10KSB 1 cpgf22.txt CPGF22 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-KSB (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 0-13418 CENTURY PROPERTIES GROWTH FUND XXII (Name of small business issuer in its charter) California 94-2939418 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Limited Partnership Units (Title of class) 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___ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. $18,482,000 State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests as of December 31, 2003. No market exists for the limited partnership interests of the Registrant, and, therefore, no aggregate market value can be determined. DOCUMENTS INCORPORATED BY REFERENCE None 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. PART I Item 1. Description of Business General Century Properties Growth Fund XXII (the "Partnership" or "Registrant") was organized in August 1984, as a California limited partnership under the Uniform Limited Partnership Act of the California Corporations Code. Fox Partners IV, a California general partnership, is the general partner of the Partnership. The general partners of Fox Partners IV are Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox Partners 84, a California general partnership. The managing general partner of FRI is NPI Equity Investments II, Inc., a Florida Corporation ("NPI Equity"). The Managing General Partner and NPI Equity are subsidiaries of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2010, unless terminated prior to such date. The principal business of the Partnership is to hold for investment and ultimately sell income-producing multi-family residential properties. Beginning in September 1984 through June 1986, the Partnership offered $120,000,000 in Limited Partnership Units and sold units having an initial cost of $82,848,000. The net proceeds of this offering were used to acquire eleven income-producing real estate properties. The Partnership's original property portfolio was geographically diversified with properties acquired in eight states. The Partnership's acquisition activities were completed in September 1986 and since then the principal activity of the Partnership has been managing its portfolio. The Partnership continues to operate eight residential properties. One property was acquired by the lender through foreclosure in 1992, one property was sold in 1995 and one property was sold in 2001. Since its initial offering, the Partnership has not received, nor are the limited partners required to make, additional capital contributions. The Partnership has no full-time employees. The Managing General Partner is vested with full authority as to the general management and supervision of the business and affairs of the Partnership. The non-managing general partners and the limited partners have no right to participate in the management or conduct of such business and affairs. An affiliate of the Managing General Partner provides day-to-day management services for the Partnership's investment properties. Risk Factors The real estate business in which the Partnership is engaged is highly competitive. There are other residential properties within the market area of the Partnership's properties. The number and quality of competitive properties, including those which may be managed by an affiliate of the Managing General Partner, in such market area could have a material effect on the rental market for the apartments at the Partnership's properties and the rents that may be charged for such apartments. While the Managing General Partner and its affiliates own and/or control a significant number of apartment units in the United States, such units represent an insignificant percentage of total apartment units in the United States and competition for the apartments is local. Laws benefiting disabled persons may result in the Partnership's incurrence of unanticipated expenses. Under the Americans with Disabilities Act of 1990, or ADA, all places intended to be used by the public are required to meet certain Federal requirements related to access and use by disabled persons. Likewise, the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped. These and other Federal, state and local laws may require modifications to the Partnership's properties, or restrict renovations of the properties. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although we believe that the Partnership's properties are substantially in compliance with present requirements, we may incur unanticipated expenses to comply with the ADA and the FHAA. Both the income and expenses of operating the properties owned by the Partnership are subject to factors outside of the Partnership's control, such as changes in the supply and demand for similar properties resulting from various market conditions, increases/decreases in unemployment or population shifts, changes in the availability of permanent mortgage financing, changes in zoning laws, or changes in patterns or needs of users. In addition, there are risks inherent in owning and operating residential properties because such properties are susceptible to the impact of economic and other conditions outside of the control of the Partnership. There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Partnership is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the properties owned by the Partnership. The Partnership monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed which resulted in no material adverse conditions or liabilities. In no case has the Partnership received notice that it is a potentially responsible party with respect to an environmental clean up site. A further description of the Partnership's business is included in "Management's Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form 10-KSB. Item 2. Description of Properties The following table sets forth the Partnership's investments in properties:
Date of Property Purchase Type of Ownership Use Wood Creek Apartments 5/84 Fee ownership subject to Apartment Mesa, Arizona first mortgage (1) 432 units Plantation Creek Apartments 6/84 Fee ownership subject to Apartment Atlanta, Georgia first mortgage (1) 484 units Four Winds Apartments 9/85 Fee ownership subject to Apartment Overland, Kansas first mortgage (1) 350 units Copper Mill Apartments 9/86 Fee ownership subject to Apartment Richmond, Virginia first mortgage (1) 192 units Cooper's Pointe Apartments 11/85 Fee ownership subject to Apartment Charleston, South Carolina first mortgage (1) 192 units Autumn Run Apartments 6/86 Fee ownership subject to Apartment Naperville, Illinois first mortgage 320 units Promontory Point Apartments 10/85 Fee ownership subject to Apartment Austin, Texas first mortgage (1) 252 units Hampton Greens Apartments 12/85 Fee ownership subject to Apartment Dallas, Texas first mortgage (1) 309 units
(1) Property is held by a limited partnership in which the Partnership owns a 100% interest. Schedule of Properties Set forth below for each of the Partnership's properties is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation and Federal tax basis at December 31, 2003.
Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis (in thousands) (in thousands) Wood Creek $ 18,349 $ 10,224 5-30 yrs S/L $ 3,102 Plantation Creek 28,863 16,404 5-30 yrs S/L 5,342 Four Winds 18,821 10,165 5-30 yrs S/L 3,909 Copper Mill 10,140 5,462 5-30 yrs S/L 3,959 Cooper's Pointe 8,160 4,861 5-30 yrs S/L 1,058 Autumn Run 18,943 10,468 5-30 yrs S/L 3,563 Promontory Point 13,464 6,944 5-30 yrs S/L 3,040 Hampton Greens 12,893 6,899 5-30 yrs S/L 3,072 $129,633 $ 71,427 $ 27,045
See "Note A" to the consolidated financial statements included in "Item 7. Financial Statements" for a description of the Partnership's capitalization and depreciation policies. Schedule of Property Indebtedness The following table sets forth certain information relating to the loans encumbering the Partnership's properties.
