sales for proceeds that are less than the tax
liability to limited partners, which may result in sales in which the
expenses consume a greater portion of the proceeds than would have been
the case without the Amendments.
o The Amendments will permit the general partners to initiate or consent to
a sale of all or substantially all of the Partnership's assets without
limited partner approval if the assets are sold in multiple transactions
that do not involve, and are not part of a series of related transactions.
The Partnership Agreement currently requires the approval of limited
partners holding a majority of the limited partner interests for a sale of
all or substantially all of the Partnership's assets. The Amendments would
permit the general partners to initiate or consent to the sale of a single
Project (or Project Interests related to a single Project) even if it is
the last Project owned or represents substantially all of the
Partnership's assets. As a result, the Amendments would permit the general
partners to initiate or consent to transactions that the limited partners
might not have approved.
WE URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING THE FEDERAL, STATE,
LOCAL AND OTHER TAX CONSEQUENCES TO YOU OF A SALE OR OTHER DISPOSITION OF A
PROJECT OR PROJECT INTERESTS.
RECOMMENDATIONS OF THE GENERAL PARTNERS
After taking into account all of the positive and negative factors
discussed above under "THE PROPOSED AMENDMENTS," NAPICO and HPC II believe that
the proposed Amendments are advisable and in the best interest of the
Partnership and its limited partners and recommend that you consent to the
Amendments.
NPIA does not recommend that you consent to the Amendments. If the
Amendments are approved by the limited partners, NAPICO intends to seek NPIA's
concurrence and approval and will not proceed if NPIA fails to execute the
Amendments.
FIDUCIARY RESPONSIBILITY; INDEMNIFICATION
California law requires a general partner to adhere to fiduciary duty
standards under which it owes its limited partners a duty of loyalty and a duty
of care. This generally prohibits a general partner from competing with a
partnership in the conduct of the partnership's business on behalf of a party
having an interest adverse to the partnership and requires the general partner
to exercise any right consistent with the obligation of good faith and fair
dealing and free of gross negligence, reckless conduct, intentional misconduct
or known violations of law. A partnership agreement (a) may not eliminate the
duty of loyalty, but, if not manifestly unreasonable, it may either identify
specific activities that do not violate the duty of loyalty or allow for all of
the partners (or some percentage identified in the partnership agreement) to
authorize or ratify, after full disclosure of all material facts, a specific
act or transaction that otherwise would violate that duty and (b) may contain
provisions releasing a partner from liability for actions taken in good faith
and in the honest belief that the actions are in the best interest of the
partnership, while indemnifying the partner against any good faith belief that
he or she has the power to act. Further, a partner does not violate such duties
merely because the partner's conduct furthers the partner's own interest.
The general partners are accountable to the Partnership and the
limited partners as fiduciaries and consequently are obligated, among other
things, to exercise good faith and fair dealing toward other members of the
Partnership. The Partnership Agreement provides that the general partners and
their officers, directors, employees, agents, affiliates, subsidiaries and
assigns are entitled to be indemnified for any liability, loss or damage
resulting from any act performed or omitted by them in connection with the
business of the Partnership, provided that, if such liability, loss or claim
arises out of any action or inaction of the general partners, the general
partners must have
6
determined, in good faith, that such course of conduct was in the best
interests of the Partnership and did not constitute fraud, negligence, breach
of fiduciary duty or willful misconduct by the general partners.
If a claim is made against any of the general partners in connection
with their respective actions on behalf of the Partnership with respect to the
Amendments, it is expected that they will seek to be indemnified by the
Partnership with respect to such claims. A successful claim for
indemnification, including the expenses of defending a claim made, would reduce
the Partnership's assets by the amount paid.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The general partners own all of the outstanding general partnership
interests of the Partnership, which collectively constitute 1% of the total
interests in the Partnership. The Partnership has no directors or executive
officers of its own. NAPICO is a California corporation owned by AIMCO. HPC II
is a Delaware corporation owned by AIMCO. None of the directors or executive
officers of NAPICO or HPC II owns any of the limited partnership interests of
the Partnership. NAPICO holds a 0.45% interest in the Partnership and HPC II
holds a 0.5% interest in the Partnership. NPIA is a California limited
partnership, the general partner of which is Nicholas G. Ciriello. NPIA holds a
0.05% interest in the Partnership. The following table sets forth certain
information as of January 4, 2006 with respect to the ownership by any person
(including any "group," as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934) known to us to be the beneficial owner of more
than 5% of the limited partnership interests of the Partnership.
Name and Address Number of Units Percent of Class
- ---------------- --------------- ----------------
AIMCO Properties, L.P. (1)............ 580.5 9.51%
4582 South Ulster Street Parkway
Suite 1100
Denver, CO 80237
- -------------------
(1) AIMCO Properties, L.P. is an affiliate of NAPICO.
CONSENT PROCEDURE
Limited Partner Consent
The Partnership Agreement requires the consent of limited partners
holding a majority of the limited partnership interests (a "Majority Consent")
to amend the Partnership Agreement. Under the terms of the Partnership
Agreement, you must be a limited partner or a substituted limited partner to
consent. NAPICO will treat a failure to respond as the equivalent of
concurrence with its recommendation. Therefore, if you do not respond by 5:00
p.m. EST on January 25, 2006, you will be deemed to have consented to the
Amendments. If only one of the Amendments is approved, the Partnership
Agreement will be amended to reflect the Amendment that is approved. Each
Amendment is conditioned upon our obtaining a Majority Consent to such
Amendment. Accordingly, if we do not obtain a Majority Consent to any
Amendment, there will be no change in the Partnership Agreement and we will
continue to operate in accordance with the terms of the Partnership Agreement
as it is currently written. In accordance with the terms of the Partnership
Agreement, the Partnership will bear the costs of this consent solicitation.
Consent Procedures
The following is an outline of the procedures to be followed if you
want to consent, or withhold your consent, to the proposed Amendments. A form
of Consent Card is included with this Consent Solicitation Statement. You
should complete this Consent Card in accordance with the instructions contained
in this Consent Solicitation Statement in order to give or withhold your
consent to the proposed Amendments. A failure to respond will be treated as the
equivalent of a consent to the Amendments. These procedures must be strictly
followed in order for the instructions of a limited partner as marked on such
limited partner's consent to be effective:
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1. A limited partner may give or withhold his or her consent by
delivering the Consent Card only during the period commencing upon the date of
delivery of this Consent Solicitation Statement and continuing until 5:00 p.m.
EST on January 25, 2006 or such later date as may be determined by NAPICO (the
"Solicitation Period").
2. You must return a properly completed, signed and dated Consent Card
in the enclosed postage-paid envelope. If possible, please also fax it to The
Altman Group at fax number (201) 460-0050.
3. You can revoke a previously given consent by signing a subsequently
dated Consent Card that is properly marked to indicate "WITHHOLD CONSENT" and
delivering it to The Altman Group at any time prior to the end of the
Solicitation Period.
4. A limited partner that fails to return a Consent Card, submits a
signed but unmarked Consent Card, or submits a properly completed, signed and
dated Consent Card marked to indicate "CONSENT" will be deemed to have
consented to the Amendments.
If you have any questions about this consent solicitation, please do
not hesitate to contact The Altman Group, the Partnership's consent
solicitation agent, at (800) 217-9608.
No Dissenters' Rights of Appraisal
Under the Partnership Agreement and California law, limited partners
do not have dissenters' rights of appraisal.
SOLICITATION OF CONSENTS
This consent solicitation is being made by NAPICO and HPC II, general
partners of the Partnership. NAPICO and its officers, directors and employees
may assist in this consent solicitation and in providing information to limited
partners in connection with any questions they may have with respect to this
Consent Solicitation Statement and the consent procedures. We have retained The
Altman Group to assist with the solicitation of consents, as well as to assist
us with communicating with our limited partners with respect to this
solicitation. Approximately five persons will be utilized by The Altman Group
in their efforts. We expect that The Altman Group will solicit consents by
mail, in person, by telephone, by facsimile and/or by e-mail. In addition to
the Partnership's solicitation by mail, and The Altman Group's efforts, NAPICO
may have certain of its officers, directors and employees solicit, without
additional compensation, consents by mail, in person, by telephone, by
facsimile or by e-mail. Although NAPICO does not currently plan to conduct
active solicitation on the Internet, solicitation materials may be made
available on or through NAPICO's website or through the Internet.
The cost of the consent solicitation will be borne by the Partnership.
The Altman Group's estimated fee is $2,500, plus reasonable out-of-pocket
expenses.
The Partnership has agreed to indemnify The Altman Group against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws. The Partnership's plan
to reimburse The Altman Group for any such liabilities or expenses will not be
submitted to the limited partners for a vote.
PARTNER PROPOSALS
In accordance with the terms of our Partnership Agreement, we do not
have annual meetings. Thus, there is no deadline for submitting partner
proposals as set forth in Rule 14a-5 under the Securities Exchange of 1934. The
limited partners may call a special meeting to vote upon matters permitted by
our Partnership Agreement with the prior consent of at least 10% of the limited
partnership interests.
8
OTHER MATTERS
Disclosure Regarding Forward-Looking Statements
Certain statements made herein contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. Such
statements are indicated by words such as "believes," "intends," "expects,"
"anticipates" and similar words or phrases. Such statements are based on
current expectations and are subject to risks, uncertainties and assumptions.
Should any of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected. Factors that could cause actual
results to differ materially from those in our forward-looking statements
include the ability of the local general partners to sell the underlying
properties on economically advantageous terms, real estate and general economic
conditions in the markets in which the properties are located and changes in
federal and state tax laws that may create tax disadvantages for certain
distributions, some of which may be beyond our control. Given these
uncertainties, limited partners are cautioned not to place undue reliance on
our forward-looking statements.
Where You Can Find More Information
The Partnership files annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). You may read and copy any reports, statements or other information
that the Partnership files at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the public reference rooms. The
Partnership's public filings are also available to the public from commercial
document retrieval services and at the website maintained by the SEC at
www.sec.gov. Reports, proxy statements and other information concerning the
Partnership also may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The SEC allows the Partnership to incorporate by reference information
into this Consent Solicitation Statement, which means that the Partnership can
disclose important information to you by referring you to another document
filed separately with the SEC. The information incorporated by reference is
deemed to be part of this Consent Solicitation Statement, except for any
information modified or superseded by information contained directly in the
Consent Solicitation Statement or in later filed documents incorporated by
reference into this document. Except as otherwise indicated, this document
incorporates by reference the documents set forth below that the Partnership
has previously filed with the SEC. These documents contain important
information about the Partnership and its financial condition:
o Annual Report of the Partnership on Form 10-KSB for the
fiscal year ended December 31, 2004; and
o Quarterly Reports of the Partnership on Form 10-QSB for the
fiscal quarters ended March 31, 2005, June 30, 2005 and
September 30, 2005.
The Partnership hereby incorporates by reference into this Consent
Solicitation Statement additional documents that the Partnership may file with
the SEC between the date of this Consent Solicitation Statement and the end of
the Solicitation Period. These include periodic reports, such as Annual Reports
on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports on Form
8-K, as well as proxy statements.
The Partnership may have sent you some of the documents incorporated
by reference, but you can obtain any of them through the Partnership or the
SEC's website described above. Documents incorporated by reference are
available from the Partnership without charge, excluding all exhibits unless
specifically incorporated by reference as exhibits into this Consent
Solicitation Statement.
You may obtain some of the documents about the Partnership at NAPICO's
website, located at www.napico.com, by selecting "Partnership Financial
Information."
The Partnership is not incorporating the contents of the website of
the SEC, the Partnership or any other person into this Consent Solicitation
Statement.
9
You may obtain documents incorporated by reference into this Consent
Solicitation Statement by requesting them in writing from NAPICO at the
following address:
National Partnership Investments Corp.
