Note 3 - Notes Payable and Amounts Due For Partnership Interests

6 Months Ended

Jun. 30, 2013

Notes

Note 3 - Notes Payable and Amounts Due For Partnership Interests

NOTE 3 - NOTES PAYABLE AND AMOUNTS DUE FOR PARTNERSHIP INTERESTS

The Partnership was obligated on non-recourse notes payable of $520,000, which bore interest at 9.5 percent per annum and had principal maturities of December 1999. The notes and related interest were payable from cash flow generated from operations of the related rental property as defined in the notes. These obligations were collateralized by the Partnership’s investment in the Local Limited Partnership. Unpaid interest was due at maturity of the notes. Interest expense on non-recourse notes payable was approximately $8,000 for the six months ended June 30, 2012. During 2005, the Partnership entered into an agreement with the non-recourse note holder for Cassady Village (“Cassady Village”) pursuant to which the noteholder agreed to forebear taking any action under the note pending the purchase by the noteholder of a series of projects, including the properties owned by the Local Limited Partnerships for Cassady Village and Marshall Plaza I & II Apartments. As discussed in “Note 2”, these Local Limited Partnerships sold their respective investment properties to the note holder during the six months ended June 30, 2012. In connection with the sale of Cassady Village, the Partnership’s non-recourse notes payable were extinguished during the six months ended June 30, 2012, and the Partnership recognized a gain on extinguishment of debt of approximately $1,891,000.