-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G2wnemF0UCtrwq45dkys4oECBiQb4z8y/auBhVckHiYarvHRiHPqgQ0nanNi+qij JQcnXYA4n8oRPdVco9ATyQ== 0000711642-02-000259.txt : 20020819 0000711642-02-000259.hdr.sgml : 20020819 20020819140730 ACCESSION NUMBER: 0000711642-02-000259 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020819 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOUSING PROGRAMS LTD CENTRAL INDEX KEY: 0000750304 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953906167 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13808 FILM NUMBER: 02742302 BUSINESS ADDRESS: STREET 1: 9090 WILSHIRE BLVD STREET 2: STE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 BUSINESS PHONE: 3102782191 MAIL ADDRESS: STREET 1: 9090 WILSHIRE BLVD STREET 2: SUITE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 FORMER COMPANY: FORMER CONFORMED NAME: REAL ESTATE ASSOCIATES LTD VIII DATE OF NAME CHANGE: 19840823 10QSB 1 hpl.txt HPL UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 0-13808 HOUSING PROGRAMS LIMITED (A California Limited Partnership) California 95-3906167 (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) (864) 239-1000 (Issuer's telephone number) 9090 Wilshire Blvd., Suite 201, Beverly Hills, California 90211 (Address of former principal executive offices) HOUSING PROGRAMS LIMITED (a California limited partnership) INDEX TO FORM 10-QSB FOR THE QUARTER ENDED JUNE 30, 2002 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Balance Sheet June 30, 2002 1 Statements of Operations Three and Six Months Ended June 30, 2002 and 2001 2 Statement of Partners' Deficiency Six Months Ended June 30, 2002 3 Statements of Cash Flows Six Months Ended June 30, 2002 and 2001 4 Notes to Financial Statements 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 10 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12 SIGNATURES 13 EXHIBIT 14 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS HOUSING PROGRAMS LIMITED (a California limited partnership) BALANCE SHEET JUNE 30, 2002 (Unaudited) ASSETS Investments in limited partnerships (Note 2) $ -- Cash and cash equivalents 11,344 Total assets $ 11,344 LIABILITIES AND PARTNERS' DEFICIENCY Liabilities: Notes payable (Note 3) $ 4,600,000 Accrued fees due to affiliates (Note 4) 1,157,591 Accrued interest payable (Note 3) 7,105,664 Accounts payable 164,064 Advances due to affiliates 45,936 13,073,255 Commitments and Contingencies (Notes 4 and 5) Partners' deficiency: General partners (381,368) Limited partners (12,680,543) (13,061,911) Total liabilities and partners' deficiency $ 11,344 The accompanying notes are an integral part of these financial statements. HOUSING PROGRAMS LIMITED (a California limited partnership) STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2002 2001 2002 2001 INTEREST INCOME $ -- $ 1,736 $ 101 $ 6,027 OPERATING EXPENSES: Management fees - partners (Note 4) 49,797 49,797 99,594 100,599 General and administrative (Note 4) 9,951 14,884 20,529 29,458 Legal and accounting 14,585 27,639 35,942 45,289 Interest 107,553 109,250 216,803 218,500 Total operating expenses 181,886 201,570 372,868 393,846 Loss from Partnership operations (181,886) (199,834) (372,767) (387,819) Equity in loss of limited partnerships (Note 2) -- (96,589) (30,462) (96,589) Gain on sale of limited partnership interest (Note 2) -- -- -- 65,000 Distributions from limited partnerships recognized as income (Note 2) 11,343 11,201 11,343 11,201 Net loss $(170,543) $(285,222) $(391,886) $(408,207) Net loss to general partners (1%) $ (1,705) $ (2,852) $ (3,919) $ (4,082) Net loss to limited partners (99%) (168,838) (282,370) (387,967) (404,125) $(170,543) $(285,222) $(391,886) $(408,207) Net loss per limited partnership interest (Note 1) $ (14) $ (23) $ (31) $ (33) The accompanying notes are an integral part of these financial statements.
HOUSING PROGRAMS LIMITED (a California limited partnership) STATEMENT OF PARTNERS' DEFICIENCY FOR THE SIX MONTHS ENDED JUNE 30, 2002 (Unaudited)
General Limited Partners Partners Total Partnership interests 12,368 Partners' deficiency, January 1, 2002 $ (377,449) $(12,292,576) $(12,670,025) Net loss for the six months ended June 30, 2002 (3,919) (387,967) (391,886) Partners' deficiency, June 30, 2002 $ (381,368) $(12,680,543) $(13,061,911) The accompanying notes are an integral part of these financial statements.
HOUSING PROGRAMS LIMITED (a California limited partnership) STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (Unaudited)
2002 2001 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(391,886) $(408,207) Adjustments to reconcile net loss to net cash used in operating activities: Gain on sale of limited partnership interest -- (65,000) Equity in loss of limited partnerships 30,462 96,589 Decrease in due from escrow -- 15,000 Increase (decrease) in: Accrued interest payable 216,803 218,500 Accounts payable and accrued expenses 22,861 8,987 Accrued fees due to partners 109,020 (76,800) Net cash used in operating activities (12,740) (210,931) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of partnership interests -- 65,000 Advances to properties -- (96,589) Capital contributions (30,462) -- Net cash used in investing activities (30,462) (31,589) CASH FLOWS PROVIDED BY FINANCING ACTIVITIES: Operating advances from affiliates 45,936 -- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,734 (242,520) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,610 372,546 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 11,344 $ 130,026 The accompanying notes are an integral part of these financial statements.
HOUSING PROGRAMS LIMITED (a California limited partnership) NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General The information contained in the following notes to the financial statements is condensed from that which would appear in the annual audited financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and related notes thereto contained in the Housing Programs Limited (the "Partnership") annual report for the year ended December 31, 2001. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim period presented are not necessarily indicative of the results for the entire year. In the opinion of the Partnership, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals) necessary to present fairly the financial position of the Partnership at June 30, 2002 and the results of operations and changes in cash flows for the three and six months then ended. Organization Housing Programs Limited (the "Partnership"), formed under the California Uniform Limited Partnership Act, was organized on May 15, 1984. The Partnership was formed to invest primarily in other limited partnerships which own or lease and operate federal, state or local government-assisted housing projects. The general partners of the Partnership are National Partnership Investments Corp. ("NAPICO" or the "Managing General Partner"), Coast Housing Investment Associates (CHIA), a limited partnership, and Housing Programs Corporation II. The general partners have a one percent interest in profits and losses of the Partnership. The limited partners have the remaining 99 percent interest which is allocated in proportion to their respective individual investments. NAPICO is the managing general partner of the Partnership. Prior to March 11, 2002, Casden Properties Inc. owned a 95.25% economic interest in NAPICO, with the balance owned by Casden Investment Corporation ("CIC"). CIC, which is wholly owned by Alan I. Casden, owned 95% of the voting common stock of NAPICO prior to March 11, 2002. On December 3, 2001, Casden Properties Inc., entered into a merger agreement and certain other transaction documents with Apartment Investment and Management Company, a Maryland corporation ("AIMCO") and certain of its subsidiaries, pursuant to which, on March 11, 2002, AIMCO acquired Casden Properties Inc. and its subsidiaries, including 100% of the stock of NAPICO. Basis of Presentation The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. Method of Accounting for Investment in Limited Partnerships The investments in local limited partnerships are accounted for on the equity method. Acquisition, selection fees and other costs related to the acquisition of the projects have been capitalized to the investment account and amortized on a straight line basis over the estimated lives of the underlying assets, which is generally 30 years. Net Loss Per Limited Partnership Interest Net loss per limited partnership interest was computed by dividing the limited partners' share of net loss by the number of limited partnership interests outstanding during the period. The number of limited partnership interests was 12,368 for the periods presented. Cash and Cash Equivalents Cash and cash equivalents consist of cash money market mutual funds. The Partnership has its cash and cash equivalents on deposit primarily with one money market mutual fund. Such cash and cash equivalents are uninsured. Impairment of Long-Lived Assets The Partnership reviews long-lived assets to determine if there has been any permanent impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows is less than the carrying amount of the assets, the Partnership recognizes an impairment loss. NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS As of June 