6100 Center Drive, Suite 800
Los Angeles, CA 90045
Attention: Legal Dept.
Telephone (800) 666-6274
You should rely only on the information contained in, or incorporated
by reference into, this Consent Solicitation Statement. The Partnership has not
authorized anyone to provide you with information that is different from what
is contained in this Consent Solicitation Statement. This Consent Solicitation
Statement is dated January 5, 2006. You should not assume that the information
contained in the Consent Solicitation Statement is accurate as of any date
other than that date.
NATIONAL PARTNERSHIP INVESTMENTS CORP.,
HOUSING PROGRAMS CORPORATION II,
General Partners of Housing Programs Limited
January 5, 2006
10
ANNEX A
AMENDMENT TO THE RESTATED CERTIFICATE AND AGREEMENT
OF LIMITED PARTNERSHIP OF HOUSING PROGRAMS LIMITED
This Amendment to the Restated Certificate and Agreement of Limited
Partnership, as amended to date (the "Partnership Agreement"), of Housing
Programs Limited, a California limited partnership (the "Partnership"), is made
and entered into as of __________, 2006, by and among National Partnership
Investments Corp., a California corporation ("NAPICO"), as general partner of
the Partnership, National Partnership Investments Associates, a California
limited partnership ("NPIA"), as general partner of the Partnership, and
NAPICO, as attorney-in-fact for the limited partners of the Partnership.
WHEREAS, NAPICO, NPIA and limited partners owning a majority of the
outstanding limited partnership interests of the Partnership have approved this
Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 9.3(d) of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"(d) upon any sale or refinancing, the Partnership
shall not reinvest any proceeds thereof;"
2. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Partnership Agreement shall remain unmodified
and continue in full force and effect and, except as amended hereby, all of the
terms, covenants, provisions and conditions of the Agreement are hereby
ratified and confirmed in all respects.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
NATIONAL PARTNERSHIP HOUSING PROGRAMS CORPORATION II,
INVESTMENTS CORP., as General Partner
as General Partner
By: _______________________________ By: ________________________________
Jeffrey H. Sussman, David Robertson
Senior Vice President, President and CEO
General Counsel and Secretary
NATIONAL PARTNERSHIP NATIONAL PARTNERSHIP
INVESTMENTS ASSOCIATES, INVESTMENTS CORP.,
as General Partner as Attorney-in-Fact for the Limited
Partners
By: _______________________________ By: ________________________________
Nicholas G. Ciriello, Jeffrey H. Sussman,
General Partner Senior Vice President,
General Counsel and Secretary
A-1
AMENDMENT TO THE RESTATED CERTIFICATE AND AGREEMENT
OF LIMITED PARTNERSHIP OF HOUSING PROGRAMS LIMITED
This Amendment to the Restated Certificate and Agreement of Limited
Partnership, as amended to date (the "Partnership Agreement"), of Housing
Programs Limited, a California limited partnership (the "Partnership"), is made
and entered into as of __________, 2006, by and among National Partnership
Investments Corp., a California corporation ("NAPICO"), as general partner of
the Partnership, National Partnership Investments Associates, a California
limited partnership ("NPIA"), as general partner of the Partnership, and
NAPICO, as attorney-in-fact for the limited partners of the Partnership.
WHEREAS, NAPICO, NPIA and limited partners owning a majority of the
outstanding limited partnership interests of the Partnership have approved this
Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Section 9.3(t) of the Partnership Agreement is hereby amended to
read in its entirety as follows:
"(t) the Partnership shall not sell all or
substantially all of the Partnership's assets in a single
transaction or a series of related transactions without
obtaining the consent of Limited Partners owning a majority
of the outstanding Limited Partnership Interests; provided,
however, that the foregoing will not apply to a sale of a
single Project (or a sale of Project Interests related to a
single Project) that is not part of a series of related
transactions involving the sale of multiple Projects (or
Project Interests related to multiple Projects) that
constitute all or substantially all of the Projects."
2. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Partnership Agreement shall remain unmodified
and continue in full force and effect and, except as amended hereby, all of the
terms, covenants, provisions and conditions of the Agreement are hereby
ratified and confirmed in all respects.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
NATIONAL PARTNERSHIP HOUSING PROGRAMS CORPORATION II,
INVESTMENTS CORP., as General Partner
as General Partner
By: ______________________________ By: ________________________________
Jeffrey H. Sussman, David Robertson
Senior Vice President, President and CEO
General Counsel and Secretary
NATIONAL PARTNERSHIP NATIONAL PARTNERSHIP
INVESTMENTS ASSOCIATES, INVESTMENTS CORP.,
as General Partner as Attorney-in-Fact for the Limited
Partners
By: ______________________________ By: ________________________________
Nicholas G. Ciriello, Jeffrey H. Sussman,
General Partner Senior Vice President,
General Counsel and Secretary
A-2
ANNEX B
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071-3144
January 5, 2006
Housing Programs Limited
c/o National Partnership Investments Corp.
6100 Center Drive, Suite 800
Los Angeles, CA 90045
Re: Proposed Amendments to Agreement of Limited Partnership
Ladies and Gentlemen:
We have acted as special counsel to Housing Programs Limited,
a California limited partnership formerly known as "Shearson Lehman/Coast
Savings Housing Partners, Limited" (the "Partnership"), in connection with
proposed amendments (the "Proposed Amendments") to the Restated Certificate and
Agreement of Limited Partnership, as amended to date (the "Partnership
Agreement"), of the Partnership. The Proposed Amendments are attached as
Exhibit I hereto. This opinion is being delivered pursuant to Section 14.1 of
the Partnership Agreement.
In our examination we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as facsimile, electronic, certified or
photostatic copies, and the authenticity of the originals of such copies. As to
any facts material to this opinion that we did not independently establish or
verify, we have relied upon statements and representations of the Partnership
and its general partners, officers of such general partners and other
representatives and of public officials, including the facts and conclusions
set forth therein.
In rendering the opinions set forth herein, we have examined
and relied on originals or copies of the following:
(a) the Proposed Amendments;
(b) the Certificate of Limited Partnership of the
Partnership, as amended to date and certified by the Secretary of State of the
State of California;
(c) a certificate, dated October 29, 2005, of the Secretary
of State of the State of California, as to the Partnership's existence and good
standing in the State of California, and a bring-down thereof, dated January 4,
2006; and
(d) the Partnership Agreement, certified by Peter Stoughton,
the Assistant Secretary of National Partnership Investments Corp., a California
corporation ("NAPICO"), general partner of the Partnership;
(e) the Certificate of Limited Partnership of National
Partnership Investments Associates, a California Limited Partnership ("NPIA"),
as filed on February 25, 1980 in the Office of the County Registrar-Recorder
for the County of Los Angeles, California;
B-1
(f) the Certificate of Limited Partnership of NPIA, as filed
on December 12, 2005 with, and certified by, the Secretary of State of the
State of California;
(g) the Agreement of Limited Partnership of NPIA, dated as of
February 22, 1980, and the Amendment thereto, dated as of December 8, 2005;
(h) the Agreement of the General Partners, dated as of June
1, 1984, between NAPICO and NPIA (doing business as "Coast Housing Investments
Associates"), certified by Peter Stoughton, the Assistant Secretary of NAPICO;
(i) the certificate of Peter Stoughton, the Assistant
Secretary of NAPICO, dated the date hereof;
(j) resolutions of the Board of Directors of NAPICO relating
to the Proposed Amendments, certified by Peter Stoughton, the Assistant
Secretary of NAPICO;
(k) resolutions of the Board of Directors of HPC II relating
to the Proposed Amendments, certified by Peter Stoughton, the Assistant
Secretary of NAPICO;
(l) such other documents as we have deemed necessary or
appropriate as a basis for the opinions set forth below.
