-----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, VjgTT/SzJtmXIgIfxDxqq8u/iVNK4NcysFAIkvIEcfjKeTnjshf6VUd9zmxfk5yi iZevTLGDWDU6idxDiLXIPQ== 0000950114-01-500035.txt : 20010702 0000950114-01-500035.hdr.sgml : 20010702 ACCESSION NUMBER: 0000950114-01-500035 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PACIFIC HOUSING FUND I CENTRAL INDEX KEY: 0000809034 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953938971 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-11194 FILM NUMBER: 1672954 BUSINESS ADDRESS: STREET 1: 1925 CENTURY PARK EAST STE 1900 STREET 2: C/O CENTURY PACIFIC CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3102081888 MAIL ADDRESS: STREET 1: C/O CENTURY PACIFIC STREET 2: 1925 CENTURY PARK EAST SUITE 1900 CITY: LOS ANGELES STATE: CA ZIP: 90067 10-K 1 eo10k.txt FORM 10-K CENTURY PACIFIC HOUSING FUND I 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 -------------------------------------- FOR THE FISCAL YEAR ENDED MARCH 31, 2001 COMMISSION FILE NUMBER 33-11194 CENTURY PACIFIC HOUSING FUND-I A CALIFORNIA LIMITED PARTNERSHIP I.R.S. EMPLOYER IDENTIFICATION NO. 95-3938971 1925 CENTURY PARK EAST, SUITE 1760, LOS ANGELES, CA 90067 REGISTRANT'S TELEPHONE NUMBER: (310) 208-1888 Securities Registered Pursuant to Section 12(b) or 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed with the Commission by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or 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-K is not contained in this form and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference to Part III of this Form 10-K or any amendment to this Form 10-K (X) No documents are incorporated into the text by reference. Yes No X ----- ----- Exhibit Index is located on Page 16 Registrant's Prospectus dated April 15, 1987, as amended (the Prospectus) and the Registrant's Supplement No. 3 dated December 21, 1988 to Prospectus dated April 15, 1987 (Supplement No. 3) but only to the extent expressly incorporated by reference in Parts I through IV hereof. Capitalized terms which are not defined herein have the same meaning as in the Prospectus. 2 TABLE OF CONTENTS PART I ITEM 1 BUSINESS 4 ITEM 2 PROPERTIES 5 ITEM 3 LEGAL PROCEEDINGS 8 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 8 PART II ITEM 5 MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS 9 ITEM 6 SELECTED FINANCIAL DATA 9 ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS 10 ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 13 ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 13 ITEM 9 CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 13 PART III ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 14 ITEM 11 EXECUTIVE COMPENSATION 15 ITEM 12 PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 15 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 15 3 PART IV ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES 16 EXHIBIT INDEX 16 SIGNATURES 17 3 4 PART I ITEM 1. BUSINESS -------- Century Pacific Housing Fund-I (the Partnership) was formed on October 6, 1986 as a limited partnership under the laws of the State of California to invest in multi-family housing developments. The Partnership's business is to invest primarily in other limited partnerships (Operating Partnerships) that are organized for the purpose of either constructing or acquiring and operating existing affordable multi-family rental apartments that are eligible for the Low-Income Housing Tax Credit, or to a lesser extent, the Rehabilitation Tax Credit, both enacted by the Tax Reform Act of 1986 (sometimes referred to as Credits or Tax Credits). The Partnership invested in 21 properties (the properties). Each of the properties qualifies for the Low-Income Housing Tax Credit, and one property, a historic structure, qualifies for the Rehabilitation Tax Credit. All of these properties receive one or more forms of assistance from federal, state or local governments. A summary of the Partnership's objectives and a summary of the Tax Credits are provided in the Prospectus under "Investment Objectives and Policies" and "Federal Income Tax Aspects" on pages 45 and 79, respectively, and are incorporated herein by reference. In order to stimulate private investment in low and moderate income housing of the types in which the Partnership has invested, the federal government has provided investors with significant ownership incentives intended to reduce the risks and provide investors/owners with certain tax benefits, limited cash distributions and the possibility of long-term capital gains. The ownership incentives include interest subsidies, rent subsidies, mortgage insurance and other measures. However, there remains significant risks inherent in this type of housing. Long-term investments in real estate limit the ability of the Partnership to vary its portfolio in response to changing economic, financial and investment conditions, and such investments are subject to changes in economic circumstances and housing patterns, rising operating costs and vacancies, rent controls and collection difficulties, costs and availability of energy, as well as other factors which normally affect real estate values. In addition, these properties usually are rent restricted and are subject to government agency programs which may or may not require prior consent to transfer ownership. The Partnership acquired the properties by investing as the limited partner in Operating Partnerships which own the properties. As a limited partner, the Partnership's liability for obligations of the Operating Partnerships is limited to its investment. The Partnership made capital contributions to the Operating Partnerships in amounts sufficient to pay the Operating Partnerships' expenses and to reimburse the general partners for their costs incurred in forming the Operating Partnerships, if any, and acquiring the properties. For each acquisition, this typically included a cash down payment (in one or more installments), acceptance of the property's mortgage indebtedness, and execution of a Purchase Money Note in favor of the seller of the property. For a summary of the acquisition financing activities for each property, see the financial information contained under Item 2. The Partnership's primary objective is to provide Low-Income Housing Tax Credits to limited partners generally over a 10-year period. Each of the Partnership's Operating Partnerships has been allocated by the relevant state tax credit agency an amount of the Low-Income Housing Tax Credit for 10 years from the date the property is placed-in-service. The required holding period of the properties is 15 years (the Compliance Period). The properties must satisfy rent restrictions, tenant income limitations and other requirements (the Low-Income Housing Tax Credit Requirements) in order to maintain eligibility for recognition of the Low-Income Housing Tax Credit at all times during the Compliance Period. Once an Operating Partnership has become eligible for the Low-Income Housing Tax Credit, it may lose such eligibility and suffer an event of recapture if its property fails to remain in compliance with the Low-Income Housing Tax Credit Requirements. To date, none of the Operating Partnerships have suffered an event of recapture of the Low-Income Housing Tax Credit. 4 5 Nineteen of the twenty-one Operating Partnerships receive rental subsidy payments, including payments under Section 8 of Title II of the Housing and Community Development Act of 1974 ("Section 8"). The subsidy agreements expire at various times during and after the 15-year compliance period of the Operating Partnerships. The United States Department of Housing and Urban Development ("HUD") has issued a notice implementing provisions to renew expiring Section 8 contracts as requested by an owner, for an additional one year term at current rent levels. As of June 20, 2001, six of the Operating Partnerships' Section 8 contracts are due to expire during 2001. The Operating Partnerships have not yet received HUD's approval of their extension requests. At the present time, the Partnership cannot reasonably predict legislative initiatives and government budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income and debt structure of any or all Operating Partnerships receiving such subsidy or similar subsidies. Employees - --------- The Partnership does not employ any persons. Alternatively, the Partnership reimburses an affiliate for overhead allocation consisting primarily of payroll costs. ITEM 2. PROPERTIES ---------- As of March 31, 2001, the Partnership had acquired equity interests in the Operating Partnerships set forth in the table below. Each of the properties acquired by the Operating Partnerships receives benefits under government assistance programs. The table set forth below summarizes the properties acquired, and the purchase price, original indebtedness assumed and the government assistance programs benefitting each property. Further information concerning these Properties may be found in Supplement No. 3 to the Prospectus, pages 4 through 66, which information is incorporated herein by reference and is summarized below. 5 6
PROPERTY NAME, AVERAGE CASH GOVERNMENT LOCATION AND OCCUPANCY PURCHASE DOWN PURCHASE MORTGAGE RESIDUAL ASSISTANCE RENTAL UNITS 2001 PRICE PAYMENT NOTE ASSUMED NOTE PROGRAM - ------------------------------------------------------------------------------------------------------------------------ Century Pacific Housing Partnership V (CPHP-V) - Jaycee Towers Dayton, OH Section 236 204 residential units 97% $ 5,700,000 $ 400,196 $16,500 $ 3,000,123 $ 2,283,181 Section 8 CPHP - VIII - Sunset Townhomes Newton, KS 50 residential units 84% 1,225,000 138,000 -- 751,905 335,095 Section 236 CPHP - XI - Continental Terrace Fort Worth, TX Section 236 200 residential units 94% 4,600,000 482,883 -- 2,609,991 1,507,126 Section 8 CPHP - XII - Yale Village Houston, TX Section 236 180 residential units 99% 5,250,000 530,894 -- 3,075,000 1,644,106 Section 8 CPHP - XIII - Atlantis Virginia Beach, VA Section 236 208 residential units 99% 6,032,000 801,000 -- 2,678,416 2,552,584 Section 8 CPHP - XIV - Kings Row Houston, TX Section 236 180 residential units 90% 3,780,000 394,213 -- 1,848,269 1,537,518 Section 8 CPHP - XV - Castle Gardens Lubbock, TX Section 236 152 residential units 93% 3,268,000 320,140 -- 1,787,613 1,160,247 Section 8 CPHP - XVI - Rockwell Villa Oklahoma City, OK Section 236 60 residential units 90% 1,235,400 129,564 -- 707,207 398,629 Section 8 CPHP - XVII - London Square Village Oklahoma City, OK Section 236 200 residential units 92% 4,214,000 414,097 -- 2,820,832 979,071 Section 8 CPHP - XVIII - Ascension Towers Memphis, TN 197 residential units 90% 6,727,500 409,094 50,000 3,863,739 2,404,667 Section 236 Coleman Manor Associates Limited Partnership Section Baltimore, MD 221(d)(4) 50 residential units 97% 3,990,000(1) 1,625,000 -- 2,365,000 -- Section 8 6 7 PROPERTY NAME, AVERAGE CASH GOVERNMENT LOCATION AND OCCUPANCY PURCHASE DOWN PURCHASE MORTGAGE RESIDUAL ASSISTANCE RENTAL UNITS 2001 PRICE PAYMENT NOTE ASSUMED NOTE PROGRAM - ------------------------------------------------------------------------------------------------------------------------ CPHP - XX - Holiday Heights Fort Worth, TX Section 236 100 residential units 98% $ 2,200,000 $ 191,000 $ -- $ 1,120,000 $ 889,000 Section 8 CPHP - XXII - Harriet Tubman Terrace Berkeley, CA Section 236 91 residential units 98% 4,732,000 593,000 -- 1,718,171 2,420,829(2) Section 8 CPHP - I - Charter House Dothan, AL 100 residential units 100% 2,146,000 195,000 -- 1,169,000 782,000 Section 236 CPHP II - VOA - Section 236 Sunset Park Section 8 Denver, CO Flexible 242 residential units 94% 6,500,000 956,000 -- 3,081,144 2,462,856 Subsidy Loan CPHP - III - Section Highland Park 221(d)(3) Topeka, KS Section 8 200 residential units 89% 6,900,000 939,000 -- 2,024,000 3,937,000 Flexible Subsidy Loan CPHP - IV - Section 236 Forest Glen Estates Section 8 Kansas City, KS Flexible 160 residential units 95% 4,960,000 738,000 -- 2,488,000 1,734,000 Subsidy Loan CPHP - VI - Edgewood Danville, IL 150 residential units 71% 3,540,000 680,000 -- 2,359,950 500,050 Section 8 CPHP - VII - Gulfway Terrace New Orleans, LA Section 236 206 residential units 97% 5,700,000 683,000 -- 3,301,974 1,715,026 Section 8 Section 236 CPHP - IX - Wind Ridge Section 8 Wichita, KS Flexible 36 residential units 96% 3,500,000 382,000 -- 1,791,936 1,326,064 Subsidy Loan CPHP - X - Bergen Circle Springfield, MA Section 236 201 residential units 96% 12,261,000 1,768,000 -- 6,946,158 3.546,842 Section 8 - ------------------------------------------------------------------------------------------------------------------------ $98,460,900 $12,770,081 $66,500 $51,508,428 $34,115,891 ========================================================================================================================= (1) This amount represents the development cost and not the purchase price. (2) This total includes a flex subsidy loan in the amount of $185,000 and the assumption of a prior residual note in the amount of $200,000.
7 8 ITEM 3. LEGAL PROCEEDINGS ----------------- As of June 20, 2001, there were no pending legal proceedings against the Partnership or any Operating Partnership in which it has invested. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- There were no submissions of matters to a vote of security holders during the year ended March 31, 2001. 8 9 PART II ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS ------------------------------------------------- There is at presently no public market for the Units of limited partnership interests (the Units), and it is unlikely that any public market for the Units will develop. See the Prospectus under "Transferability of Interests" on pages 29 and 72 of the Prospectus, which information is incorporated herein by reference. The number of owners of Units as of May 31, 2001 was approximately 2,121, holding 22,315 units. As of June 20, 2001, there were no cash distributions. ITEM 6. SELECTED FINANCIAL DATA ----------------------- The following summary of selected financial data should be read in conjunction with ITEM 14, herein, which also includes a summary of the Partnership's significant accounting policies.
YEAR ENDED MARCH 31, -------------------------------------------------------------------------- OPERATIONS 2001 2000 1999 1998 1997 - ----------------------------- ----------- ------------ ------------ ------------ ------------ Revenues $ 800 $ 1,000 $ 3,715 $ 1,720 $ 2,100 Operating Expenses (69,421) (87,407) (74,653) (72,591) (73,359) Equity in Net Losses of Operating Partnerships (15,633) (122,245) (122,202) (134,311) (136,010) ----------- ------------ ------------ ------------ ------------ Net Loss $(84,254) $(208,652) $(193,140) $(205,182) $(207,269) =========== ============ ============ ============ ============ Net Loss per Unit of Limited Partnership Interest $ (4) $ (9) $ (9) $ (9) $ (9) =========== ============ ============ ============ ============ March 31, -------------------------------------------------------------------------- FINANCIAL POSITION 2001 2000 1999 1998 1997 - ----------------------------- ----------- ------------ ------------ ------------ ------------ Total Assets $ 9,619 $ 26,456 $ 171,816 $ 277,925 $ 410,633 =========== ============ ============ ============ ============
9 10 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND ---------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- The Partnership raised $8,517,000 in equity capital during calendar year 1987 and raised an additional $13,798,000 through April 15, 1988. In late December 1987, the Partnership invested in eight Operating Partnerships, which own eight multi-family properties located in various states representing $45,507,000 of property value. During 1988, the Partnership invested in an additional 13 properties located in eight states representing $52,953,900 of property value. As of March 31, 2001, the Partnership's portfolio consists of 21 properties. The properties are located in 13 states and contain 3,267 residential units. The average occupancy level for all properties during calendar year 2000 was approximately 93% and most properties generated sufficient revenue to cover operating costs, debt service, and the funding of reserves. For a summary of the combined financial status of the Operating Partnerships and the properties, see the financial information contained under Item 14. Liquidity and Capital Resources - ------------------------------- The Partnership is currently experiencing a liquidity problem. Under the Partnership Agreement, the Partnership is entitled to receive distributions of surplus cash from the Operating Partnerships which is to provide the funds necessary for the Partnership to meet its operating costs. To date, the Operating Partnerships have not provided sufficient cash distributions to enable the Partnership to meet its current obligations. The Partnership has also incurred allocated losses from all but one of its Operating Partnerships to the extent of the Partnership's cash contributions and has a negative working capital. As a result of the foregoing, the Partnership has been dependent upon its general partners and affiliates for continued financial support to meet its operating costs. Management maintains that the general partners and/or affiliates, though not required to do so, will continue to fund operations of the Partnership by continuing to fund operating costs and by deferring payment of allocated overhead expenses and repayment of operating cash advances. Management believes the possibility exists that one or several Operating Partnerships may require additional capital, in addition to that previously contributed by the Partnership, to sustain operations. In such case, the source of the required capital needs may be from (i) limited reserves from the Partnership (which may include distributions received from the Operating Partnerships that would otherwise be available for distribution to partners), (ii) debt financing at the Operating Partnership level (which may not be available), or (iii) additional equity contributions from the general partner of the Operating Partnerships (which may not be available). There can be no assurance that any of these sources would be readily available to provide for possible additional capital requirements which may be necessary to sustain the operations of the Operating Partnerships. However, the Partnership is under no obligation to fund operating deficits of the Operating Partnerships in the form of additional contributions or loans. Due to the uncertainty of the continuation of the Section 8 program, management has been forced to consider several options to prepare for the possible lack of subsidy income to the Operating Partnerships. The loss of subsidy income to the Operating Partnerships will make it more difficult for the Operating Partnerships to provide sufficient cash distributions to the Partnership. Management has identified the courses of action they will take as a result of the potential changes to the Section 8 program. The plan that the Operating Partnerships follow will depend on the federal government's decision to implement the decentralization or elimination of HUD. HUD's proposed Mark-to-Market approach would create an atmosphere where the Projects would have to compete for residents in the conventional market. The following alternatives are listed as plans of action that management plans to pursue in response the HUD's actions: 10 11 1) HUD may transfer project control to a local Housing Authority in the form of block grants. The Housing Authority would determine the market rents based on the area market. The projects will respond to the local Housing Authority and follow their procedures and guidelines. 2) The current tenants may receive a housing voucher administered by the local Housing Authority. The projects will accept vouchers and actively seek applicants who have vouchers. The projects will also accept non- voucher residents who will pay rent amounts not to exceed the maximum rents for persons at 60% of the median income level as in compliance with Section 42 of the Internal Revenue Code (IRC). 3) If no subsidies or vouchers are given to the projects or the tenants, all rents will be raised not to exceed the maximum rents for persons at 60% of the median income level and in compliance with Section 42 of the IRC. With rental rate increases, many of the current residents will be unable to pay the higher rents, thus forcing them to move from the projects and to seek housing elsewhere. An increase in the move out rate will cause a severe cash flow strain to the project. To compensate for the loss of income and increased vacancy turnover costs, the projects will require effective marketing, competitive rental rates and possible upgrading to units and/or common areas to attract qualified applicants and maintain a low vacancy rate. 4) HUD may restructure loans in order to minimize the monthly costs to the project and reduce the chances for default. Even with reduced or eliminated payments, the project will be forced to increase rents in order to operate. 5) The final option is to buy off the HUD insured loan making the complex free from HUD's or the local Housing Authority's regulations. Tax Reform Act of 1986, Omnibus Budget Reconciliation Act of 1987, Technical - ---------------------------------------------------------------------------- and Miscellaneous Revenue Act of 1988, Omnibus Budget Reconciliation Act of - --------------------------------------------------------------------------- 1989, Omnibus Budget Reconciliation Act of 1990 and all subsequent tax acts. - ---------------------------------------------------------------------------- The Partnership is organized as a limited partnership and is a "pass through" tax entity which does not, itself, pay federal income tax. However, the partners of the Partnership, who are subject to federal income tax, may be affected by the Tax Reform Act of 1986, the Omnibus Budget Reconciliation Act of 1987, the Technical and Miscellaneous Revenue Act of 1988, the Omnibus Budget Reconciliation Act of 1989, the Omnibus Budget Reconciliation Act of 1990 and all subsequent tax acts (collectively the Tax Acts). The Partnership will consider the effect of certain aspects of the Tax Acts on the partners when making investment decisions. The Partnership does not anticipate that the Tax Acts will have a material adverse impact on the Partnership's business operations, capital resources, plans or liquidity. Results of Operations - --------------------- 2001 Compared to 2000 - --------------------- For the fiscal year ended March 31, 2001, the Partnership recorded a net loss of approximately $84,000, as compared to a net loss of approximately $209,000 for the prior fiscal year. The decrease in net loss is the result of a decrease in the Partnership's equity in net losses of the Operating Partnerships and by a decrease in the Partnership's general and administrative expenses. 11 12 In accordance with the equity method of accounting for limited partnership interests, the Partnership does not recognize losses from investment properties when losses exceed the Partnership's equity method basis in these properties. All of the Partnership's investments have an equity method basis of zero at March 31, 2001. The Partnership's recorded share of the Operating Partnerships' losses in the current fiscal period consists of losses of approximately $16,000 from the Coleman Manor Associates Limited Partnership. In the prior fiscal year, losses of approximately $122,000 from the operations of Coleman Manor Associates Limited Partnership were recorded. In the aggregate, combined rental revenue of the Operating Partnerships increased by approximately $81,000 during the current calendar year. The average occupancy level decreased in fifteen out of the twenty-one Operating Partnerships. The combined total expenses increased by approximately $802,000 in the current year primarily due to an increase in utilities, repairs and maintenance, and interest expense. 2000 Compared to 1999 - --------------------- For the fiscal year ended March 31, 2000, the Partnership recorded a net loss of approximately $209,000, as compared to a net loss of approximately $193,000 for the prior fiscal year. The increase in net loss is a result of an increase in the Partnership's general and administrative expenses. In accordance with the equity method of accounting for limited partnership interests, the Partnership does not recognize losses from investment properties when losses exceed the Partnership's equity method basis in these properties. Twenty of the twenty-one investments have an equity method basis of zero at March 31, 2000. The Partnership's recorded share of the Operating Partnerships' losses in the current fiscal period consists of losses of approximately $122,000 from the Coleman Manor Associates Limited Partnership. In the prior fiscal year, losses of approximately $122,000 from the operations of Coleman Manor Associates Limited Partnership were recorded. In the aggregate, combined rental revenue of the Operating Partnerships decrease by approximately $209,000 during the current calendar year. The average occupancy level increased in twelve out of the twenty-one Operating Partnerships. The combined total expenses increased by approximately $140,000 in the current year primarily due to an increase in operating expenses. 1999 Compared To 1998 - --------------------- For the fiscal year ended March 31, 1999, the Partnership recorded a net loss of approximately $193,000, as compared to a net loss of approximately $205,000 for the prior fiscal year. The decrease in net loss is a direct result of a decrease in the Partnership's equity in net losses of the Operating Partnerships. In accordance with the equity method of accounting for limited partnership interests, the Partnership does not recognize losses from investment properties when losses exceed the Partnership's equity method basis in these properties. Twenty of the twenty-one investments have an equity method basis of zero at March 31, 1999. The Partnership's recorded share of the Operating Partnerships' losses in the current fiscal period consists of losses of approximately $122,000 from the Coleman Manor Associates Limited Partnership. In the prior fiscal year, losses of approximately $134,000 from the operations of Coleman Manor Associates Limited Partnership were recorded. In the aggregate, combined rental revenue of the Operating Partnerships decreased by approximately $29,000 during the current calendar year. The average occupancy level decreased in twelve out of twenty-one Operating Partnerships. The combined total expenses increased by approximately $718,000 in the current year primarily due to increases in repair and maintenance, interest and also depreciation and amortization. 12 13 Inflation - --------- Inflation is not expected to have a material adverse impact on the Partnership's operations during its period of ownership of the Properties. Other - ----- The Partnership's operations are not subject to any significant seasonal fluctuations. The Partnership believes it is in compliance with environmental regulations and does not anticipate material effects of continued compliance. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ---------------------------------------------------------- Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ------------------------------------------- The financial statements together with the report of the independent auditors thereon are incorporated by reference from the Registrants Financial Statements on the pages indicated in ITEM 14. ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND ------------------------------------------------------------ FINANCIAL DISCLOSURE -------------------- Not applicable. 13 14 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT -------------------------------------------------- The Partnership has no officers or directors. Management of the Partnership is vested in Irwin Jay Deutch and Century Pacific Capital Corporation (CPCC) (the general partners). The general partners will involve themselves in the day-to-day affairs of the Partnership as required to protect the limited partners' investment and advance the Partnership's tax investment objectives. Mr. Deutch, the managing general partner, has the overall responsibility for the preparation and transmittal of periodic reports to the limited partners, preparation and filing of the Partnership's tax returns with the IRS and the appropriate state tax authorities, and the preparation and filing of reports to HUD and other government agencies. Following is biographical information on Mr. Deutch and the Executive Officers of CPCC: IRWIN JAY DEUTCH Irwin Jay Deutch, age 60, is Chairman of the Board, President, and Chief Executive Officer of Century Pacific Realty Corporation (CPRC), a general partner of the Operating Partnerships that own the Properties in which CPHF-I has invested, and its Affiliates. Mr. Deutch has been involved with low-income housing investments since 1968. He is the individual general partner in 62 private limited partnerships and two public limited partnerships investing in 209 properties, including 196 multifamily properties with 33,700 apartment units, 10 commercial projects, and 3 hotel properties. Fifty-eight of the 62 private limited partnerships have invested in affordable housing. In his capacity as general partner and officer of CPRC, he oversees the management of these partnerships and assumes overall responsibility for the development, direction, and operation of all affiliated CPRC companies. Mr. Deutch is recognized as an expert in the field of affordable housing and frequently addresses professional groups on topics of real estate investment, syndication, tax law, and the Low-Income Housing Tax Credit program. Mr. Deutch received a B.B.A. with distinction from the University of Michigan School of Business Administration in 1962 and a Juris Doctor degree with honors from the University of Michigan Law School in 1965. He is a member of the Order of the Coif. Mr. Deutch served in the Honors Program in the Office of the Chief Counsel of the Internal Revenue Service from 1965 to 1967, where he was assigned to the Interpretative Division in Washington, D.C. He attended Georgetown Law Center and received his Master of Laws degree in taxation in 1967. Mr. Deutch is a member of the State Bars of Michigan and California, as well as the American, Federal, Los Angeles, and Beverly Hills Bar Associations. KEY OFFICERS OF CPCC AND AFFILIATES ESSIE SAFAIE, age 51, is Chief Financial Officer and Chief Operating Officer of CPRC. Prior to joining CPRC in 1988, from 1985-88, he was Vice President and Chief Financial Officer of Sunrise Investments, Inc., a real estate syndication firm with $450 million of real estate under management. During this period, Mr. Safaie was also President of an affiliated property management firm, S&L Property Management, Inc., with over 12,000 residential units and 800,000 square feet of commercial office space under direct management. From 1982 to 1985, Mr. Safaie was assistant controller of Standard Management Company, builders and managers of luxury hotels, commercial offices and residential units. From 1980-1982, he served as financial officer of Diamond "M" Drilling Company. Mr. Safaie received a BA degree in Business Administration from California State University with a major in accounting. 14 15 CHARLES L. SCHWENNESEN, age 55, is Vice President of Acquisition Finance for CPRC and is responsible for financial analysis and "due diligence" reviews of all properties acquired by CPRC. Prior to joining CPRC in 1987, he was a consultant to companies which provided investment opportunities through private placements. From 1984 to 1985, Mr. Schwennesen was Vice President of Cranston Securities Company and was responsible for the structuring of more than $30 million of mortgage revenue bond financing for affordable housing projects. From 1977 to 1984, Mr. Schwennesen was a manager with the accounting firm of Price Waterhouse where he specialized in providing auditing and consulting services to publicly held California real estate development companies involved in the affordable housing industry. Mr. Schwennesen is a Certified Public Accountant and holds a Masters degree in Business Administration from the UCLA Graduate School of Management and a B.A. degree in Mathematics from UCLA. ITEM 11. EXECUTIVE COMPENSATION ---------------------- The Partnership has no officers or directors. However, in connection with the operations of the Partnership and the Operating Partnerships, the general partners and their affiliates will or may receive certain fees, compensation, income and other payments which are described in the Prospectus under "Compensation, Fees and Reimbursements" on page 17, the terms of which are incorporated herein by reference. During the fiscal years ended March 31, 2001, 2000, and 1999, CPCC, a general partner of the Partnership, and CPRC, a general partner of the Operating Partnerships, earned $526,524, $522,326 and $535,596, respectively, in compensation from the Operating Partnerships and $60,000 was accrued for each fiscal year for the reimbursement for overhead allocation from Century Pacific Equity Corporation (CPEC). During fiscal year 2001, the general partners received no payments from the Operating Partnerships. ITEM 12. PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND --------------------------------------------------------------- MANAGEMENT ---------- No partner in the Partnership owns more than 5% of the total number of partnership interests outstanding. Irwin J. Deutch, the managing general partner, holds a one-half percent general partnership interest and C.P. Westwood Associates holds a one percent limited partnership interest. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ---------------------------------------------- Irwin J. Deutch is the managing general partner of the Partnership, and CPCC is also a general partner. Irwin J. Deutch is the sole Director and President of CPCC, and the stock of CPCC is solely owned by the Deutch Family Trust. Mr. Deutch is also the President, sole Director and the Deutch Family Trust is the sole stockholder of Century Pacific Realty Corporation (CPRC), the general partner of the Operating Partnerships that own the properties in which the Partnership has invested. The general partners were allocated their proportionate share of the Partnership's tax losses and allocated tax credits. CPCC and CPRC accrued certain fees for their services in managing and advising the Partnership and its business. Century Pacific Equity Corporation (CPEC), an affiliate, provides all the services and materials necessary for the operation of the Partnership and is reimbursed for actual costs. These transactions are more particularly set forth in the financial statements found under ITEM 14. 15 16 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K --------------------------------------------------------------- (a) (1) Financial Statements: Independent Auditors' Reports F-1 Balance Sheet as of March 31, 2001 and 2000 F-2 Statement of Operations for the Years Ended March 31, 2001, 2000, and 1999 F-3 Statement Of Partners' Equity (Deficit) for the Years Ended March 31, 2001, 2000, and 1999 F-4 Statement of Cash Flows for the Years Ended March 31, 2001, 2000, and 1999 F-5 Notes to Financial Statements F-6 (2) Financial Statement Schedules: Schedule III - Real Estate and Accumulated Depreciationof Operating Partnerships in which CPHF-I has Limited Partnership Interests F-13 and F-14 Notes to Schedule III - Real Estate and Accumulated Depreciation of Operating Partnerships in which CPHF-I has Limited Partnership Interest F-15 and F-16 Schedule IV - Mortgage Loans on Real Estate of OperatingPartnerships in which CPHF-I has Limited Partnership Interests F-17 thru F-20 Notes to Schedule IV - Mortgage Loans on Real Estate of Operating Partnerships in which CPHF-I has Limited Partnership Interests F-21 All other schedules are omitted because they are not applicable or the required information is shown in the financialstatements or notes thereto. (3) Exhibits Not applicable (b) Reports on Form 8-K Not applicable (c) Exhibits Not applicable (d) Financial Statement Schedule Financial Statements of Coleman Manor for the Years Ended December 31, 1999, and 1998 16 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTURY PACIFIC HOUSING FUND - I By: Irwin Jay Deutch, as Managing General Partner Date: June 29, 2001 /s/ Irwin Jay Deutch -------------------------------------- and Century Pacific Capital I Corporation, as Corporate General Partner and as Attorney-in-Fact for all Investor Limited Partners Date: June 29, 2001 /s/ Irwin Jay Deutch By: Irwin Jay Deutch, President -------------------------------------- 17 18 INDEPENDENT AUDITORS' REPORT Partners Century Pacific Housing Fund - I We have audited the accompanying balance sheet of Century Pacific Housing Fund - I as of March 31, 2001 and 2000, and the related statements of operations, partners' equity (deficit) and cash flows for each of the three years in the period ended March 31, 2001. 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 audit. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits 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 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 financial position of Century Pacific Housing Fund - - I as of March 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2001, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Notes 2, 3, 4 and 5 to the financial statements, the Partnership has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management's plans regarding these matters also are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have also prepared, from information audited by us, the related financial statement schedules listed in Item 14(a)(2) as of December 31, 2000 and 1999. In our opinion the financial statement schedules present fairly, in all material respects, the information required to be set forth therein. /s/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri June 20, 2001 F-1 19 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------------------------------------ BALANCE SHEET
ASSETS MARCH 31, ------------------------------ 2001 2000 ------------------------------ Cash $ 4,685 $ 5,889 Receivable from related parties (Note 4) 4,934 4,934 Investments in Operating Partnerships (Notes 1 and 5) -- 15,633 - ------------------------------------------------------------------------------------------------------------ TOTAL ASSETS $ 9,619 $ 26,456 ============================================================================================================ LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Accounts payable and accrued expenses $ 7,618 $ 13,769 Advance from affiliate (Note 4) 62,455 62,455 Payable to related parties (Note 4) 1,006,337 932,769 - ------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES 1,076,410 1,008,993 - ------------------------------------------------------------------------------------------------------------ COMMITMENTS AND CONTINGENCIES (NOTE 6) -- -- - ------------------------------------------------------------------------------------------------------------ PARTNERS' EQUITY (DEFICIT) General partners (400,058) (398,373) Limited partners, $1,000 stated value per unit, 50,000 units authorized, 22,315 units issued and outstanding (Note 2) (666,733) (584,164) - ------------------------------------------------------------------------------------------------------------ TOTAL PARTNERS' EQUITY (DEFICIT) (1,066,791) (982,537) - ------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT) $ 9,619 $ 26,456 ============================================================================================================ F-2 - ------------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements.
20 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------------------------------------ STATEMENT OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, ------------------------------------------------ 2001 2000 1999 ------------------------------------------------ REVENUES Transfer fees $ 800 $ 1,000 $ 1,900 Miscellaneous -- -- 1,815 - ------------------------------------------------------------------------------------------------------------ TOTAL REVENUES 800 1,000 3,715 - ------------------------------------------------------------------------------------------------------------ EXPENSES Allocated overhead expenses - affiliate (Note 4) 60,000 60,000 60,000 Other general and administrative 9,421 27,407 14,653 - ------------------------------------------------------------------------------------------------------------ TOTAL EXPENSES 69,421 87,407 74,653 - ------------------------------------------------------------------------------------------------------------ LOSS BEFORE EQUITY IN NET LOSSES OF OPERATING PARTNERSHIPS (68,621) (86,407) (70,938) EQUITY IN NET LOSSES OF OPERATING PARTNERSHIPS (NOTE 5) (15,633) (122,245) (122,202) - ------------------------------------------------------------------------------------------------------------ NET LOSS $ (84,254) $ (208,652) $ (193,140) ============================================================================================================ ALLOCATION OF NET LOSS General partners $ (1,685) $ (4,173) $ (3,863) Limited partners (82,569) (204,479) (189,277) - ------------------------------------------------------------------------------------------------------------ $ (84,254) $ (208,652) $ (193,140) ============================================================================================================ NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST (NOTE 1) $ (4) $ (9) $ (9) ============================================================================================================ AVERAGE NUMBER OF OUTSTANDING UNITS 22,315 22,315 22,315 ============================================================================================================ F-3 - ------------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements.
21 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------------------------------------ STATEMENT OF PARTNERS' EQUITY (DEFICIT) FOR THE YEARS ENDED MARCH 31, 2001, 2000 AND 1999
GENERAL LIMITED PARTNERS PARTNERS TOTAL ----------------------------------------------- PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1998 $(390,037) $(190,408) $ (580,745) NET LOSS (3,863) (189,277) (193,140) - ------------------------------------------------------------------------------------------------------------ PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1999 (394,200) (379,685) (773,885) NET LOSS (4,173) (204,479) (208,652) - ------------------------------------------------------------------------------------------------------------ PARTNERS' EQUITY (DEFICIT) - MARCH 31, 2000 (398,373) (584,164) (982,537) NET LOSS (1,685) (82,569) (84,254) - ------------------------------------------------------------------------------------------------------------ PARTNERS' EQUITY (DEFICIT) - MARCH 31, 2001 $(400,058) $(666,733) $(1,066,791) ============================================================================================================ PERCENTAGE INTEREST - MARCH 31, 2001 2% 98% 100% ============================================================================================================ F-4 - ------------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements.
22 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------------------------------------ STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, ----------------------------------------------- 2001 2000 1999 ----------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(84,254) $(208,652) $(193,140) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Equity in net losses of Operating Partnerships 15,633 122,245 122,202 (Increase) decrease in receivable from related parties -- 24,116 (13,500) Increase (decrease) in accounts payable and accrued expenses (6,151) (2,032) 5,000 Increase (decrease) in advance from affiliate -- (13,500) 13,500 Increase in payable to related parties 73,568 78,823 68,531 - ------------------------------------------------------------------------------------------------------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (1,204) 1,000 2,593 - ------------------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN CASH (1,204) 1,000 2,593 CASH - BEGINNING OF PERIOD 5,889 4,889 2,296 - ------------------------------------------------------------------------------------------------------------ CASH - END OF PERIOD $ 4,685 $ 5,889 $ 4,889 ============================================================================================================ F-5 - ------------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements.
23 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS MARCH 31, 2001, 2000 AND 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The Partnership maintains its financial records on the tax basis. Memorandum entries, while not recorded in the records of the Partnership, have been made in order to prepare the financial statements in accordance with generally accepted accounting principles. On August 7, 1991, management of the Partnership changed from a calendar year end to a fiscal year end of March 31 for financial reporting purposes. Accordingly, the Partnership's quarterly periods end June 30, September 30 and December 31. The Operating Partnerships, for financial reporting purposes, have a calendar year. The Partnership, as well as the Operating Partnerships, have a calendar year for income tax purposes. ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. INVESTMENTS IN OPERATING PARTNERSHIPS The Partnership uses the equity method to account for its investment in the Operating Partnerships in which it has invested (Note 5). Under the equity method of accounting, the investment is carried at cost and adjusted for the Partnership's share of the Operating Partnerships' results of operations and by cash distributions received. Equity in the loss of each Operating Partnership allocated to the Partnership is not recognized to the extent that the investment balance would become negative. Costs paid by the Partnership for organization of the Operating Partnership as well as direct costs of acquiring properties, including acquisition fees and reimbursable acquisition expenses paid to the general partner, have been capitalized as investments in Operating Partnerships. INCOME TAXES No provision has been made for income taxes in the accompanying financial statements since such taxes and/or the recapture of the Low-Income Housing Tax Credit benefits received, if any, are the liability of the individual partners. The Partnership uses the accrual method of accounting for tax purposes. F-6 - ------------------------------------------------------------------------------ 24 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST Net loss per unit of limited partnership interest is calculated based upon the weighted average number of units of limited partnership interest (units) outstanding. 2. OPERATIONS Century Pacific Housing Fund-I, a California limited partnership, (the Partnership), was formed on October 6, 1986 for the purpose of raising capital by offering and selling limited partnership interests and then acquiring limited partnership interests in 21 limited partnerships (the Operating Partnerships), which acquired and operate 21 multi-family residential apartment properties (the properties). The general partners of the Partnership are Century Pacific Capital Corporation, a California corporation (CPCC), and Irwin Jay Deutch, an individual (collectively, the general partners). The general partners and affiliates of the general partners (the general partners and affiliates) have interests in the Partnership and receive compensation from the Partnership and the Operating Partnerships (Note 4). The Properties qualify for the Low-Income Housing Tax Credit established by Section 42 of the Tax Reform Act of 1986 (the Low-Income Housing Tax Credit) and one property qualifies for Historic Rehabilitation Tax Credits (collectively the Tax Credits). These properties are leveraged low-income multi-family residential complexes and receive one or more forms of assistance from federal, state or local government agencies (the Government Agencies). In July 1987, the Partnership began raising capital from sales of limited partnership interests, at $1,000 per unit, to limited partners. The Partnership authorized the issuance of a maximum of 50,000 partnership units of which 22,315 were subscribed and issued. The limited partnership interest offering closed in April 1988. The Partnership has acquired limited partnership interests ranging from 97% to 99% in the Operating Partnerships, which have invested in rental property. F-7 - ------------------------------------------------------------------------------ 25 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) 3. REALIZATION OF ASSETS The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Partnership as a going concern. The Partnership's Operating Partnerships have not achieved the operating results required to provide the Partnership with sufficient cash distributions to fund the Partnership's administrative costs. Additionally, as of March 31, 2001, the Partnership has incurred allocated losses from all of its Operating Partnerships to the extent of the Partnership's cash contributions. As a result of the foregoing, the Partnership is dependent upon the general partners and affiliates for continued financial support. The auditors' report on eight of the Operating Partnerships' financial statements contained an explanatory paragraph relating to a going concern issue, of which seven concerned the expiration of the Housing Assistance Payment Contract and one concerned recurring losses of the project. These Operating Partnerships have Housing Assistance Payment Contracts with the U.S. Department of Housing and Urban Development (HUD) that are due to expire during 2001. Management has requested one year extensions for these Operating Partnerships; however, as of June 20, 2001, these extensions have not been granted. Management maintains that the general partners and affiliates, though not required to do so, will continue to fund operations by deferring payment to related parties of allocated overhead expenses, and by funding any Partnership operating costs. Unpaid allocated overhead expenses will accrue and become payable when the Operating Partnerships generate sufficient cash distributions to the Partnership to cover such expenses. The financial statements do no include any adjustments that might result from the outcome of this uncertainty. 4. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES OF THE GENERAL PARTNERS The general partners of the Partnership are CPCC and Irwin Jay Deutch. The original limited partner of the Partnership is Westwood Associates which partners are Irwin Jay Deutch and key employees of CPCC. Century Pacific Placement Corporation (CPPC), an affiliate of the general partners, served as the broker-dealer-manager for sales of the limited partnership interests in the Partnership. Century Pacific Realty Corporation (CPRC), an affiliate of CPCC, is a general partner in each of the Operating Partnerships. The general partners have an aggregate one percent interest in the Partnership, as does the original limited partner. CPRC has a one percent interest in each of the Operating Partnerships, except for one Operating Partnership in which it has a one-half percent interest. F-8 - ------------------------------------------------------------------------------ 26 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) The general partners and affiliates receive compensation and reimbursement of expenses from the Partnership, as set forth in the limited partnership agreement, for their services in managing the Partnership and its business. The general partners and affiliates also receive compensation and reimbursement of expenses from the Operating Partnerships. This compensation and reimbursement includes services provided to the Partnership during its offering stage, acquisition stage, operational stage, and termination of refinancing stage. The general partners and affiliates earned the following fees for services provided to the Partnership and were entitled to reimbursement for costs incurred by the general partners and affiliates on behalf of the Partnership and the Operating Partnerships for the years ended March 31, 2001, 2000 and 1999 as follows:
2001 2000 1999 ---------------------------------------------- Fees and reimbursement from the Partnership: Reimbursement for overhead allocated from Century Pacific Equity Corporation (CPEC) $ 60,000 $ 60,000 $ 60,000 ------------------------------------------------------------------------------------------------- Fees and reimbursement from the Operating Partnerships Supervisory management fee (CPCC and CPRC) 152,115 152,115 152,115 Partnership management fee (CPCC and CPRC) 374,409 370,211 383,681 ------------------------------------------------------------------------------------------------- 526,524 522,326 535,796 ------------------------------------------------------------------------------------------------- $586,524 $582,326 $595,796 =================================================================================================
At March 31, 2001 and 2000, payable to related parties totaling $1,006,337 and $932,769, respectively, consists of fees and certain general and administrative costs accrued as a non-interest bearing payable by the Partnership to the general partners and affiliates. Such fees and allocated costs have been deferred until the Partnership has sufficient cash to pay them. Receivable from related parties of $4,934 at March 31, 2001 and 2000 represents cash advances to several of the Operating Partnerships. At March 31, 2001 and 2000, CPRC was owed $62,455 for non-interest bearing, demand cash advances to the Partnership. The general partners may advance funds to the Partnership to fund operating deficits, but are not obligated to do so. Such advances shall be evidenced by a promissory note of a term no more than 12 months in length and at a rate of interest no lower than the prime rate. All such loans shall be repaid prior to any distributions of net cash flow. At March 31, 2001 and 2000, the Partnership had no outstanding advances due to the general partners. F-9 - ------------------------------------------------------------------------------ 27 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) 5. INVESTMENTS IN OPERATING PARTNERSHIPS At March 31, 2001 and 2000, the Partnership owned limited partnership interests in 21 Operating Partnerships, each of which has invested in a multi-family rental property. Investments in Operating Partnerships consist of the following:
2001 2000 ------------------------------- Cash contributions to Operating Partnerships to fund purchase of beneficial interests in properties $ 15,497,467 $ 15,497,467 Cash contributions to Operating Partnerships to fund operations 6,150 6,150 Cash distribution from Operating Partnership (6,326) (6,326) Acquisition and organization costs 3,342,778 3,342,778 Equity in net losses of Operating Partnerships (18,840,069) (18,824,436) --------------------------------------------------------------------------------------------- $ -- $ 15,633 ==============================================================================================
A summarized combined balance sheet as of December 31, 2000 and 1999 and statement of operations for the three years ended December 31, 2000 of the aforementioned Operating Partnership follows: COMBINED BALANCE SHEET ASSETS
2000 1999 ------------------------------- Cash $ 956,612 $ 1,480,035 Reserve for replacements 3,125,100 2,977,765 Land and buildings 56,156,394 59,866,590 Other assets 3,247,235 3,177,215 --------------------------------------------------------------------------------------------- $ 63,485,341 $ 67,501,605 ============================================================================================== LIABILITIES AND PARTNERS' DEFICIT 2000 1999 ------------------------------- Notes payable $133,566,140 $128,346,523 Other liabilities 7,691,137 7,829,867 Partners' deficit (77,771,936) (68,674,785) --------------------------------------------------------------------------------------------- $ 63,485,341 $ 67,501,605 ==============================================================================================
F-10 - ------------------------------------------------------------------------------ 28 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) COMBINED STATEMENT OF OPERATIONS
2000 1999 1998 ------------------------------------------------- REVENUES Rental income $16,585,661 $16,667,064 $16,457,379 Other income 653,813 817,016 413,609 --------------------------------------------------------------------------------------------------- TOTAL REVENUES 17,239,474 17,484,080 16,870,988 --------------------------------------------------------------------------------------------------- EXPENSES Utilities 2,869,732 2,630,077 2,718,177 Repairs and maintenance 4,601,575 4,389,890 4,645,192 Management fees 1,313,219 1,320,288 1,287,155 Other operating expenses 5,402,602 5,492,192 4,848,663 Interest 7,625,813 7,179,043 7,339,635 Depreciation and amortization 4,346,112 4,345,497 4,378,554 --------------------------------------------------------------------------------------------------- TOTAL EXPENSES 26,159,053 25,356,987 25,217,376 --------------------------------------------------------------------------------------------------- NET LOSS $(8,919,579) $(7,872,907) $(8,346,388) =================================================================================================== ALLOCATION OF LOSS General partners and other limited partners $(8,741,187) $(7,715,449) $(8,179,460) Century Pacific Housing Fund - I (178,392) (157,458) (166,928) --------------------------------------------------------------------------------------------------- $(8,919,579) $(7,872,907) $(8,346,388) ===================================================================================================
6. COMMITMENTS AND CONTINGENCIES The rents of the Operating Partnerships, all of which receive rental subsidy payments, including payments under Section 8 of Title II of the Housing and Community Development Act of 1974 ("Section 8") are subject to specific laws, regulations, and agreements with federal and state agencies. The subsidy agreements expire at various times during and after the 15-year compliance period of the Operating Partnerships. The United States Department of Housing and Urban Development ("HUD") has issued a notice implementing provisions to renew Section 8 contracts expiring during HUD's fiscal year 2001, where requested by an owner, for an additional one year term at current rent levels. As of June 20, 2001, eight of the Operating Partnerships' Section 8 contracts are due to expire during 2001. The Operating Partnerships have not yet received HUD's approval of their extension requests. At the present time, the Partnership cannot reasonably predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income and debt structure of any or all Operating Partnerships receiving such subsidy or similar subsidies. F-11 - ------------------------------------------------------------------------------ 29 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) 7. FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of each class of financial instruments: CASH The carrying amount approximates fair value because of the short maturity of those instruments. RELATED PARTY RECEIVABLES The carrying amount approximates fair value because of the short-term nature of the receivables. ADVANCE FROM AFFILIATE The carrying amount approximates fair value because of the short-term nature of the advance. PAYABLE TO RELATED PARTIES The carrying amount approximates fair value because the terms of the payable are similar to currently available terms and conditions for similar instruments. F-12 - ------------------------------------------------------------------------------ 30 Schedule III ------------ Page 1 of 2 CENTURY PACIFIC TAX CREDIT HOUSING FUND-I - ------------------------------------------------------------------------------------------------------------------------ REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2000
INITIAL COST TO COST CAPITALIZED OPERATING PARTNERSHIP SUBSEQUENT TO ACQUISITION ------------------------------- ------------------------------- BUILDINGS AND BUILDINGS AND DESCRIPTION (1) ENCUMBRANCES (2) LAND IMPROVEMENTS LAND IMPROVEMENTS - ------------------------------------------------------------------------------------------------------------------------ Century Pacific Housing Partnership I (CPHP-I) - Charter House Dothan, Alabama $ 2,455,449 $ 179,578 $ 1,918,124 $ -- $ 168,252 CPHP-II - VOA/ Sunset Park, Ltd. - Sunset Park Denver, