-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OE8UKx6UHdT/MmkKl94BjfE0dQXQZyQR3TcC/iWFiw67Zhc+vAWcth6nYPckpBFa NmzTZwS+w4Q70WpCnqkPVw== 0000711642-05-000606.txt : 20051114 0000711642-05-000606.hdr.sgml : 20051111 20051114132551 ACCESSION NUMBER: 0000711642-05-000606 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051114 DATE AS OF CHANGE: 20051114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XVII CENTRAL INDEX KEY: 0000356472 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942782037 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-11137 FILM NUMBER: 051199348 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: PO BOX 1089 C/O INSIGNIA FINANCIAL GROUP CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391000 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 cpf17.txt CPF17 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2005 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT For the transition period from _________to _________ Commission file number 0-11137 CENTURY PROPERTIES FUND XVII (Exact name of small business issuer as specified in its charter) California 94-2782037 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes __ No X_ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CENTURY PROPERTIES FUND XVII CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 2005
Assets Cash and cash equivalents $ 259 Receivables and deposits 941 Restricted escrows 489 Other assets 860 Investment properties: Land $ 7,078 Buildings and related personal property 81,068 88,146 Less accumulated depreciation (53,543) 34,603 $ 37,152 Liabilities and Partners' Deficit Liabilities Accounts payable $ 499 Tenant security deposit liabilities 309 Accrued property taxes 712 Other liabilities 729 Due to affiliates (Note B) 10,221 Mortgage notes payable 45,472 Partners' Deficit General partner $ (9,393) Limited partners (75,000 units issued and outstanding) (11,397) (20,790) $ 37,152
See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVII CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Revenues: Rental income $ 3,001 $ 2,668 $ 8,664 $ 7,921 Other income 422 445 1,233 1,264 Casualty gain (Note C) -- 4 -- 23 Total revenues 3,423 3,117 9,897 9,208 Expenses: Operating 1,744 1,760 5,135 4,694 General and administrative 101 96 312 286 Depreciation 1,079 805 3,181 2,318 Interest 1,053 887 3,068 2,627 Property taxes 134 235 664 753 Total expenses 4,111 3,783 12,360 10,678 Net loss $ (688) $ (666) $(2,463) $(1,470) Net loss allocated to general partner (11.8%) $ (81) $ (79) $ (291) $ (173) Net loss allocated to limited partners (88.2%) (607) (587) (2,172) (1,297) $ (688) $ (666) $(2,463) $(1,470) Net loss per limited partnership unit $ (8.09) $ (7.83) $(28.96) $(17.29)
See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVII CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 75,000 $ -- $ 75,000 $ 75,000 Partners' deficit at December 31, 2004 75,000 $(9,102) $ (9,225) $(18,327) Net loss for the nine months ended September 30, 2005 -- (291) (2,172) (2,463) Partners' deficit at September 30, 2005 75,000 $(9,393) $(11,397) $(20,790)
See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVII CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 2005 2004 Cash flows from operating activities: Net loss $(2,463) $(1,470) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 3,181 2,318 Amortization of loan costs 66 45 Casualty gain -- (23) Bad debt expense 155 442 Change in accounts: Receivables and deposits (372) (820) Other assets (29) (330) Accounts payable (96) (15) Tenant security deposit liabilities 25 (23) Accrued property taxes (1) 10 Other liabilities 94 (117) Due to affiliates 557 55 Net cash provided by operating activities 1,117 72 Cash flows from investing activities: Insurance proceeds received -- 27 Property improvements and replacements (5,451) (4,524) Net withdrawals from (deposits to) restricted escrows 8 (163) Net cash used in investing activities (5,443) (4,660) Cash flows from financing activities: Payments on mortgage notes payable (825) (851) Loan costs paid -- (70) Payments on advances from affiliate -- (1,524) Proceeds from mortgage note payable -- 2,540 Advances from affiliate 5,066 4,373 Net cash provided by financing activities 4,241 4,468 Net decrease in cash and cash equivalents (85) (120) Cash and cash equivalents at beginning of period 344 433 Cash and cash equivalents at end of period $ 259 $ 313 Supplemental disclosure of cash flow information: Cash paid for interest $ 2,665 $ 2,658 Supplemental disclosure of non-cash activity: Property improvements and replacements included in accounts payable $ 439 $ 590
At December 31, 2004 and 2003, approximately $298,000 and $366,000, respectively, of property improvements and replacements were included in accounts payable, and are included in property improvements and replacements at September 30, 2005 and 2004, respectively. See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVII NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Century Properties Fund XVII (the "Partnership" or the "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Fox Capital Management Corporation, the managing general partner of the Partnership (the "Managing General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2005. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004. The Managing General Partner is an affiliate of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. Note B - Transactions with Affiliated Parties The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Affiliates of the Managing General Partner receive 5% of gross receipts from all of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $488,000 and $444,000 for the nine months ended September 30, 2005 and 2004, respectively, which are included in operating expenses. An affiliate of the Managing General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $376,000 and $224,000 for the nine months ended September 30, 2005 and 2004, respectively, which are included in investment properties and general and administrative expenses. The portion of these reimbursements included in investment properties for the nine months ended September 30, 2005 and 2004 are fees related to construction management services provided by an affiliate of the Managing General Partner of approximately $230,000 and $90,000, respectively. The fees are calculated based upon a percentage of additions to investment properties. At September 30, 2005, approximately $213,000 was owed to an affiliate of the Managing General Partner for unpaid reimbursements, which is included in due to affiliates. Pursuant to the Partnership Agreement, for managing the affairs of the Partnership, the Managing General Partner is entitled to receive a Partnership management fee equal to 10% of the Partnership's adjusted cash from operations as distributed. There were no Partnership management fees paid during the nine months ended September 30, 2005 or 2004 as there were no distributions from operations. An affiliate of the Managing General Partner has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. During the nine months ended September 30, 2005, an affiliate of the Managing General Partner exceeded this credit limit and advanced the Partnership approximately $609,000 and $3,019,000 to fund the redevelopment projects at Peakview Place Apartments and The Village in the Woods Apartments, respectively, and approximately $1,438,000 to fund property taxes, capital improvements and operating expenses at four of the Partnership's investment properties. An affiliate of the Managing General Partner has committed to fund additional redevelopment costs of approximately $1,862,000 for The Village in the Woods Apartments (as discussed in "Item 2. Management's Discussion and Analysis or Plan of Operation"). During the nine months ended September 30, 2004, an affiliate of the Managing General Partner advanced the Partnership approximately $3,103,000 to fund the redevelopment project at Peakview Place Apartments, approximately $425,000 to fund property taxes at The Village in the Woods Apartments and Cooper's Pond Apartments, and approximately $845,000 to fund capital improvements and operating expenses at The Lodge Apartments, Peakview Place Apartments, and The Village in the Woods Apartments. The redevelopment advances to The Village in the Woods Apartments accrue interest at 10.0% and all other advances bear interest at the prime rate plus 2% (8.75% at September 30, 2005). Interest expense for the nine months ended September 30, 2005 and 2004 was approximately $408,000 and $91,000, respectively. During the nine months ended September 30, 2004, the Partnership made payments of approximately $1,524,000 on the advances and approximately $22,000 in accrued interest, from proceeds from the second mortgage obtained on Cooper's Pond Apartments (as discussed in Note D). No such payments were made to affiliates of the Managing General Partner during the nine months ended September 30, 2005. At September 30, 2005, the total outstanding advances and accrued interest due to an affiliate of the Managing General Partner is approximately $10,008,000 and is included in due to affiliates. Subsequent to September 30, 2005, an affiliate of the Managing General Partner advanced the Partnership approximately $390,000 to fund the redevelopment project at The Village in the Woods Apartments and approximately $649,000 to fund operations and capital improvements at four of the Partnership's investment properties. The Partnership insures its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the Managing General Partner. During the nine months ended September 30, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates approximately $203,000 and $191,000, respectively, for insurance coverage and fees associated with policy claims administration. Note C - Casualty Event In October 2003, there was a fire at Cooper's Pond Apartments, causing minor damage to seven units. The property suffered damages of approximately $33,000. Insurance proceeds of approximately $27,000 were received during the nine months ended September 30, 2004 to cover the damages. After writing off the undepreciated damaged asset of approximately $4,000, the Partnership recognized a casualty gain of approximately $23,000 for the nine months ended September 30, 2004. Note D - Second Mortgage Note Payable On June 7, 2004 the Partnership obtained a second mortgage loan on Cooper's Pond Apartments in the amount of $2,540,000. The second mortgage requires monthly payments of interest beginning August 1, 2004 until the loan matures July 1, 2007, with interest being equal to the one month LIBOR rate plus 300 basis points (6.86% at September 30, 2005). In connection with obtaining the second mortgage, loan costs of approximately $70,000 were capitalized during the nine months ended September 30, 2004 and are included in other assets. In connection with the new financing, the Partnership agreed to certain modifications on the existing mortgage loan encumbering Cooper's Pond Apartments. The modification of terms consisted of an interest rate of 8.77%, a monthly payment of approximately $62,000 on July 1, 2004, and monthly payments of approximately $59,000, commencing August 1, 2004 through its maturity of July 1, 2014, with a balloon payment of approximately $6,655,000 due at maturity. The previous terms consisted of monthly payments of approximately $72,000 with a stated interest rate of 8.47% through its maturity of March 1, 2020, at which time the loan was scheduled to be fully amortized. Note E - Redevelopment of Properties In April 2005, the Managing General Partner began a major redevelopment project at The Village in the Woods Apartments. The property has had difficulty staying competitive and needed to be updated. Therefore, in an effort to increase occupancy and become competitive in the local market, a significant redevelopment project has been started and is expected to be completed in January 2006 at a total cost of approximately $5,300,000. During the construction period, certain expenses are being capitalized