We express no opinion as to the laws of any jurisdiction
other than the Uniform Limited Partnership Act, as in effect in the State of
California, and the California Revised Limited Partnership Act.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that the Proposed Amendments, if duly authorized and approved by NPIA
and the limited partners of the Partnership in accordance with the terms of the
Partnership Agreement, will not contravene any provision of the Uniform Limited
Partnership Act, as in effect in the State of California, or the California
Revised Limited Partnership Act.
In rendering the foregoing opinion, we have assumed, with
your consent, that the Partnership is validly existing and in good standing as
a limited partnership under the laws of the State of California.
This opinion is being furnished only to you in connection
with the Proposed Amendments and is solely for your benefit and is not to be
used, circulated, quoted or otherwise referred to for any other purpose or
relied upon by, or assigned to, any other person or entity for any purpose
without our prior written consent. Notwithstanding the foregoing, you (and each
of your employees, representatives or other agents) may disclose this opinion
(i) to limited partners of the Partnership and (ii) to any and all persons,
without limitation of any kind, to the extent such disclosure may be relevant
to understanding the tax treatment or tax structure of the Proposed Amendments;
provided that any and all such persons to whom you make such disclosure may not
rely upon this opinion unless otherwise permitted hereby.
Very truly yours,
Skadden, Arps, Slate, Meagher & Flom LLP
B-2
CONSENT SOLICITED BY
NATIONAL PARTNERSHIP INVESTMENTS CORP.
AND HOUSING PROGRAMS CORPORATION II,
GENERAL PARTNERS OF
HOUSING PROGRAMS LIMITED
NATIONAL PARTNERSHIP INVESTMENTS CORP. AND HOUSING PROGRAMS
CORPORATION II, GENERAL PARTNERS OF THE PARTNERSHIP, RECOMMEND THAT YOU CONSENT
TO EACH OF THE PROPOSALS BELOW.
The undersigned, a limited partner of HOUSING PROGRAMS LIMITED (the
"Partnership"), acting with respect to all of the limited partnership interests
held by the undersigned on the date hereof, hereby consents, withholds consent
or abstains, with respect to the proposals specified below and more fully
described in the Housing Programs Limited Consent Solicitation Statement dated
January 5, 2006 (the "Consent Solicitation Statement"). All terms used but not
defined herein shall have the meanings ascribed to such terms in the Consent
Solicitation Statement. A failure to execute and return this consent card by
5:00 p.m. EST on January 25, 2006 will be deemed a consent to each of the
proposals set forth below. A signed but unmarked consent card will be deemed a
consent to each of the proposals set forth below.
- --------------------------------------------------------------------------------
PROPOSAL 1. Amend Section 9.3(d) of the Partnership Agreement, as described in
the Consent Solicitation Statement, to allow the sale of Projects or Project
Interests for less than the amount necessary to cover the resulting tax
liability.
|_| CONSENT |_| WITHHOLD CONSENT |_| ABSTAIN
- --------------------------------------------------------------------------------
PROPOSAL 2. Amend Section 9.3(t) of the Partnership Agreement, as described in
the Consent Solicitation Statement, so that a sale of a single Project (or a
sale of Project Interests related to a single Project) that is not part of a
series of related transactions involving the sale of multiple Projects (or
Project Interests related to multiple Projects) that constitute all or
substantially all of the Projects, does not require limited partner approval,
even if all Projects or Project Interests are ultimately sold.
|_| CONSENT |_| WITHHOLD CONSENT |_| ABSTAIN
- --------------------------------------------------------------------------------
PLEASE SIGN, DATE AND FAX THIS CONSENT CARD TO (201) 460-0050, ATTN: JASON
VINICK, AND MAIL THIS CONSENT CARD TODAY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE, PLEASE CALL THE ALTMAN GROUP AT
(800) 217-9608.
Please sign your name below. If your partnership interests are held jointly,
each limited partner should sign a Consent Card. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by president or authorized
officer. If a partnership, please sign in partnership name by authorized
person.
Dated: ______________________
Signature:___________________ Signature:_____________________
Name:________________________ Name:__________________________
Title:_______________________ Title:_________________________
Telephone Number:____________