Organization, Consolidation and Presentation of Financial Statements

3 Months Ended

Mar. 31, 2012

Organization, Consolidation and Presentation of Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

Note 1 – BASIS OF PRESENTATION

As of January 31, 2012, Housing Programs Limited (the “Partnership” or “Registrant”) adopted the liquidation basis of accounting due to the sale of its limited partnership interest in its sole remaining investment (as discussed in “Note 3”).

As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its financial statements at January 31, 2012 to the liquidation basis of accounting. Consequently, assets have been valued at estimated net realizable value and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation of the Partnership. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the Corporate General Partner’s (as defined below) estimates as of the date of the financial statements.

The Corporate General Partner estimates that the liquidation process will be completed by December 31, 2012. Because the success in realization of assets and the settlement of liabilities is based on the Corporate General Partner’s best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period.

General

The information contained in the following notes to the unaudited 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 annual report for the fiscal year ended December 31, 2011 filed by the Partnership. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods 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 items) necessary to present fairly the statement of net assets in liquidation of the Partnership at March 31, 2012, statement of changes in net assets in liquidation for the period from February 1, 2012 to March 31, 2012 and the results of operations and changes in cash flows for the period from January 1 to January 31, 2012 and the three months ended March 31, 2011.

The balance sheet at December 31, 2011 has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by generally accepting accounting principles for complete financial statements.

At both March 31, 2012 and December 31, 2011, there were 12,050 limited partnership interests outstanding.

Organization

The Partnership was organized under the California Uniform Limited Partnership Act 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 "Corporate General Partner"), Housing Programs Corporation II and National Partnership Investment Associates (collectively, the "General Partners"). The Corporate General Partner and Housing Programs Corporation II are subsidiaries of Apartment Investment and Management Company ("Aimco"), a publicly traded real estate investment trust.

On January 31, 2012, an affiliate of the Corporate General Partner entered into a management agreement with a third party management services company for the management of a portfolio of approximately 147 properties with 10,184 units held by entities, including the Partnership, in which Aimco and its affiliates have minority limited and general partner interests. On January 31, 2012, an affiliate of the Corporate General Partner also entered into an option agreement with the management services company pursuant to which it granted the company the exclusive option, for a period ending on December 27, 2013, to purchase the minority interests in the portfolio held by Aimco and its affiliates. Aimco expects the sale of such interests to be completed later this year, pending the satisfaction of certain closing conditions.

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.

The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States.

The Partnership’s management evaluated subsequent events through the time this Quarterly Report on Form 10-Q was filed.

Certain reclassifications have been made to the 2011 balances to conform to the 2012 presentation.

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.

Method of Accounting for Investments in Local Limited Partnerships

The investments in local limited partnerships (the “Local Limited Partnerships”) were accounted for using the equity method. 

Net Income (Loss) Per Limited Partnership Interest

Net income (loss) per limited partnership interest was computed by dividing the limited partners' share of net income (loss) by the number of limited partnership interests outstanding at the beginning of the year. The number of limited partnership interests used was 12,050 for the period from January 1 to January 31, 2012 and 12,070 for the three months ended March 31, 2011.

Variable Interest Entities

The Partnership consolidates any variable interest entities in which the Partnership holds a variable interest and is the primary beneficiary.  Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics:  (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the rights to receive benefits that could potentially be significant to the VIE.

In determining whether it is the primary beneficiary of a VIE, the Partnership considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Partnership’s investment; the obligation or likelihood for the Partnership or other investors to provide financial support; and the similarity with and significance to the business activities of the Partnership and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

At December 31, 2011, the Partnership held a variable interest in one VIE for which the Partnership was not the primary beneficiary.  The Partnership concluded, based on its qualitative consideration of the partnership agreement, the partnership structure and the role of the general partner in the Local Limited Partnership, that the general partner of the Local Limited Partnership was the primary beneficiary of the Local Limited Partnership. In making this determination, the Partnership considered the following factors:

·the general partner conducted and managed the business of the Local Limited Partnership;

·the general partner had the responsibility for and sole discretion over selecting a property management agent for the Local Limited Partnership’s underlying real estate property;

·the general partner was responsible for approving operating and capital budgets for the property owned by the Local Limited Partnership;

·the general partner was obligated to fund any recourse obligations of the Local Limited Partnership;

·the general partner was authorized to borrow funds on behalf of the Local Limited Partnership; and

·the Partnership, as a limited partner in the Local Limited Partnership, did not have the ability to direct or otherwise significantly influence the activities of the Local Limited Partnership that most significantly impact such entity’s economic performance.

The one VIE at December 31, 2011 consisted of a Local Limited Partnership that was directly engaged in the ownership and management of one apartment property with a total of 330 units.  The Partnership was involved with this VIE as a non-controlling limited partner equity holder. The Partnership’s maximum exposure to loss as a result of its involvement with this unconsolidated VIE was limited to the Partnership’s recorded investment in and receivables from this VIE, which was zero at December 31, 2011. the Partnership assigned its interest in this Local Limited Partnership to a third party on January 31, 2012.

Note 2 – aDJUSTMENT TO LIQUIDATION BASIS OF ACCOUNTING

At January 31, 2012, in accordance with the liquidation basis of accounting, assets were adjusted to their estimated net realizable value and liabilities were adjusted to their estimated settlement amount. The net adjustment required to convert to the liquidation basis of accounting was a decrease in net liabilities of approximately $554,000, which is included in the Statements of Changes in Partners’ Deficit/Net Assets in Liquidation. The net adjustment is summarized as follows:

	(Increase) Decrease in
	Net Liabilities
	(in thousands)
Estimated costs to liquidate	$   (45)
Write off of accrued fees due to affiliates	544
Write off of accounts payable and accrued expenses	55
Adjustment of other liabilities, net	$   554