and depreciated over the remaining life of the property. During the nine months ended September 30, 2005, approximately $42,000 of interest was capitalized. During 2003, the Managing General Partner began a major redevelopment project at Peakview Place Apartments. The property has had difficulty staying competitive and needed to be updated. Therefore, in an effort to increase occupancy and become competitive in the local market, a significant redevelopment project was completed in May 2005 at a total cost of approximately $4,785,000. During the construction period, certain expenses were capitalized and depreciated over the estimated remaining life of the property. During the nine months ended September 30, 2005 and 2004 approximately $34,000 and $143,000, respectively, of interest, approximately $1,000 and $15,000, respectively, of real estate taxes, and approximately $3,000 and $43,000, respectively, of other construction period costs were capitalized. Note F - Contingencies In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Managing General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint. Plaintiffs took an appeal from this order. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the court's use of a referee and its order requiring Objector to pay those fees. On March 21, 2005, the Court of Appeals issued opinions in both pending appeals. With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial court's order and remanded to the trial court for further findings on the basis that the "state of the record is insufficient to permit meaningful appellate review". With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. On April 26, 2005, the Court of Appeals lifted the stay of a pending appeal related to the Heller action and the trial court's order striking the complaint. On April 28, 2005, the Objector filed a Petition for Review with the California Supreme Court in connection with the opinion vacating the order approving settlement and remanding for further findings. On June 10, 2005, the California Supreme Court denied Objector's Petition for Review and the Court of Appeals sent the matter back to the trial court on June 21, 2005. The parties intend to ask the trial court to make further findings in connection with settlement consistent with the Court of Appeal's remand order. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial court's order striking the first amended complaint. On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On October 27, 2005, the Court denied Objector's peremptory challenge and struck Objector's motion to disqualify for cause. No hearing has been set on Objector's remaining motions. On November 3, 2005, Objector and his counsel filed a writ of mandate to the Court of Appeals challenging the court's October 27, 2005 order. The Managing General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. AIMCO Properties L.P. and NHP Management Company, both affiliates of the Managing General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Those employees will have the opportunity to opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management Company will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs' motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County). Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Managing General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment properties that are not of a routine nature arising in the ordinary course of business. Environmental Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its properties, the Partnership could potentially be liable for environmental liabilities or costs associated with its properties. Mold The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. Affiliates of the Managing General Partner have implemented a national policy and procedures to prevent or eliminate mold from its properties and the Managing General Partner believes that these measures will minimize the effects that mold could have on residents. To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change the Managing General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnership's consolidated financial condition or results of operations. SEC Investigation The Central Regional Office of the United States Securities and Exchange Commission (the "SEC") continues its formal investigation relating to certain matters. Although the staff of the SEC is not limited in the areas that it may investigate, AIMCO believes the areas of investigation have included AIMCO's miscalculated monthly net rental income figures in third quarter 2003, forecasted guidance, accounts payable, rent concessions, vendor rebates, capitalization of payroll and certain other costs, tax credit transactions, and tender offers for limited partnership interests. AIMCO is cooperating fully. AIMCO is not able to predict when the investigation will be resolved. AIMCO does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Managing General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. Note G - Subsequent Event Subsequent to September 30, 2005, the Partnership entered into a Purchase and Sale Contract to sell Cooper's Pond Apartments to a third party for a purchase price of approximately $25,051,000. The anticipated closing date for the transaction is January 31, 2006. At September 30, 2005, the carrying amounts of the mortgage notes payable and investment property are approximately $9,955,000 and $5,675,000, respectively. The operating results of Cooper's Pond Apartments for the three and nine months ended September 30, 2005 were income of approximately $12,000 and loss of approximately $22,000, which included revenues of approximately $843,000 and $2,481,000, respectively. The operating results of the property for the three and nine months ended September 30, 2004 were losses of approximately $11,000 and $44,000, respectively, which included revenues of approximately $769,000 and $2,259,000, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission. The Partnership's investment properties consist of five apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 2005 and 2004:
Average Occupancy Property 2005 2004 Peakview Place Apartments (1) 79% 72% Englewood, Colorado Creekside Apartments (2) 95% 90% Denver, Colorado The Lodge Apartments (3) 84% 88% Denver, Colorado The Village in the Woods Apartments 75% 75% Cypress, Texas Cooper's Pond Apartments 96% 94% Tampa, Florida
(1) The Managing General Partner attributes the increase in occupancy at Peakview Place Apartments to an increase in units available for lease as a result of the completion of the redevelopment project at the property (as discussed in "Results of Operations"). (2) The Managing General Partner attributes the increase in occupancy at Creekside Apartments to increased resident retention efforts. (3) The Managing General Partner attributes the decrease in occupancy at The Lodge Apartments to an increase in credit standards and the implementation of a strict collection policy. The Partnership's financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment properties, interest rates on mortgage loans, costs incurred to operate the investment properties, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, the Managing General Partner may use rental concessions and rental rate reductions to offset softening market conditions; accordingly, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnership's financial results. Results of Operations The Partnership's net loss for the three and nine months ended September 30, 2005 was approximately $688,000 and $2,463,000, respectively, as compared to net loss of approximately $666,000 and $1,470,000 for the three and nine months ended September 30, 2004, respectively. The increase in net loss for both the three and nine months ended September 30, 2005 is due to an increase in total expenses, partially offset by an increase in total revenues. The increase in total expenses for the three months ended September 30, 2005 is due to increases in depreciation, interest, and general and administrative expenses, partially offset by decreases in both operating and property tax expenses. The increase in total expenses for the nine months ended September 30, 2005 is due to increases in operating, depreciation, interest, and general and administrative expenses, partially offset by a decrease in property tax expense. The decrease in operating expenses for the three months ended September 30, 2005 is primarily due to a decrease in advertising expense at four of the Partnership's investment properties, partially offset by increases in contract maintenance expense and increases in costs related to tenant application processes at all of the Partnership's investment properties, and payroll related expenses at four properties. The increase in operating expenses for the nine months ended September 30, 2005 is primarily due to increases in payroll related expenses at four of the Partnership's investment properties, contract maintenance expense, painting supplies, and increases in costs related to tenant application processes at all of the Partnership's investment properties and a decrease in construction period costs at Peakview Place Apartments (as discussed below). The increase in depreciation expense for both periods is due to property improvements and replacements placed into service at the Partnership's investment properties during the past twelve months. The increase in interest expense for the three months ended September 30, 2005 is primarily due to an increase in interest on advances from an affiliate of the Managing General Partner and a higher variable interest rate on the second mortgage encumbering Cooper's Pond Apartments, partially offset by scheduled principal payments made on the mortgages encumbering the Partnership's investment properties, which reduced the carrying balance of the loans. The increase in interest expense for the nine months ended September 30, 2005 is primarily due to an increase in interest on advances from an affiliate of the Managing General Partner, a larger debt balance encumbering Cooper's Pond Apartments as a result of the second mortgage obtained in June 2004 (as discussed in "Liquidity and Capital Resources"), and a decrease in interest capitalized at Peakview Place Apartments, due to a redevelopment project at the property which required 21 units to be vacated at September 30, 2004 in order to expedite construction. The increase in interest expense was partially offset by scheduled principal payments made on the mortgages encumbering the Partnership's investment properties, which reduced the carrying balance of the loans and an increase in interest capitalized at The Village in the Woods Apartments due to a redevelopment project at the property, which caused units to be vacated during the nine months ended September 30, 2005 in order to expedite construction. The decrease in property tax expense for both periods is due to the Partnership's successful appeal of the assessed value of Peakview Place Apartments for the 2003 and 2004 tax years. As a result of the successful appeal, the Partnership is expected to receive refunds of approximately $34,000 and $36,000 related to the overpayment of property taxes for the 2003 and 2004 tax years, respectively. In addition, during the three and nine months ended September 30, 2005, the Partnership reduced its estimate for 2005 property taxes by approximately $32,000 at Peakview Place Apartments based upon the successful appeal of the 2003 and 2004 assessed values. The increase in general and administrative expenses for both periods is primarily due to increases in the cost of services included in the management reimbursements to the Managing General Partner as allowed under the Partnership Agreement and professional expenses associated with the administration of the Partnership. Also included in general and administrative expenses for the three and nine months ended September 30, 2005 and 2004 are costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement. The increase in total revenues for both the three and nine months ended September 30, 2005 is due to an increase in rental income, partially offset by a decrease in other income and the recognition of a casualty gain during 2004 (as discussed below). The increase in rental income for the three months ended September 30, 2005 is primarily due to reduced bad debt expense at all of the Partnership's investment properties and increases in the average rental rate at four properties and occupancy at Peakview Place Apartments, partially offset by a decrease in occupancy at four properties. The increase in rental income for the nine months ended September 30, 2005 is primarily due to increases in occupancy at Peakview Place Apartments, Cooper's Pond Apartments and Creekside Apartments and average rental rates at four properties, and a decrease in bad debt expense at all of the Partnership's investment properties, partially offset by decreases in occupancy at The Lodge Apartments and the average rental rate at The Village in the Woods Apartments. The decrease in other income for both periods is primarily due to a decrease in lease cancellation fees, partially offset by an increase in utility reimbursements at all of the Partnership's investment properties. In October 2003, there was a fire at Cooper's Pond Apartments, causing minor damage to seven units. The property suffered damages of approximately $33,000. Insurance proceeds of approximately $27,000 were received during the nine months ended September 30, 2004 to cover the damages. After writing off the undepreciated damaged asset of approximately $4,000, the Partnership recognized a casualty gain of approximately $23,000 for the nine months ended September 30, 2004. In April 2005, the Managing General Partner began a major redevelopment project at The Village in the Woods Apartments. The property has had difficulty staying competitive and needed to be updated. Therefore, in an effort to increase occupancy and become competitive in the local market, a significant redevelopment project has been started and is expected to be completed in January 2006 at a total cost of approximately $5,300,000. During the construction period, certain expenses are being capitalized and depreciated over the remaining life of the property. During the nine months ended September 30, 2005, approximately $42,000 of interest was capitalized. During 2003, the Managing General Partner began a major redevelopment project at Peakview Place Apartments. The property has had difficulty staying competitive and needed to be updated. Therefore, in an effort to increase occupancy and become competitive in the local market, a significant redevelopment project was completed in May 2005 at a total cost of approximately $4,785,000. During the construction period, certain expenses were capitalized and depreciated over the estimated remaining life of the property. During the nine months ended September 30, 2005 and 2004 approximately $34,000 and $143,000, respectively, of interest, approximately $1,000 and $15,000, respectively, of real estate taxes, and approximately $3,000 and $43,000, respectively, of other construction period costs were capitalized. Liquidity and Capital Resources At September 30, 2005, the Partnership had cash and cash equivalents of approximately $259,000, compared to approximately $313,000 at September 30, 2004. The decrease in cash and cash equivalents of approximately $85,000, from December 31, 2004, is due to approximately $5,443,000 of cash used in investing activities, partially offset by approximately $4,241,000 of cash provided by financing activities and approximately $1,117,000 of cash provided by operating activities. Cash used in investing activities consisted of property improvements and replacements, partially offset by net receipts from escrow accounts maintained by the mortgage lenders. Cash provided by financing activities consisted of advances from an affiliate of the Managing General Partner, partially offset by payments of principal made on the mortgages encumbering the Partnership's investment properties. The Partnership invests its working capital reserves in interest bearing accounts. An affiliate of the Managing General Partner has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. During the nine months ended September 30, 2005, an affiliate of the Managing General Partner exceeded this credit limit and advanced the Partnership approximately $609,000 and $3,019,000 to fund the redevelopment projects at Peakview Place Apartments and The Village in the Woods Apartments, respectively, and approximately $1,438,000 to fund property taxes, capital improvements and operating expenses at four of the Partnership's investment properties. An affiliate of the Managing General Partner has committed to fund additional redevelopment costs of approximately $1,862,000 for The Village in the Woods Apartments (as discussed below). During the nine months ended September 30, 2004, an affiliate of the Managing General Partner advanced the Partnership approximately $3,103,000 to fund the redevelopment project at Peakview Place Apartments, approximately $425,000 to fund property taxes at The Village in the Woods Apartments and Cooper's Pond Apartments, and approximately $845,000 to fund capital improvements and operating expenses at The Lodge Apartments, Peakview Place Apartments, and The Village in the Woods Apartments. The redevelopment advances to The Village in the Woods Apartments accrue interest at 10.0% and all other advances bear interest at the prime rate plus 2% (8.75% at September 30, 2005). Interest expense for the nine months ended September 30, 2005 and 2004 was approximately $408,000 and $91,000, respectively. During the nine months ended September 30, 2004, the Partnership made payments of approximately $1,524,000 on the advances and approximately $22,000 in accrued interest, from proceeds from the second mortgage obtained on Cooper's Pond Apartments (as discussed below). No such payments were made to affiliates of the Managing General Partner during the nine months ended September 30, 2005. At September 30, 2005, the total outstanding advances and accrued interest due to an affiliate of the Managing General Partner is approximately $10,008,000 and is included in due to affiliates. Subsequent to September 30, 2005 an affiliate of the Managing General Partner advanced the Partnership approximately $390,000 to fund the redevelopment project at The Village in the Woods Apartments and approximately $649,000 to fund operations and capital improvements at four of the Partnership's investment properties. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The Managing General Partner monitors developments in the area of legal and regulatory compliance. For example, the Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance. Capital improvements planned for each of the Partnership's properties are detailed below. Peakview Place Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $448,000 of capital improvements arising from the redevelopment of the property, which includes capitalization of construction period interest of approximately $34,000, real estate taxes of approximately $1,000 and other construction period costs of approximately $3,000. Additional capital improvements of approximately $165,000 were also completed during the nine months ended September 30, 2005, consisting primarily of interior improvements and floor covering replacement. These improvements were funded from operating cash flow and advances from an affiliate of the Managing General Partner. The property underwent a redevelopment project in order to become more competitive with other properties in the area and to increase occupancy at the property. The redevelopment was completed in May 2005 at a total cost of approximately $4,785,000, approximately $3,697,000 and $640,000 of which was completed during 2004 and 2003, respectively. The project was funded by advances from an affiliate of the Managing General Partner. Approximately $609,000 was advanced during the nine months ended September 30, 2005 to pay for redevelopment project costs. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no other material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. Creekside Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $296,000 of capital improvements at Creekside Apartments, consisting primarily of electrical and lighting upgrades, major landscaping, handrails, air conditioning upgrades and floor covering replacement. These improvements were funded from replacement reserves and operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The Lodge Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $414,000 of capital improvements at The Lodge Apartments, consisting primarily of heating and air conditioning upgrades, interior building improvements, structural upgrades, and floor covering replacement. These improvements were funded from replacement reserves, advances from an affiliate of the Managing General Partner, and operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The Village in the Woods Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $3,438,000 of capital improvements at The Village in the Woods Apartments arising from the redevelopment of the property which includes capitalization of construction period interest of approximately $42,000. Additional capital improvements of approximately $311,000 were also completed during the nine months ended September 30, 2005, consisting primarily of interior building improvements, swimming pool upgrades, air conditioning upgrades, and floor covering replacement. These improvements were funded from operating cash flow and advances from an affiliate of the Managing General Partner. The Partnership regularly evaluates the capital improvement needs of the property. In April 2005, the Partnership began a major redevelopment project in order for the property to become more competitive with other properties in the Houston area and to increase occupancy at the property. Based on current redevelopment plans, the Managing General Partner anticipates the redevelopment to be complete in January 2006 at a total cost of approximately $5,300,000. The project consists of structural upgrades, interior and exterior building improvements, balcony and deck upgrades, the addition of a fitness center, clubhouse and swimming pool upgrades, major landscaping, sewer upgrades, parking area upgrades and exterior lighting upgrades. In March 2005, the Partnership entered into a construction contract with a third party for approximately $3,300,000 related to this project. The Partnership expects to fund the redevelopment from operating cash flow and advances from an affiliate of the Managing General Partner. In addition, certain routine capital expenditures are anticipated during the remainder of 2005. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. Cooper's Pond Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $520,000 of capital improvements at Cooper's Pond Apartments, consisting primarily of roof replacement, gutter upgrades, structural improvements, handrails, exterior building improvements, furniture upgrades, major landscaping and floor covering replacement. These improvements were funded from operating cash flow and advances from an affiliate of the Managing General Partner. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The capital expenditures will be incurred only if cash is available from operations, Partnership reserves, or advances from an affiliate of the Managing General Partner. To the extent that capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. On June 7, 2004, the Partnership obtained a second mortgage loan on Cooper's Pond Apartments in the amount of $2,540,000. The second mortgage requires monthly payments of interest beginning August 1, 2004 until the loan matures July 1, 2007, with interest being equal to the one month LIBOR rate plus 300 basis points (6.86% at September 30, 2005). In connection with obtaining the second mortgage, loan costs of approximately $70,000 were capitalized during the nine months ended September 30, 2004 and are included in other assets on the consolidated balance sheet included in "Item 1. Financial Statements". In connection with the new financing, the Partnership agreed to certain modifications on the existing mortgage loan encumbering Cooper's Pond Apartments. The modification of terms consisted of an interest rate of 8.77%, a monthly payment of approximately $62,000 on July 1, 2004, and monthly payments of approximately $59,000, commencing August 1, 2004 through its maturity of July 1, 2014, with a balloon payment of approximately $6,655,000 due at maturity. The previous terms consisted of monthly payments of approximately $72,000 with a stated interest rate of 8.47% through its maturity of March 1, 2020, at which time the loan was scheduled to be fully amortized. The remaining mortgage indebtedness of approximately $35,517,000 is amortized over varying periods. The debt encumbering Creekside Apartments and The Lodge Apartments matures in September 2008, at which time balloon payments totaling approximately $11,594,000 will be due. The debt encumbering Peakview Place Apartments and The Village in the Woods Apartments matures in 2020 at which time the loans are scheduled to be fully amortized. The Managing General Partner will attempt to refinance the indebtedness encumbering Cooper's Pond Apartments, Creekside Apartments, and The Lodge Apartments and/or sell the properties prior to their maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure. Subsequent to September 30, 2005, the Partnership entered into a Purchase and Sale Contract to sell Cooper's Pond Apartments to a third party for a purchase price of approximately $25,051,000. The anticipated closing date for the transaction is January 31, 2006. At September 30, 2005, the carrying amounts of the mortgage notes payable and investment property are approximately $9,955,000 and $5,675,000, respectively. The operating results of Cooper's Pond Apartments for the three and nine months ended September 30, 2005 were income of approximately $12,000 and loss of approximately $22,000, which included revenues of approximately $843,000 and $2,481,000, respectively. The operating results of the property for the three and nine months ended September 30, 2004 were losses of approximately $11,000 and $44,000, respectively, which included revenues of approximately $769,000 and $2,259,000, respectively. No distributions were made to the partners during the nine months ended September 30, 2005 or 2004. Future distributions will depend on the levels of net cash generated from operations, the timing of debt maturities, refinancings, and/or property sales. The Partnership's cash available for distribution is reviewed on a monthly basis. In light of the amounts accrued and payable to affiliates of the Managing General Partner at September 30, 2005, it is unlikely that the Partnership will generate sufficient funds from operations, after required capital improvement expenditures, to permit any distributions to its partners for the foreseeable future. Other In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 51,826 limited partnership units (the "Units") in the Partnership representing 69.10% of the outstanding Units at September 30, 2005. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 69.10% of the outstanding Units, AIMCO and its affiliates are in a position to influence all voting decisions with respect to the Partnership. However, DeForest Ventures I L.P., from whom AIMCO, through its merger with Insignia Financial Group, Inc., acquired 25,833.5 (approximately 34.45%) of its Units, had agreed for the benefit of third party unitholders, that it would vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to its affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party unit holders. Except for the foregoing, no other limitations are imposed on AIMCO and its affiliates right to vote each Unit held. Although the Managing General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to AIMCO as its sole stockholder. Critical Accounting Policies and Estimates The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity. Impairment of Long-Lived Assets The Partnership's investment properties are recorded at cost, less accumulated depreciation, unless considered impaired. If events or circumstances indicate that the carrying amount of a property may be impaired, the Partnership will make an assessment of its recoverability by estimating the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the fair value of the property. Real property investments are subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of the Partnership's investment properties. These factors include, but are not limited to, changes in the national, regional and local economic climate; local conditions, such as an oversupply of multifamily properties; competition from other available multifamily property owners and changes in market rental rates. Any adverse changes in these factors could cause impairment of the Partnership's assets. Revenue Recognition The Partnership generally leases apartment units for twelve-month terms or less. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease. The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants. ITEM 3. CONTROLS AND PROCEDURES (a) Disclosure Controls and Procedures. The Partnership's management, with the participation of the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) Internal Control Over Financial Reporting. There have not been any changes in the Partnership's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain Managing General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint. Plaintiffs took an appeal from this order. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the court's use of a referee and its order requiring Objector to pay those fees. On March 21, 2005, the Court of Appeals issued opinions in both pending appeals. With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial court's order and remanded to the trial court for further findings on the basis that the "state of the record is insufficient to permit meaningful appellate review". With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. On April 26, 2005, the Court of Appeals lifted the stay of a pending appeal related to the Heller action and the trial court's order striking the complaint. On April 28, 2005, the Objector filed a Petition for Review with the California Supreme Court in connection with the opinion vacating the order approving settlement and remanding for further findings. On June 10, 2005, the California Supreme Court denied Objector's Petition for Review and the Court of Appeals sent the matter back to the trial court on June 21, 2005. The parties intend to ask the trial court to make further findings in connection with settlement consistent with the Court of Appeal's remand order. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial court's order striking the first amended complaint. On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On October 27, 2005, the Court denied Objector's peremptory challenge and struck Objector's motion to disqualify for cause. No hearing has been set on Objector's remaining motions. On November 3, 2005, Objector and his counsel filed a writ of mandate to the Court of Appeals challenging the court's October 27, 2005 order. The Managing General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. AIMCO Properties L.P. and NHP Management Company, both affiliates of the Managing General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Those employees will have the opportunity to opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management Company will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs' motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County). Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the Managing General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS See Exhibit Index. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTURY PROPERTIES FUND XVII By: FOX PARTNERS Its General Partner By: FOX CAPITAL MANAGEMENT CORPORATION Its Managing General Partner By: /s/Martha L. Long Martha L. Long Senior Vice President By: /s/Stephen B. Waters Stephen B. Waters Vice President Date: November xx, 2005 CENTURY PROPERTIES FUND XVII EXHIBIT INDEX Exhibit Number Description of Exhibit 2.5 Master Indemnity Agreement incorporated by reference to Exhibit 2.5 to Form 8-K filed by Insignia with the Securities and Exchange Commission on September 1, 1995. 3.4 Agreement of Limited Partnership incorporated by reference to Exhibit A to the Prospectus of the Registrant dated March 29, 1982 and as thereafter supplemented contained in the Registrant's Registration Statement on Form S-11 (Reg. No. 2-75411). 10.1 Multifamily Note dated December 7, 1999, by and between Apartment CCG 17, L.P., a California limited partnership, and GMAC Commercial Mortgage Corporation, a California Corporation; incorporated by reference to the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999. 10.2 Multifamily Note dated January 27, 2000, by and between Century Properties Fund XVII, a California limited partnership, and GMAC Commercial Mortgage Corporation, a California Corporation; incorporated by reference to the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999. 10.3 Multifamily Note dated February 11, 2000, by and between Century Properties Fund XVII, a California limited partnership, and GMAC Commercial Mortgage Corporation, a California Corporation; incorporated by reference to the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999. 10.4 Allonge and Amendment to Multifamily Note dated June 7, 2004, by and among Century Properties Fund XVII, a California limited partnership, GMAC Commercial Mortgage Corporation, and Federal Home Loan Mortgage Corporation, incorporated by reference to the Partnership's Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 2004. 10.5 Multifamily Note dated June 7, 2004, by and between Century Properties Fund XVII, a California limited partnership, and GMAC Commercial Mortgage Bank, incorporated by reference to the Partnership's Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 2004. 10.6 Multifamily Note dated August 24, 1998, by and between Apartment Lodge 17 A LLC, a Colorado limited liability company and Newport Mortgage Company, L.P. a Texas limited partnership, incorporated by reference to Partnership's Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 1998. 10.7 Multifamily Note dated August 24, 1998, by and between Apartment Creek 17 A LLC, a Colorado limited liability company and Newport Mortgage Company, L.P., a Texas limited partnership, incorporated by reference to the Partnership's Quarterly Report on Form 10-QSB for the quarterly period ended September 30, 1998. CENTURY PROPERTIES FUND XVII EXHIBIT INDEX - CONTINUED 31.1 Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 31.1 CERTIFICATION I, Martha L. Long, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Century Properties Fund XVII; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November xx, 2005 /s/Martha L. Long Martha L. Long Senior Vice President of Fox Capital Management Corporation, equivalent of the chief executive officer of the Partnership Exhibit 31.2 CERTIFICATION I, Stephen B. Waters, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Century Properties Fund XVII; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November xx, 2005 /s/Stephen B. Waters Stephen B. Waters Vice President of Fox Capital Management Corporation, equivalent of the chief financial officer of the Partnership Exhibit 32.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-QSB of Century Properties Fund XVII (the "Partnership"), for the quarterly period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive officer of the Partnership, and Stephen B. Waters, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/Martha L. Long Name: Martha L. Long Date: November xx, 2005 /s/Stephen B. Waters Name: Stephen B. Waters Date: November xx, 2005 This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----