Principal Principal Balance At Balance December 31, Interest Period Maturity Due At Property 2003 Rate Amortized Date Maturity (1) (in thousands) (in thousands) Wood Creek $11,745 7.93% 30 yrs 2/2006 $11,319 Plantation Creek 14,476 7.93% 30 yrs 2/2006 13,952 Four Winds 8,808 7.93% 30 yrs 2/2006 8,489 Copper Mill 5,542 7.88% 30 yrs 1/2006 5,347 Cooper's Pointe 3,861 7.88% 30 yrs 1/2006 3,725 Autumn Run 12,402 7.02% 20 yrs 10/2021 -- Promontory Point 3,758 7.04% 30 yrs 5/2008 3,500 Hampton Greens 5,269 7.88% 30 yrs 1/2006 5,084 Total $65,861 $51,416
(1) See "Item 7. Financial Statements - Note C" for information with respect to the Partnership's ability to prepay these loans and other specific details about the loans. Schedule of Rental Rates and Occupancy Average annual rental rates and occupancy for 2003 and 2002 for each property:
Average Annual Average Rental Rates Occupancy (per unit) Property 2003 2002 2003 2002 Wood Creek (1) $ 7,429 $ 7,702 79% 84% Plantation Creek (2) 7,697 9,068 92% 84% Four Winds 7,994 8,376 94% 96% Copper Mill 9,262 9,224 94% 96% Cooper's Pointe (3) 7,793 7,702 97% 93% Autumn Run (4) 9,555 9,714 96% 92% Promontory Point 7,193 7,988 88% 87% Hampton Greens (5) 6,223 6,537 89% 92%
(1) The decrease in occupancy at Wood Creek Apartments is due to road construction in the area as well as a slow economy and increased competition in the Mesa market. Management is implementing new marketing strategies which may include rental concessions to make Wood Creek more competitive in its market. (2) The increase in occupancy at Plantation Creek Apartments is due to management changes which have had an immediate impact on the marketing and leasing activity of the property which includes the lowering of the rental rates. (3) The increase in occupancy at Cooper's Pointe is due to lower resident turnover at the property and an aggressive resident retention program. (4) The increase in occupancy at Autumn Run Apartments is due to competitive rental rates and new marketing strategies that were offered to tenants during 2003. (5) The decrease in occupancy at Hampton Green Apartments is primarily due to job losses in the Dallas area and low mortgage rates allowing more tenants to buy homes. As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties are subject to competition from other residential apartment complexes in the area. The Managing General Partner believes that all of the properties are adequately insured. Each property is an apartment complex which leases units for terms of one year or less. No residential tenant leases 10% or more of the available rental space. All of the properties are in good physical condition, subject to normal depreciation and deterioration as is typical for assets of this type and age. Real Estate Taxes and Rates Real estate taxes and rates in 2003 for each property were: 2003 2003 Billing Rate (in thousands) Wood Creek $199 1.18% Plantation Creek 340 3.49% Four Winds 170 0.96% Copper Mill 110 0.94% Cooper's Pointe 128 1.66% Autumn Run 388 6.84% Promontory Point 229 2.79% Hampton Greens 243 2.88% Capital Expenditures Wood Creek The Partnership completed approximately $385,000 in capital expenditures at Wood Creek Apartments during the year ended December 31, 2003, consisting primarily of roof, appliance and floor covering replacements, major landscaping, furniture and fixtures, cabinets and swimming pool upgrades. These improvements were funded from operating cash flow and replacement reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $238,000. Additional capital improvements may be considered during 2004 and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Plantation Creek The Partnership completed approximately $594,000 in capital expenditures at Plantation Creek Apartments during the year ended December 31, 2003, consisting primarily of major landscaping, floor covering and appliance replacements, parking lot resurfacing, structural improvements and water/sewer upgrades. Included in this amount is approximately $250,000 of expenditures related to a collapsed storm drain during the spring which resulted in significant damage to three tennis courts and part of the pool deck. The damage was not covered by insurance. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $266,000. Additional capital improvements may be considered during 2004 and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Four Winds The Partnership completed approximately $163,000 in capital expenditures at Four Winds Apartments during the year ended December 31, 2003, consisting primarily of structural improvements, floor covering and appliance replacements and air conditioning upgrades. These improvements were funded from replacement reserves and operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $193,000. Additional capital improvements may be considered during 2004 and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Copper Mill The Partnership completed approximately $70,000 in capital expenditures at Copper Mill Apartments during the year ended December 31, 2003, consisting primarily of floor covering replacements, air conditioning upgrades and structural improvements. These improvements were funded from replacement reserves and operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $106,000. Additional capital improvements may be considered during 2004 and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Cooper's Pointe The Partnership completed approximately $67,000 in capital expenditures at Cooper's Pointe Apartments during the year ended December 31, 2003, consisting primarily of floor covering and roof replacements and swimming pool improvements. These improvements were funded from replacement reserves and operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $106,000. Additional capital improvements may be considered during 2004 and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Autumn Run The Partnership completed approximately $244,000 in capital expenditures at Autumn Run Apartments during the year ended December 31, 2003, consisting primarily of floor covering, roof and appliance replacements, swimming pool and building improvements and plumbing fixture and water heater upgrades. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $176,000. Additional capital improvements may be considered during 2004 and will depend on the physical condition of the property and the anticipated cash flow generated by the property. Promontory Point The Partnership completed approximately $163,000 in capital expenditures at Promontory Point Apartments during the year ended December 31, 2003, consisting primarily of appliance and floor covering replacements, office computers and air conditioning and structural improvements. These improvements were funded from insurance proceeds, replacement reserves and operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $139,000. Additional capital improvements may be considered during 2004 and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Hampton Greens The Partnership completed approximately $104,000 in capital expenditures at Hampton Greens Apartments during the year ended December 31, 2003, consisting primarily of floor covering replacements, swimming pool upgrades, major landscaping and parking lot improvements. These improvements were funded from replacement reserves and operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $170,000. Additional capital improvements may be considered during 2004 and will depend on the physical condition of the property as well as replacement reserves and the anticipated cash flow generated by the property. Item 3. 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 (the "Heller action") was filed against the same defendants that are named in the Nuanes action, captioned Heller v. Insignia Financial Group. 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 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. In general terms, the proposed settlement provides for certification for settlement purposes of a settlement class consisting of all limited partners in this Partnership and others (the "Partnerships") as of December 20, 2002, the dismissal with prejudice and release of claims in the Nuanes and Heller litigation, payment by AIMCO of $9.9 million (which shall be distributed to settlement class members after deduction of attorney fees and costs of class counsel and certain costs of settlement) and up to $1 million toward the cost of independent appraisals of the Partnerships' properties by a Court appointed appraiser. An affiliate of the Managing General Partner has also agreed to make at least one round of tender offers to purchase all of the partnership interests in the Partnerships within one year of final approval, if it is granted, and to provide partners with the independent appraisals at the time of these tenders. The proposed settlement also provided for the limitation of the allowable costs which the Managing General Partner or its affiliates will charge the Partnerships in connection with this litigation and imposes limits on the class counsel fees and costs in this litigation. On April 11, 2003, notice was distributed to limited partners providing the details of the proposed settlement. 