30, 2002, the Partnership holds limited partnership interests in seven limited partnerships, after selling its interest in one limited partnership in January 2001. As of June 30, 2002, the seven limited partnerships owned residential low income rental projects consisting of 1,153 apartment units. The mortgage loans of these projects are payable to or insured by various governmental agencies. The Partnership, as a limited partner, is entitled to 99 percent of the profits and losses of the local limited partnerships. Equity in losses of local limited partnerships are recognized in the financial statements until the limited partnership investment account is reduced to a zero balance. Losses incurred after the limited partnership investment account is reduced to zero are not recognized. Distributions from the limited partnerships are recognized as a reduction of capital until the investment balance has been reduced to zero or to a negative amount equal to further capital contributions required. Subsequent distributions are recognized as income. The Partnership has no carrying value in investment in limited partnerships as of June 30, 2002. The following are unaudited combined estimated statements of operations for the three and six months ended June 30, 2002 and 2001 for the limited partnerships in which the Partnership has investments:
Three Months Ended Six Months Ended June 30, June 30, 2002 2001 2002 2001 Revenues Rental and other $ 1,885,000 $ 1,892,000 $ 3,770,000 $ 3,784,000 Expenses Depreciation 374,000 362,000 748,000 724,000 Interest 242,000 242,000 484,000 484,000 Operating 1,402,000 1,339,000 2,804,000 2,678,000 2,018,000 1,943,000 4,036,000 3,886,000 Net loss $ (133,000) $ (51,000) $ (266,000) $ (102,000)
NAPICO, or one of its affiliates, is the general partner and property management agent for certain of the limited partnerships included above. Under recent adopted law and policy, the United States Department of Housing and Urban Development ("HUD") has determined not to renew the Housing Assistance Payment ("HAP") Contracts on a long term basis on the existing terms. In connection with renewals of the HAP Contracts under such new law and policy, the amount of rental assistance payments under renewed HAP Contracts will be based on market rentals instead of above market rentals, which may be the case under existing HAP Contracts. The payments under the renewed HAP Contracts may not be in an amount that would provide sufficient cash flow to permit owners of properties subject to HAP Contracts to meet the debt service requirements of existing loans insured by the Federal Housing Administration of HUD ("FHA") unless such mortgage loans are restructured. In order to address the reduction in payments under HAP Contracts as a result of this new policy, the Multi-family Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA") provides for the restructuring of mortgage loans insured by the FHA with respect to properties subject to the Section 8 program. Under MAHRAA, an FHA-insured mortgage loan can be restructured into a first mortgage loan which will be amortized on a current basis and a low interest second mortgage loan payable to FHA which will only be payable on maturity of the first mortgage loan. This restructuring results in a reduction in annual debt service payable by the owner of the FHA-insured mortgage loan and is expected to result in an insurance payment from FHA to the holder of the FHA-insured loan due to the reduction in the principal amount. MAHRAA also phases out project-based subsidies on selected properties serving families not located in rental markets with limited supply, converting such subsidies to a tenant-based subsidy. When the HAP Contracts are subject to renewal, there can be no assurance that the local limited partnerships in which the Partnership has an investment will be permitted to restructure its mortgage indebtedness under MAHRAA. In addition, the economic impact on the Partnership of the combination of the reduced payments under the HAP Contracts and the restructuring of the existing FHA-insured mortgage loans under MAHRAA is uncertain. During the six months ended June 30, 2001, the Partnership sold its interest in one limited partnership for net proceeds of $65,000. The Partnership recognized a gain from the sale equal to the net proceeds received because it had no investment balance related to this partnership. NOTE 3 - NOTES PAYABLE Two of the Partnership's investments, Evergreen and Plaza Village, involved purchases of partnership interests from partners who subsequently withdrew from the operating partnership. The Partnership is obligated for non-recourse notes payable of $4,600,000 to the sellers of the partnership interests, bearing interest at 9.5 percent. The notes matured in December 1999. These obligations and the related interest are collateralized by the Partnership's investment in the investee limited partnerships and are payable only out of cash distributions from the investee partnerships, as defined in the notes. Unpaid interest was due at maturity of the notes. All notes payable and related accrued interest payable aggregating $11,705,664 as of June 30, 2002 became payable prior to June 30, 2002. The Partnership has not made any payments and is in default under the terms of the notes. Due to the Partnership's lack of cash and partners' deficiency, there is substantial doubt about its ability to make these payments, which would result in the possible foreclosure of the two investments in the local limited partnerships. As a result, there is substantial doubt about the Partnership's ability to continue as a going concern. Management is attempting to negotiate extensions of the maturity dates on the notes payable. NOTE 4 - FEES AND EXPENSES DUE TO GENERAL PARTNERS Under the terms of the Restated Certificate and Agreement of the Limited Partnership, the Partnership is obligated to the general partners for an annual management fee equal to 0.5 percent of the original invested assets of the limited partnerships. Invested assets is defined as the costs of acquiring project interests including the proportionate amount of the mortgage loans related to the Partnership's interests in the capital accounts of the respective limited partnerships. For the six months ended June 30, 2002 and 2001, $99,594 and $100,599, respectively, has been expensed. The unpaid balance at June 30, 2002 is $1,157,591. The Partnership reimburses NAPICO for certain expenses. The reimbursement to NAPICO was $9,426 and $10,997 for the six months ended June 30, 2002 and 2001, respectively, and is included in general and administrative expenses. As of June 30, 2002, the fees and expenses due the general partners exceeded the Partnership's cash. The general partners, during the forthcoming year, are not expected to demand payment of amounts due in excess of such cash or such that the Partnership would not have sufficient operating cash; however, the Partnership will remain liable for all such amounts. NOTE 5 - CONTINGENCIES On August 27, 1998, two investors holding an aggregate of eight units of limited partnership interests in Real Estate Associates Limited III (an affiliated partnership in which NAPICO is the managing general partner) and two investors holding an aggregate of five units of limited partnership interest in Real Estate Associates Limited VI (another affiliated partnership in which NAPICO is the managing general partner) commenced an action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other affiliated entities. The complaint alleges that the defendants breached their fiduciary duty to the limited partners of certain NAPICO managed partnerships and made materially false and misleading statements in the consent solicitation statements sent to the limited partners of such partnerships relating to approval of the transfer of partnership interests in limited partnerships, owning certain of the properties, to affiliates of Casden Properties Inc., organized by an affiliate of NAPICO. The plaintiffs seek equitable relief, as well as compensatory damages and litigation related costs. On August 4, 1999, one investor holding one unit of limited partnership interest in the Partnership commenced a virtually identical action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other affiliated entities. The second action has been subsumed in the first action, which has been certified as a class action. On August 21, 2001, plaintiffs filed a supplemental complaint, which added new claims, including for a recission of the transfer of partnership interests and an accounting. Trial is scheduled for October 1, 2002. The managing general partner of such NAPICO managed partnerships and the other defendants believe that the plaintiffs' claims are without merit and are vigorously contesting the actions. The holder of a purchase money promissory note issued by Cloverleaf limited partnership, one of the Partnership's investments, in the amount of $845,000 plus accrued interest payable of $1,130,000 as of June 30, 2002, filed a foreclosure action against the Cloverleaf limited partnership. The Partnership and other defendants have answered the complaint and intend to vigorously defend this action. The Partnership has no investment balance related to this Local Partnership. The holders of three cash flow notes issued by Oshtemo Limited Dividend Housing Association, one of the Partnership's investments, with an aggregate principal balance of $3,825,000 have filed a suit to reduce the notes to judgment and foreclose on the Partnership's interest in this limited partnership. Settlement discussions have begun; however, there is no guarantee that a settlement will be reached. The Partnership has no investment balance related to this limited partnership. NAPICO is a plaintiff in various lawsuits and has also been named as defendant in other lawsuits arising from transactions in the ordinary course of business. In the opinion of NAPICO, the claims will not result in any material liability to the Partnership. NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosure about Fair Value of Financial Instruments," requires disclosure of fair value information about financial instruments, when it is practicable to estimate that value. The notes payable are collateralized by the Partnership's investments in investee limited partnerships, which account for the Partnership's primary source of revenues, are subject to various government rules, regulations and restrictions which make it impracticable to estimate the fair value of the notes and related accrued interest payable. It is impracticable to estimate the fair value of the amounts due to affiliates due to their related party nature. The carrying amount of other assets and liabilities reported on the balance sheets that require such disclosure approximates fair value due to their short-term maturity. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Liquidity and Capital Resources The Partnership's primary sources of funds include interest income on money market accounts and distributions from limited partnerships in which the Partnership has invested. It is not expected that any of the local limited partnerships in which the Partnership has invested will generate cash flow sufficient to provide for distributions to the Partnership's limited partners in any material amount. Results of Operations Partnership revenues consist primarily of interest income earned on investment of funds. The Partnership also receives distributions from the lower-tier limited partnerships in which it has invested. Distributions received from limited partnerships are recognized as return of capital until the investment balance has been reduced to zero or to a negative amount equal to future capital contributions required. Subsequent distributions received are recognized as income. Except for investing cash in money market funds, the Partnership's investments consist entirely of interests in other limited partnerships owning government-assisted housing projects. Available cash not invested in local limited partnerships is invested in these money market funds to provide interest income as reflected in the statements of operations. These funds can be converted to cash to meet obligations as they arise. The Partnership intends to continue investing available funds in this manner. An annual management fee is payable to the general partners of the Partnership and is calculated at 0.5 percent of the Partnership's invested assets. The management fee is paid to the general partners for their continuing management of partnership affairs. The fee is payable beginning with the month following the Partnership's initial investment in a local limited partnership. Management fees were $99,594 and $100,599 for the six months ended June 30, 2002 and 2001, respectively. Two of the Partnership's investments, Evergreen and Plaza Village, involved purchases of partnership interests from partners who subsequently withdrew from the operating partnership. The Partnership is obligated for non-recourse notes payable of $4,600,000 to the sellers of the partnership interests, bearing interest at 9.5 percent. The notes matured in December 1999. These obligations and the related interest are collateralized by the Partnership's investment in the investee limited partnerships and are payable only out of cash distributions from the investee partnerships, as defined in the notes. Unpaid interest was due at maturity of the notes. All notes payable and related accrued interest payable aggregating $11,705,664 as of June 30, 2002 became payable prior to June 30, 2002. The Partnership has not made any payments and is in default under the terms of the notes. Due to the Partnership's lack of cash and partners' deficiency, there is substantial doubt about its ability to make these payments, which would result in the possible foreclosure of the two investments in the local limited partnerships. As a result, there is substantial doubt about the Partnership's ability to continue as a going concern. Management is attempting to negotiate extensions of the maturity dates on the notes payable. Operating expenses, other than management fees and interest expense, consist of legal and accounting fees for services rendered to the Partnership and administrative expenses, which were generally consistent for the periods presented. Legal and accounting fees were $35,942 and $45,289 for the six months ended June 30, 2002 and 2001, respectively. General and administrative expenses were $20,529 and $29,458 for the periods ended June 30, 2002 and 2001, respectively. The Partnership accounts for its investments in the local limited partnerships on the equity method, thereby adjusting its investment balance by its proportionate share of the income or loss of the local limited partnerships. Losses incurred after the limited partnership investment account is reduced to zero are not recognized. Under recent adopted law and policy, the United States Department of Housing and Urban Development ("HUD") has determined not to renew the Housing Assistance Payment ("HAP") Contracts on a long term basis on the existing terms. In connection with renewals of the HAP Contracts under such new law and policy, the amount of rental assistance payments under renewed HAP Contracts will be based on market rentals instead of above market rentals, which may be the case under existing HAP Contracts. The payments under the renewed HAP Contracts may not be in an amount that would provide sufficient cash flow to permit owners of properties subject to HAP Contracts to meet the debt service requirements of existing loans insured by the Federal Housing Administration of HUD ("FHA") unless such mortgage loans are restructured. In order to address the reduction in payments under HAP Contracts as a result of this new policy, the Multi-family Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA") provides for the restructuring of mortgage loans insured by the FHA with respect to properties subject to the Section 8 program. Under MAHRAA, an FHA-insured mortgage loan can be restructured into a first mortgage loan which will be amortized on a current basis and a low interest second mortgage loan payable to FHA which will only be payable on maturity of the first mortgage loan. This restructuring results in a reduction in annual debt service payable by the owner of the FHA-insured mortgage loan and is expected to result in an insurance payment from FHA to the holder of the FHA-insured loan due to the reduction in the principal amount. MAHRAA also phases out project-based subsidies on selected properties serving families not located in rental markets with limited supply, converting such subsidies to a tenant-based subsidy. When the HAP Contracts are subject to renewal, there can be no assurance that the local limited partnerships in which the Partnership has an investment will be permitted to restructure its mortgage indebtedness under MAHRAA. In addition, the economic impact on the Partnership of the combination of the reduced payments under the HAP Contracts and the restructuring of the existing FHA-insured mortgage loans under MAHRAA is uncertain. During the six months ended June 30, 2001, the Partnership sold its interest in one limited partnership for net proceeds of $65,000. The Partnership recognized a gain from the sale equal to the net proceeds received because it had no investment balance related to this partnership. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On August 27, 1998, two investors holding an aggregate of eight units of limited partnership interests in Real Estate Associates Limited III (an affiliated partnership in which NAPICO is the managing general partner) and two investors holding an aggregate of five units of limited partnership interest in Real Estate Associates Limited VI (another affiliated partnership in which NAPICO is the managing general partner) commenced an action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other affiliated entities. The complaint alleges that the defendants breached their fiduciary duty to the limited partners of certain NAPICO managed partnerships and made materially false and misleading statements in the consent solicitation statements sent to the limited partners of such partnerships relating to approval of the transfer of partnership interests in limited partnerships, owning certain of the properties, to affiliates of Casden Properties Inc., organized by an affiliate of NAPICO. The plaintiffs seek equitable relief, as well as compensatory damages and litigation related costs. On August 4, 1999, one investor holding one unit of limited partnership interest in the Partnership commenced a virtually identical action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other affiliated entities. The second action has been subsumed in the first action, which has been certified as a class action. On August 21, 2001, plaintiffs filed a supplemental complaint, which added new claims, including for a recission of the transfer of partnership interests and an accounting. Trial is scheduled for October 1, 2002. The managing general partner of such NAPICO managed partnerships and the other defendants believe that the plaintiffs' claims are without merit and are vigorously contesting the actions. The holder of a purchase money promissory note issued by Cloverleaf Limited Partnership, one of the Partnership's investments, in the amount of $845,000 plus accrued interest payable of $1,130,000 as of June 30, 2002, filed a foreclosure action against the Cloverleaf limited partnership. The Partnership and other defendants have answered the complaint and intend to vigorously defend this action. The Partnership has no investment balance related to this Local Partnership. The holders of three cash flow notes issued by Oshtemo Limited Dividend Housing Association, one of the Partnership's investments, with an aggregate principal balance of $3,825,000 have filed a suit to reduce the notes to judgment and foreclose on the Partnership's interest in this limited partnership. Settlement discussions have begun; however, there is no guarantee that a settlement will be reached. The Partnership has no investment balance related to this limited partnership. As of June 30, 2002, NAPICO was a plaintiff or defendant in various lawsuits. None of these suits are related to the Partnership. In the opinion of NAPICO, the claims will not result in any material liability to the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 3, Restated Certificate and Agreement of Limited Partnership dated May 15, 1984 filed with the Securities and Exchange Commission Form S-11 No. 2-92352, which is hereby incorporated by reference. Exhibit 99, Certification of Chief Executive Officer and Chief Financial Officer. b) Reports on Form 8-K: None filed during the quarter ended June 30, 2002. 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. HOUSING PROGRAMS LIMITED (a California limited partnership) By: National Partnership Investments Corp. General Partner By: /s/Charles H. Boxenbaum Charles H. Boxenbaum Chairman of the Board of Directors and Chief Executive Officer By: /s/Brian H. Shuman Brian H. Shuman Chief Financial Officer Date: August 19, 2002 Exhibit 99 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-QSB of Housing Programs Ltd. (the "Partnership"), for the quarterly period ended June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Charles H. Boxenbaum, as the equivalent of the Chief Executive Officer of the Partnership, and Brian H. Shuman, 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/ Charles H. Boxenbaum Name: Charles H. Boxenbaum Date: August 19, 2002 /s/ Brian H. Shuman Name: Brian H. Shuman Date: August 19, 2002 This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----