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 seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On November 24, 2003, the Objector filed an application requesting the Court order AIMCO to withdraw settlement tender offers it had commenced, refrain from making further offers pending the appeal and auction any units tendered to third parties, contending that the offers did not conform with the terms of the Settlement. Counsel for the Objector (on behalf of another investor) had alternatively requested the Court take certain action purportedly to enforce the terms of the settlement agreement. On December 18, 2003, the Court heard oral argument on the motions and denied them both in their entirety. On January 28, 2004, Objector filed his opening brief in his pending appeal. The Managing General Partner is currently scheduled to file a brief in support of the order approving settlement and entering judgment thereto by April 23, 2004. On August 8, 2003 AIMCO Properties L.P., an affiliate of the Managing General Partner, was served with a Complaint in the United States District Court, District of Columbia alleging that AIMCO Properties L.P. 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 is styled as 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. failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the Complaint alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating maintenance workers for time that they worked in responding to a call while "on-call". The Complaint also attempts to certify a subclass for salaried service directors who are challenging their classification as exempt from the overtime provisions of the FLSA. AIMCO Properties L.P. has filed an answer to the Complaint denying the substantive allegations. Discovery is currently underway. 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. Item 4. Submission of Matters to a Vote of Security Holders The unit holders of the Partnership did not vote on any matter during the quarter ended December 31, 2003. PART II Item 5. Market for the Partnership Equity and Related Partner Matters The Partnership, a publicly-held limited partnership, offered and sold 82,848 limited partnership units (the "Units") aggregating $82,848,000. The Partnership currently has 3,027 holders of record owning an aggregate of 82,848 Units at December 31, 2003. Affiliates of the Managing General Partner owned 48,171.50 Units or 58.14% at December 31, 2003. No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future. The Partnership distributed the following amounts during the years ended December 31, 2003 and 2002 (in thousands, except per unit data):
Per Limited Per Limited Year Ended Partnership Year Ended Partnership December 31, 2003 Unit December 31, 2002 Unit Operations $ 230 $ 2.45 $ 1,915 $ 20.39
Future cash distributions will depend on the levels of cash generated from operations, the availability of cash reserves, the timing of debt maturities, property sales, and/or refinancings. The Partnership's cash available for distribution is reviewed on a monthly basis. There can be no assurance that the Partnership will generate sufficient funds from operations after required capital improvements to permit any distributions to its partners during 2004 or subsequent periods. In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 48,171.50 limited partnership units (the "Units") in the Partnership representing 58.14% of the outstanding Units at December 31, 2003. 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, which 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 58.14% of the outstanding Units, AIMCO and it affiliates are in a position to influence all voting decisions with respect to the Partnership. With respect to 17,023.50 Units, such affiliates are required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party unitholders. Except for the foregoing, no other limitations are imposed on such affiliates' ability to influence voting decisions with respect to the Partnership. 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. Item 6. Management's Discussion and Analysis or Plan of Operation This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. Results of Operations The Partnership's net loss for the year ended December 31, 2003 was approximately $1,909,000 compared to net loss of approximately $225,000 for the comparable period in 2002. The increase in net loss for the year ended December 31, 2003 is due to a decrease in total revenues and an increase in total expenses. Total revenues decreased primarily as a result of a decrease in rental income and the casualty gains recognized at Promontory Point and Wood Creek Apartments during the year ended December 31, 2002 partially offset by an increase in other income. The decrease in rental income is due primarily to the decrease in occupancy at Wood Creek and Hampton Greens Apartments. Although four of the Partnership's investment properties saw increases in occupancy, these increases were more than offset by decreases in average rental rates at six of the Partnership's eight investment properties and an increase in concessions offered to attract tenants. Other income increased for the comparable periods due primarily to increases in late charges and lease cancellation fees at a majority of the Partnership's investment properties. During the year ended December 31, 2003, the Partnership recorded a net casualty gain of approximately $25,000 at Autumn Run Apartments. The casualty gain was related to wind damage in May 2003. The gain was a result of the receipt of insurance proceeds of approximately $35,000 offset by approximately $10,000 of undepreciated property improvements and replacements being written off. During the year ended December 31, 2002, the Partnership recorded a net casualty gain of approximately $544,000 which was the result of a $531,000 casualty gain recorded at Promontory Point Apartments and a $13,000 casualty gain recorded at Wood Creek Apartments. The casualty gain at Promontory Point Apartments related to a fire in January 2002 which caused damage to 24 units of the complex. The gain was a result of the receipt of insurance proceeds of approximately $746,000 offset by approximately $215,000 of undepreciated property improvements and replacements being written off. The casualty gain at Wood Creek Apartments related to a water main break in July 2001 which caused damage to one unit of the complex. During 2001, the related assets were written off and the Partnership recognized a casualty gain of approximately $46,000. During the year ended December 31, 2002, the final insurance proceeds were received and the Partnership recognized an additional casualty gain of $13,000. On October 24, 2003, the Partnership sold a portion of the land from Autumn Run Apartments to the city of Naperville, Illinois, for gross proceeds of approximately $26,000. The Partnership realized a gain of approximately $5,000 as a result of the sale. The Partnership was required to use the net proceeds, after closing costs, of approximately $19,000 as a payment on the mortgage encumbering the property. The increase in total expenses is due to increases in operating and depreciation expenses partially offset by decreases in interest and property tax expenses. Operating expense increased primarily as a result of increases in contract repairs and cleaning and advertising expenses at Wood Creek Apartments, increases in utilities and salaries and related employee expenses at Wood Creek and Plantation Creek Apartments and increases in yard and ground work at Promontory Point Apartments and Four Winds Apartments. These increases were slightly offset by a decrease in management fees at six of the Partnership's investment properties due to the decrease in rental income on which these fees are based. Depreciation expense increased due to property improvements and replacements placed into service during the past twelve months which are now being depreciated. Interest expense decreased due to the payment of scheduled principal payments on the mortgages encumbering the Partnership's investment properties, which has reduced the average outstanding balance over the past twelve months. Property tax expense decreased due to an additional billing in 2002 by the local taxing authorities related to the 2001 tax year at Cooper's Pointe Apartments, a decrease in the assessed value of Promontory Point and a decrease in the tax rate at Four Winds. General and administrative expense remained relatively constant between the comparable periods. Included in general and administrative expenses are reimbursements to the Managing General Partner allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. 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. Capital Resources and Liquidity At December 31, 2003, the Partnership had cash and cash equivalents of approximately $1,011,000 compared to approximately $1,288,000 at December 31, 2002. Cash and cash equivalents decreased approximately $277,000 from December 31, 2002 due to approximately $1,576,000 and $1,659,000 of cash used in financing and investing activities, respectively, partially offset by approximately $2,958,000 of cash provided by operating activities. Cash used in financing activities consisted of principal payments made on the mortgages encumbering the Partnership's investment properties, distributions made to the partners, and the repayment of an advance from an affiliate of the Managing General Partner partially offset by an advance from an affiliate of the Managing General Partner. Cash used in investing activities consisted of property improvements and replacements and net deposits to restricted escrows maintained by the mortgage lenders, slightly offset by insurance proceeds received from a casualty at Autumn Run Apartments and sale proceeds received from the sale of land at Autumn Run Apartments. 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 years ended December 31, 2003 and 2002, an affiliate of the Managing General Partner agreed to advance funds in excess of the $150,000 line of credit to fund operating expenses of Plantation Creek Apartments and advanced approximately $205,000 and $329,000, respectively, for this purpose. At December 31, 2003, the outstanding balance was approximately $206,000, including accrued interest. Interest expense amounted to approximately $3,000 and $4,000 for the years ended December 31, 2003 and 2002, respectively. Other than cash and cash equivalents, the line of credit is the Partnership's only unused source of liquidity. 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 and is studying new federal laws, including the Sarbanes-Oxley Act of 2002. 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, including increased legal and audit fees. The Partnership is currently evaluating the capital improvement needs of the properties for the upcoming year and expects to budget approximately $1,394,000. Additional improvements may be considered and will depend on the physical condition of the properties as well as replacement reserves and anticipated cash flow generated by the properties. The Partnership's assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness encumbering all of the Partnership's investment properties of approximately $65,861,000 is amortized over varying periods with balloon payments of $47,916,000 and $3,500,000 due in 2006 and 2008, respectively, and one mortgage which will be fully amortized upon its maturity in October 2021. The Managing General Partner will attempt to refinance such remaining indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure. Pursuant to the Partnership Agreement, the term of the Partnership is scheduled to expire December 31, 2010. Accordingly, prior to such date the Partnership will need to either sell its investment properties or extend the term of the Partnership. The Partnership distributed the following amounts during the years ended December 31, 2003 and 2002 (in thousands, except per unit data):
Per Limited Per Limited Year Ended Partnership Year Ended Partnership December 31, 2003 Unit December 31, 2002 Unit Operations $ 230 $ 2.45 $ 1,915 $ 20.39
Future cash distributions will depend on the levels of cash generated from operations, the availability of cash reserves, the timing of debt maturities, property sales, and/or refinancings. The Partnership's cash available for distribution is reviewed on a monthly basis. There can be no assurance that the Partnership will generate sufficient funds from operations after required capital improvements to permit any distributions to its partners during 2004 or subsequent periods. Other In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 48,171.50 limited partnership units (the "Units") in the Partnership representing 58.14% of the outstanding Units at December 31, 2003. 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, which 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 58.14% of the outstanding Units, AIMCO and it affiliates are in a position to influence all voting decisions with respect to the Partnership. With respect to 17,023.50 Units, such affiliates are required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party unitholders. Except for the foregoing, no other limitations are imposed on such affiliates' ability to influence voting decisions with respect to the Partnership. 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 A summary of the Partnership's significant accounting policies is included in "Note A - Organization and Significant Accounting Policies" which is included in the consolidated financial statements in "Item 7. Financial Statements". The Managing General Partner believes that the consistent application of these policies enables the Partnership to provide readers of the financial statements with useful and reliable information about the Partnership's operating results and financial condition. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Partnership to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Judgments and assessments of uncertainties are required in applying the Partnership's accounting policies in many areas. 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 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 an impairment in the Partnership's assets. Revenue Recognition The Partnership generally leases apartment units for twelve-month terms or less. Rental income attributable to leases is recognized monthly as it is earned. 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. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Any concessions given at the inception of the lease are amortized over the life of the lease. Item 7. Financial Statements CENTURY PROPERTIES GROWTH FUND XXII LIST OF FINANCIAL STATEMENTS Report of Ernst & Young LLP, Independent Auditors Consolidated Balance Sheet - December 31, 2003 Consolidated Statements of Operations - Years ended December 31, 2003 and 2002 Consolidated Statements of Changes in Partners' (Deficiency) Capital - Years ended December 31, 2003 and 2002 Consolidated Statements of Cash Flows - Years ended December 31, 2003 and 2002 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Century Properties Growth Fund XXII We have audited the accompanying consolidated balance sheet of Century Properties Growth Fund XXII as of December 31, 2003, and the related consolidated statements of operations, changes in partners' (deficiency) capital, and cash flows for each of the two years in the period ended December 31, 2003. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Century Properties Growth Fund XXII at December 31, 2003, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States. /s/ERNST & YOUNG LLP Greenville, South Carolina February 27, 2004 CENTURY PROPERTIES GROWTH FUND XXII CONSOLIDATED BALANCE SHEET (in thousands, except unit data) December 31, 2003
Assets Cash and cash equivalents $ 1,011 Receivables and deposits 1,191 Restricted escrows 483 Other assets 962 Investment properties (Notes C, D and G): Land $ 12,694 Buildings and related personal property 116,939 129,633 Less accumulated depreciation (71,427) 58,206 $ 61,853 Liabilities and Partners' (Deficiency) Capital Liabilities Accounts payable $ 402 Tenant security deposit liability 404 Accrued property taxes 1,056 Due to affiliate (Note B) 292 Other liabilities 609 Mortgage notes payable (Note C) 65,861 Partners' (Deficiency) Capital General partner $ (8,283) Limited partners (82,848 units issued and outstanding) 1,512 (6,771) $ 61,853 See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES GROWTH FUND XXII CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit data)
Years Ended December 31, 2003 2002 Revenues: Rental income $16,538 $17,480 Other income 1,914 1,746 Casualty gains (Note F) 25 544 Gain on sale of property (Note G) 5 -- Total revenues 18,482 19,770 Expenses: Operating 8,026 7,417 General and administrative 481 493 Depreciation 4,860 4,735 Interest 5,312 5,400 Property taxes 1,712 1,950 Total expenses 20,391 19,995 Net loss (Note E) $(1,909) $ (225) Net loss allocated to general partner $ (225) $ (27) Net loss allocated to limited partners (1,684) (198) $(1,909) $ (225) Net loss per limited partnership unit $(20.33) $ (2.39) Distributions per limited partnership unit $ 2.45 $ 20.39 See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES GROWTH FUND XXII CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIENCY) CAPITAL (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 82,848 $ -- $ 82,848 $ 82,848 Partners' (deficiency) capital at December 31, 2001 82,848 $(7,778) $ 5,286 $(2,492) Distributions paid to partners -- (226) (1,689) (1,915) Net loss for the year ended December 31, 2002 -- (27) (198) (225) Partners' (deficiency) capital at December 31, 2002 82,848 (8,031) 3,399 (4,632) Distributions paid to partners -- (27) (203) (230) Net loss for the year ended December 31, 2003 -- (225) (1,684) (1,909) Partners' (deficiency) capital at December 31, 2003 82,848 $(8,283) $ 1,512 $(6,771) See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES GROWTH FUND XXII CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31, 2003 2002 Cash flows from operating activities: Net loss $ (1,909) $ (225) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 4,860 4,735 Bad debt 801 740 Amortization of loan costs 186 185 Gain on sale of property (5) -- Casualty gain (25) (544) Change in accounts: Receivables and deposits (668) (577) Other assets (166) (7) Accounts payable 87 (59) Tenant security deposit liability 55 54 Accrued property taxes (204) 45 Due to affiliate 83 4 Other liabilities (137) 135 Net cash provided by operating activities 2,958 4,486 Cash flows from investing activities: Property improvements and replacements (1,691) (2,473) Net deposits to restricted escrows (20) (192) Insurance proceeds received 35 759 Net proceeds from sale of property 17 -- Net cash used in investing activities (1,659) (1,906) Cash flows from financing activities Principal payments on mortgage notes payable (1,222) (1,154) Distributions paid to partners (230) (1,915) Advances from affiliate 205 329 Repayment of advances from affiliate (329) -- Net cash used in financing activities (1,576) (2,740) Net decrease in cash and cash equivalents (277) (160) Cash and cash equivalents at beginning of year 1,288 1,448 Cash and cash equivalents at end of year $ 1,011 $ 1,288 Supplemental disclosure of cash flow information: Cash paid for interest $ 5,189 $ 5,514 Supplemental information of non-cash activity: Property improvements and replacements included in accounts payable $ 99 $ -- See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES GROWTH FUND XXII NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2003 Note A - Organization and Significant Accounting Policies Organization Century Properties Growth Fund XXII (the "Partnership" or "Registrant") is a California Limited Partnership organized in August 1984 to acquire and operate residential apartment complexes. The Partnership's general partner is Fox Partners IV, a California general partnership. The general partners of Fox Partners IV are Fox Capital Management Corporation (the "Managing General Partner" or "FCMC"), a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox Associates 84, a California general partnership. The Managing General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2010 unless terminated prior to such date. The Partnership commenced operations on September 25, 1984. The capital contributions of $82,848,000 ($1,000 per unit) were made by the limited partners. The Partnership currently operates eight apartment properties in seven states. Principles of Consolidation The Partnership's consolidated financial statements include the accounts of Wood Creek CPGF 22, L.P., Plantation Creek CPGF 22, L.P., Four Winds CPGF 22, L.P., Cooper's Point CPGF 22, L.P., Hampton Greens CPGF 22, L.P., Century Stoney Greens, L.P. and Copper Mill CPGF 22, L.P. The Partnership owns a 100% interest in each of these partnerships. The Partnership has the ability to control the major operating and financial policies of these partnerships. All interpartnership transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Allocation of Profits, Gains, Losses and Distributions Profits, gains, losses and distributions of the Partnership are allocated between general and limited partners in accordance with the provisions of the Partnership Agreement. Profits and losses, not including gains from property dispositions, are allocated as follows: a) first, 10% to the general partner, and b) remainder allocated two percent to the general partner and 98% to the limited partners. Any gain from property dispositions shall be allocated as follows: a) first, to the general partner in an amount equal to distributions to the general partner from proceeds of property dispositions or refinancings; b) until the general partner no longer has a deficit balance in its capital account, 12% to the general partner and 88% to the limited partners, and c) remainder to the limited partners. Fair Value of Financial Instruments Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amounts of its financial instruments (except for long term debt) approximate their fair values due to the short term maturity of these instruments. The fair value of the Partnership's long term debt, after discounting the scheduled loan payments at a borrowing rate currently available to the Partnership, is approximately $68,581,000. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand and in banks. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances included approximately $939,000 at December 31, 2003 that are maintained by an affiliated management company on behalf of affiliated entities in cash concentration accounts. Depreciation Depreciation is provided by the straight-line method over the estimated lives of the apartment properties and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used for real property over 18 years for additions after March 15, 1984 and before May 9, 1985, and 19 years for additions after May 8, 1985, and before January 1, 1987. As a result of the Tax Reform Act of 1986, for additions after December 31, 1986, the modified accelerated cost recovery method is used for depreciation of (1) real property over 27.5 years and (2) personal property additions over 5 years. Replacement Reserve Escrow The Partnership maintains replacement reserve escrows at seven of its eight properties to fund replacement, refurbishment or repairs of improvements to the property pursuant to the mortgage note documents. As of December 31, 2003, the balance in these accounts is approximately $483,000, which includes interest. Loan Costs At December 31, 2003, loan costs of approximately $1,980,000 are included in other assets in the accompanying balance sheet and are being amortized by the straight-line method over the life of the loan. At December 31, 2003, accumulated amortization is approximately $1,368,000. Amortization of loan costs is included in interest expense in the accompanying consolidated statements of operations. Amortization expense is expected to be approximately $186,000 for both of the years 2004 and 2005; $39,000 in 2006, $29,000 in 2007 and $18,000 in 2008. Tenant Security Deposits The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in receivables and deposits. Deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on rental payments. Leases The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income on its leases monthly as it is earned. 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. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Any concessions given at the inception of the lease are amortized over the life of the lease. Investment Properties Investment properties consist of eight apartment complexes and are stated at cost. Acquisition fees are capitalized as a cost of real estate. Expenditures in excess of $250 that maintain an existing asset which has a useful life of more than one year are capitalized as capital replacement expenditures and depreciated over the useful life of the asset. Expenditures for ordinary repairs, maintenance and apartment turnover costs are expensed as incurred. In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. Costs of properties that have been permanently impaired have been written down to appraised value. No adjustments for impairment of value were recorded in the years ended December 31, 2003 or 2002. Segment Reporting SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment. Advertising The Partnership expenses the costs of advertising as incurred. Advertising costs of approximately $398,000 and $374,000 for the years ended December 31, 2003 and 2002, respectively, were charged to operating expense. Note B - Transactions with Affiliated Parties The Partnership has no employees and is dependent 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 as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Affiliates of the Managing General Partner are entitled to 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 $918,000 and $980,000 for the years ended December 31, 2003 and 2002, respectively, which is included in operating expenses. At December 31, 2003, approximately $11,000 of such property management fees were unpaid and are included in due to affiliate on the accompanying consolidated balance sheet. Affiliates of the Managing General Partner charged the Partnership reimbursement of accountable administrative expenses amounting to approximately $249,000 and $342,000 for the years ended December 31, 2003 and 2002, respectively, which is included in general and administrative expenses and investment properties. Included in these amounts are fees related to construction management services provided by an affiliate of the Managing General Partner of approximately $61,000 and $170,000 for the years ended December 31, 2003 and 2002, respectively. The construction management service fees are calculated based on a percentage of current additions to investment properties. At December 31, 2003, approximately $75,000 of accountable administrative expenses were unpaid and are included in due to affiliate on the accompanying consolidated balance sheet. Pursuant to the Partnership Agreement, for managing the affairs of the Partnership, the Managing General Partner is entitled to receive a Partnership management incentive allocation equal to 10% of the Partnership's adjusted cash from operations as distributed. During the years ended December 31, 2003 and 2002, approximately $23,000 and $192,000, respectively, of Partnership management incentive allocation was paid along with the distributions from operations. The incentive allocation is accounted for as a distribution to the general partner, in accordance with the terms of the Partnership Agreement. 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 years ended December 31, 2003 and 2002, an affiliate of the Managing General Partner agreed to advance funds in excess of the $150,000 line of credit to fund operating expenses of Plantation Creek Apartments and advanced approximately $205,000 and $329,000, respectively, for this purpose. At December 31, 2003, the outstanding balance was approximately $206,000, including accrued interest. Interest expense amounted to approximately $3,000 and $4,000 for the years ended December 31, 2003 and 2002, respectively. 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 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 years ended December 31, 2003 and 2002, the Partnership was charged by AIMCO and its affiliates approximately $250,000 and $302,000, respectively, for insurance coverage and fees associated with policy claims administration. In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 48,171.50 limited partnership units (the "Units") in the Partnership representing 58.14% of the outstanding Units at December 31, 2003. 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, which 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 58.14% of the outstanding Units, AIMCO and it affiliates are in a position to influence all voting decisions with respect to the Partnership. With respect to 17,023.50 Units, such affiliates are required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party unitholders. Except for the foregoing, no other limitations are imposed on such affiliates' ability to influence voting decisions with respect to the Partnership. 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. Note C - Mortgage Notes Payable The principal terms of mortgage notes payable are as follows:
Principal Monthly Principal Balance At Payment Stated Balance December 31, Including Interest Maturity Due At Property 2003 Interest Rate Date Maturity (in thousands) (in thousands) Wood Creek $11,745 $ 94 7.93% 2/2006 $11,319 Plantation Creek 14,476 116 7.93% 2/2006 13,952 Four Winds 8,808 71 7.93% 2/2006 8,489 Copper Mill 5,542 44 7.88% 1/2006 5,347 Cooper's Pointe 3,861 31 7.88% 1/2006 3,725 Autumn Run 12,402 102 7.02% 10/2021 -- Promontory Point 3,758 27 7.04% 5/2008 3,500 Hampton Greens 5,269 42 7.88% 1/2006 5,084 Total $65,861 $527 $51,416
The mortgage notes payable are non-recourse and are secured by a pledge of the Partnership's rental properties and by a pledge of revenues from the respective rental properties. The mortgage notes payable include a prepayment penalty if repaid prior to maturity. Further, the properties may not be sold subject to existing indebtedness. Scheduled principal payments of the mortgage notes payable subsequent to December 31, 2003, are as follows (in thousands): 2004 $ 1,205 2005 1,380 2006 48,453 2007 514 2008 4,002 Thereafter 10,307 $65,861 Note D - Real Estate and Accumulated Depreciation
Initial Cost To Partnership (in thousands) Buildings Net Cost and Related Capitalized Personal Subsequent to Description Encumbrances Land Property Acquisition (in thousands) (in thousands) Wood Creek $11,745 $ 2,130 $ 13,440 $ 2,779 Plantation Creek 14,476 2,653 20,827 5,383 Four Winds 8,808 1,363 14,288 3,170 Copper Mill 5,542 933 8,061 1,146 Cooper's Pointe 3,861 513 6,696 951 Autumn Run 12,402 1,462 14,957 2,524 Promontory Point 3,758 1,690 10,129 1,645 Hampton Greens 5,269 2,086 9,474 1,333 Total $65,861 $12,830 $ 97,872 $18,931
Gross Amount At Which Carried At December 31, 2003 (in thousands) Buildings And Related Personal Accumulated Year of Depreciable Description Land Property Total Depreciation Construction Life-Years (in thousands) Wood Creek $ 2,117 $ 16,232 $ 18,349 $10,224 1985 5-30 Plantation Creek 2,655 26,208 28,863 16,404 1978 5-30 Four Winds 1,357 17,464 18,821 10,165 1987 5-30 Copper Mill 929 9,211 10,140 5,462 1987 5-30 Cooper's Pointe 510 7,650 8,160 4,861 1986 5-30 Autumn Run 1,445 17,498 18,943 10,468 1987 5-30 Promontory Point 1,595 11,869 13,464 6,944 1984 5-30 Hampton Greens 2,086 10,807 12,893 6,899 1986 5-30 Total $12,694 $116,939 $129,633 $71,427
Reconciliation of "Real Estate and Accumulated Depreciation": Years Ended December 31, 2003 2002 (in thousands) Investment Properties Balance at beginning of year $128,934 $127,041 Property improvements and replacements 1,790 2,357 Disposal of property (1,079) (464) Sale of property (12) -- Balance at end of year $129,633 $128,934 Accumulated Depreciation Balance at beginning of year $ 67,636 $ 63,150 Additions charged to expense 4,860 4,735 Disposal of property (1,069) (249) Balance at end of year $ 71,427 $ 67,636 The aggregate cost of the real estate for Federal income tax purposes at December 31, 2003 and 2002, is approximately $127,740,000 and $125,998,000, respectively. The accumulated depreciation for Federal income tax purposes at December 31, 2003 and 2002, is approximately $100,695,000 and $96,479,000, respectively. Note E - Income Taxes The Partnership has received a ruling from the Internal Revenue Service that it will be classified as a partnership for Federal income tax purposes. Accordingly, no provision for income taxes is made in the consolidated financial statements of the Partnership. Taxable income or loss of the Partnership is reported in the income tax returns of its partners. The following is a reconciliation of reported net loss and Federal taxable loss (in thousands, except per unit data): 2003 2002 Net loss as reported $(1,909) $ (225) Add (deduct): Depreciation differences 644 (129) Change in prepaid rent (18) 209 Gain on sale -- (544) Other (46) (55) Federal taxable loss $(1,329) $ (744) Federal taxable loss per limited partnership unit $(14.15) $ (7.92) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands): 2003 Net liabilities as reported $ (6,771) Land and buildings (1,893) Accumulated depreciation (29,268) Syndication 12,427 Other 509 Net liabilities - Federal tax basis $(24,996) Note F - Casualty Gains During the year ended December 31, 2003, the Partnership recorded a net casualty gain of approximately $25,000 at Autumn Run Apartments. The casualty gain was related to wind damage in May 2003. The gain was a result of the receipt of insurance proceeds of approximately $35,000 offset by approximately $10,000 of undepreciated property improvements and replacements being written off. During the year ended December 31, 2002, the Partnership recorded a net casualty gain of approximately $544,000 which was the result of a $531,000 casualty gain recorded at Promontory Point Apartments and a $13,000 casualty gain recorded at Wood Creek Apartments. The casualty gain at Promontory Point Apartments related to a fire in January 2002 which caused damage to 24 units of the complex. The gain was a result of the receipt of insurance proceeds of approximately $746,000 offset by approximately $215,000 of undepreciated property improvements and replacements being written off. The casualty gain at Wood Creek Apartments related to a water main break in July 2001 which caused damage to one unit of the complex. During 2001, the related assets were written off and the Partnership recognized a casualty gain of approximately $46,000. During the year ended December 31, 2002, the final insurance proceeds were received and the Partnership recognized an additional casualty gain of approximately $13,000. Note G - Disposition of Property On October 24, 2003, the Partnership sold a portion of the land from Autumn Run Apartments to the city of Naperville, Illinois, for gross proceeds of approximately $26,000. The Partnership realized a gain of approximately $5,000 as a result of the sale. The Partnership was required to use the net proceeds, after closing costs, of approximately $19,000 as a payment on the mortgage encumbering the property. Note H - 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 (the "Heller action") was filed against the same defendants that are named in the Nuanes action, captioned Heller v. Insignia Financial Group. 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 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. In general terms, the proposed settlement provides for certification for settlement purposes of a settlement class consisting of all limited partners in this Partnership and others (the "Partnerships") as of December 20, 2002, the dismissal with prejudice and release of claims in the Nuanes and Heller litigation, payment by AIMCO of $9.9 million (which shall be distributed to settlement class members after deduction of attorney fees and costs of class counsel and certain costs of settlement) and up to $1 million toward the cost of independent appraisals of the Partnerships' properties by a Court appointed appraiser. An affiliate of the Managing General Partner has also agreed to make at least one round of tender offers to purchase all of the partnership interests in the Partnerships within one year of final approval, if it is granted, and to provide partners with the independent appraisals at the time of these tenders. The proposed settlement also provided for the limitation of the allowable costs which the Managing General Partner or its affiliates will charge the Partnerships in connection with this litigation and imposes limits on the class counsel fees and costs in this litigation. On April 11, 2003, notice was distributed to limited partners providing the details of the proposed settlement. 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 seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On November 24, 2003, the Objector filed an application requesting the Court order AIMCO to withdraw settlement tender offers it had commenced, refrain from making further offers pending the appeal and auction any units tendered to third parties, contending that the offers did not conform with the terms of the Settlement. Counsel for the Objector (on behalf of another investor) had alternatively requested the Court take certain action purportedly to enforce the terms of the settlement agreement. On December 18, 2003, the Court heard oral argument on the motions and denied them both in their entirety. On January 28, 2004, Objector filed his opening brief in his pending appeal. The Managing General Partner is currently scheduled to file a brief in support of the order approving settlement and entering judgment thereto by April 23, 2004. On August 8, 2003 AIMCO Properties L.P., an affiliate of the Managing General Partner, was served with a Complaint in the United States District Court, District of Columbia alleging that AIMCO Properties L.P. 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 is styled as 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. failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the Complaint alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating maintenance workers for time that they worked in responding to a call while "on-call". The Complaint also attempts to certify a subclass for salaried service directors who are challenging their classification as exempt from the overtime provisions of the FLSA. AIMCO Properties L.P. has filed an answer to the Complaint denying the substantive allegations. Discovery is currently underway. 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. 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. Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 8a. 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 fourth quarter of 2003 that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act Century Properties Growth Fund XXII (the "Partnership" or the "Registrant") has no directors or officers. The general partner of the Partnership is Fox Partners IV, a California general partnership. The managing general partner of Fox Partners IV is Fox Capital Management Corporation, ("FCMC" or the "Managing General Partner"). The names and ages of, as well as the positions and offices held by, the present directors and officers of FCMC are set forth below. The Managing General Partner manages and controls substantially all of the Partnership's affairs and has general responsibility and ultimate authority in all matters affecting its business. There are no family relationships between or among any directors or officers. Name Age Position Peter K. Kompaniez 59 Director Martha L. Long 44 Director and Senior Vice President Harry G. Alcock 41 Executive Vice President Miles Cortez 60 Executive Vice President, General Counsel and Secretary Patti K. Fielding 40 Executive Vice President Paul J. McAuliffe 47 Executive Vice President and Chief Financial Officer Thomas M. Herzog 41 Senior Vice President and Chief Accounting Officer Peter K. Kompaniez has been Director of the Managing General Partner since February 2004. Mr. Kompaniez has been Vice Chairman of the Board of Directors of AIMCO since July 1994 and was appointed President in July 1997. Mr. Kompaniez has also served as Chief Operating Officer of NHP Incorporated after it was acquired by AIMCO in December 1997. Effective April 1, 2004, Mr. Kompaniez resigned as President of AIMCO. Mr. Kompaniez will continue in his role as Director of the Managing General Partner and Vice Chairman of AIMCO's Board and will serve AIMCO on a variety of special and ongoing projects in an operating role. Martha L. Long has been a Director and Senior Vice President of the Managing General Partner since February 2004. Ms. Long has been with AIMCO since October 1998 and has served in various capacities. From 1998 to 2001, Ms. Long served as Senior Vice President and Controller of AIMCO and the Managing General Partner. During 2002 and 2003, Ms. Long served as Senior Vice President of Continuous Improvement for AIMCO. Harry G. Alcock was appointed Executive Vice President of the Managing General Partner in February 2004 and has been Executive Vice President and Chief Investment Officer of AIMCO since October 1999. Prior to October 1999 Mr. Alcock served as a Vice President of AIMCO from July 1996 to October 1997, when he was promoted to Senior Vice President-Acquisitions where he served until October 1999. Mr. Alcock has had responsibility for acquisition and financing activities of AIMCO since July 1994. Miles Cortez was appointed Executive Vice President, General Counsel and Secretary of the Managing General Partner in February 2004 and of AIMCO in August 2001. Prior to joining AIMCO, Mr. Cortez was the senior partner of Cortez Macaulay Bernhardt & Schuetze LLC, a Denver law firm, from December 1997 through September 2001. Patti K. Fielding was appointed Executive Vice President - Securities and Debt of the Managing General Partner in February 2004 and of AIMCO in February 2003. Ms. Fielding previously served as Senior Vice President - Securities and Debt of AIMCO from January 2000 to February 2003. Ms. Fielding is responsible for securities and debt financing and the treasury department. Ms. Fielding joined AIMCO in February 1997 and served as Vice President - Tenders, Securities and Debt until January 2000. Paul J. McAuliffe has been Executive Vice President and Chief Financial Officer of the Managing General Partner since April 2002. Mr. McAuliffe has served as Executive Vice President of AIMCO since February 1999 and was appointed Chief Financial Officer of AIMCO in October 1999. From May 1996 until he joined AIMCO, Mr. McAuliffe was Senior Managing Director of Secured Capital Corp. Thomas M. Herzog was appointed Senior Vice President and Chief Accounting Officer of the Managing General Partner in February 2004 and of AIMCO in January 2004. Prior to joining AIMCO in January 2004, Mr. Herzog was at GE Real Estate, serving as Chief Accounting Officer & Global Controller from April 2002 to January 2004 and as Chief Technical Advisor from March 2000 to April 2002. Prior to joining GE Real Estate, Mr. Herzog was at Deloitte & Touche LLP from 1990 until 2000, including a two-year assignment in the real estate national office. One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act. Further, one or more of the above persons are also directors and/or officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act. The board of directors of the Managing General Partner does not have a separate audit committee. As such, the board of directors of the Managing General Partner fulfills the functions of an audit committee. The board of directors has determined that Martha L. Long meets the requirement of an "audit committee financial expert". The directors and officers of the Managing General Partner with authority over the Partnership are all employees of subsidiaries of AIMCO. AIMCO has adopted a code of ethics that applies to such directors and officers that is posted on AIMCO's website (www.AIMCO.com). AIMCO's website is not incorporated by reference to this filing. Item 10. Executive Compensation Neither the directors nor any of the officers of the Managing General Partner received any remuneration from the Registrant during the year ended December 31, 2003 and 2002. Item 11. Security Ownership of Certain Beneficial Owners and Management Except as noted below, no person or entity was known by the Registrant to be the beneficial owner of more than 5% of the Limited Partnership Units of the Registrant as of December 31, 2003. Entity Number of Units Percentage AIMCO IPLP, L.P. 17,341.5 20.93% (an affiliate of AIMCO) IPLP Acquisition I, LLC 5,459.0 6.59% (an affiliate of AIMCO) Market Ventures, LLC 45.0 0.05% (an affiliate of AIMCO) AIMCO Properties, L.P. 25,326.0 30.57% (an affiliate of AIMCO) AIMCO IPLP, L.P. (formerly known as Insignia Properties, L.P.), IPLP Acquisition I, LLC and Market Ventures, LLC are indirectly ultimately owned by AIMCO. Their business addresses are 55 Beattie Place, Greenville, South Carolina 29602. AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its business address is 4582 S. Ulster St. Parkway, Suite 1100, Denver, Colorado 80222. No director or officer of the Managing General Partner owns any Units. Item 12. Certain Relationships and Related Transactions The Partnership has no employees and is dependent 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 as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Affiliates of the Managing General Partner are entitled to 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 $918,000 and $980,000 for the years ended December 31, 2003 and 2002, respectively, which is included in operating expenses. At December 31, 2003, approximately $11,000 of such property management fees were unpaid and are included in due to affiliate on the accompanying consolidated balance sheet. Affiliates of the Managing General Partner charged the Partnership reimbursement of accountable administrative expenses amounting to approximately $249,000 and $342,000 for the years ended December 31, 2003 and 2002, respectively, which is included in general and administrative expenses and investment properties. Included in these amounts are fees related to construction management services provided by an affiliate of the Managing General Partner of approximately $61,000 and $170,000 for the years ended December 31, 2003 and 2002, respectively. The construction management service fees are calculated based on a percentage of current additions to investment properties. At December 31, 2003, approximately $75,000 of accountable administrative expenses were unpaid and are included in due to affiliate on the accompanying consolidated balance sheet. Pursuant to the Partnership Agreement, for managing the affairs of the Partnership, the Managing General Partner is entitled to receive a Partnership management incentive allocation equal to 10% of the Partnership's adjusted cash from operations as distributed. During the years ended December 31, 2003 and 2002, approximately $23,000 and $192,000, respectively, of Partnership management incentive allocation was paid along with the distributions from operations. The incentive allocation is accounted for as a distribution to the general partner, in accordance with the terms of the Partnership Agreement. 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 years ended December 31, 2003 and 2002, an affiliate of the Managing General Partner agreed to advance funds in excess of the $150,000 line of credit to fund operating expenses of Plantation Creek Apartments and advanced approximately $205,000 and $329,000, respectively, for this purpose. At December 31, 2003, the outstanding balance was approximately $206,000, including accrued interest. Interest expense amounted to approximately $3,000 and $4,000 for the years ended December 31, 2003 and 2002, respectively. 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 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 years ended December 31, 2003 and 2002, the Partnership was charged by AIMCO and its affiliates approximately $250,000 and $302,000, respectively, for insurance coverage and fees associated with policy claims administration. In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 48,171.50 limited partnership units (the "Units") in the Partnership representing 58.14% of the outstanding Units at December 31, 2003. 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, which 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 58.14% of the outstanding Units, AIMCO and it affiliates are in a position to influence all voting decisions with respect to the Partnership. With respect to 17,023.50 Units, such affiliates are required to vote such Units: (i) against any increase in compensation payable to the Managing General Partner or to affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party unitholders. Except for the foregoing, no other limitations are imposed on such affiliates' ability to influence voting decisions with respect to the Partnership. 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. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: See Exhibit Index (b) Reports on Form 8-K: None filed in the quarter ended December 31, 2003. Item 14. Principal Accounting Fees and Services The Managing General Partner has reappointed Ernst & Young LLP as independent auditors to audit the financial statements of the Partnership for 2004. Audit Fees. The Partnership paid to Ernst & Young LLP audit fees of approximately $72,000 and $71,000 for 2003 and 2002, respectively. Tax Fees. The Partnership paid to Ernst & Young LLP fees for tax services for 2003 and 2002 of approximately $15,000 and $16,000, respectively. 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 GROWTH FUND XXII By: FOX PARTNERS IV, General Partner By: FOX CAPITAL MANAGEMENT CORPORATION, Managing General Partner By: /s/Martha L. Long Martha L. Long Senior Vice President By: /s/Thomas M. Herzog Thomas M. Herzog Senior Vice President and Chief Accounting Officer Date: March 29, 2004 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. /s/Peter K. Kompaniez Director Date: March 29, 2004 Peter K. Kompaniez /s/Martha L. Long Director and Senior Vice Date: March 29, 2004 Martha L. Long President /s/Thomas M. Herzog Senior Vice President and Date: March 29, 2004 Thomas M. Herzog Chief Accounting Officer CENTURY PROPERTIES GROWTH FUND XXII EXHIBIT INDEX Exhibit Number Description of Exhibit 2.1 NPI, Inc. Stock Purchase Agreement, dated as of August 17, 1995, incorporated by reference to the Partnership's Current Report on Form 8-K dated August 17, 1995. 2.2 Partnership Units Purchase Agreement dated as of August 17, 1995, incorporated by reference to Exhibit 2.1 to Form 8-K filed by Insignia Financial Group, Inc. ("Insignia") with the Securities and Exchange Commission on September 1, 1995. 2.3 Management Purchase Agreement dated as of August 17, 1995, incorporated by reference to Exhibit 2.2 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 Partnership dated September 20, 1983, as amended on June 13, 1989, and as thereafter supplemented contained in the Partnership's Registration Statement on Form S-11 (Reg. No. 2-79007). 10.1 Promissory Note dated December 27, 1994 from Century Stoney Greens, L.P. to USL Capital Corporation ("USL") in the principal amount of $30,000,000 incorporated by reference to the Registrant's Form 10-K for the year ended December 31, 1994 10.2 Form of Deed of Trust, Security Agreement, Assignment of Leases and Rents, Fixture Filing and Financing Statement by CSG to Howard E. Schreiber, Trustee for the benefit of USL incorporated by reference to the Registrant's Form 10-K for the year ended December 31, 1994. 10.3 Form of Promissory Note from the Registrant to Secore Financial Corporation ("Secore") relating to the refinancing of each of Cooper's Pointe, Copper Mill, Four Winds, Hampton Greens, Plantation Creek, Stoney Creek, and Wood Creek incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995. 10.4 Form of Mortgage/Deed of Trust and Security Agreement from the Registrant to Secore relating to the refinancing of each of Cooper's Pointe, Copper Mill, Four Winds, Hampton Greens, Plantation Creek, Stoney Creek and Wood Creek incorporated by reference to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995. 10.7 Promissory Note dated March 31, 1998, by and between the Partnership and Lehman Brothers Holding, Inc. for Promontory Point incorporated by reference to Exhibit 10.3 on the Partnership's quarterly report on Form 10-QSB for the quarter ended March 31, 1998. 10.8 Contract of Sale between Registrant and Stoney Creek, LLC, a Texas Limited Liability Company, effective July 31, 2001, regarding the sale of Stoney Creek Apartments. Filed with the Form 10-QSB for the quarter ended June 30, 2001 and incorporated herein. 10.9 Amendment to Contract of Sale between Registrant and Stoney Creek, LLC, a Texas Limited Liability Company, effective July 31, 2001, regarding the sale of Stoney Creek Apartments. Filed with the Form 10-QSB for the quarter ended June 30, 2001 and incorporated herein. 10.10 Multifamily Note for Autumn Run dated September 6, 2001, by and between Century Properties Growth Fund XXII, a California limited partnership, and GMAC Commercial Mortgage Corporation, a California corporation. Filed with the Form 10-QSB for the quarter ended September 30, 2001 and incorporated herein. 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 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 annual report on Form 10-KSB of Century Properties Growth Fund XXII; 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 registrant as of, and for, the periods presented in this report; 4. The registrant'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 registrant 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 registrant, 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting. Date: March 29, 2004 /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, Thomas M. Herzog, certify that: 1. I have reviewed this annual report on Form 10-KSB of Century Properties Growth Fund XXII; 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 registrant as of, and for, the periods presented in this report; 4. The registrant'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 registrant 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 registrant, 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 registrant'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 registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'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 registrant'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 registrant's internal control over financial reporting. Date: March 29, 2004 /s/Thomas M. Herzog Thomas M. Herzog Senior Vice President and Chief Accounting Officer 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 Annual Report on Form 10-KSB of Century Properties Growth Fund XXII (the "Partnership"), for the year ended December 31, 2003 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 Thomas M. Herzog, 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: March 29, 2004 /s/Thomas M. Herzog Name: Thomas M. Herzog Date: March 29, 2004 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.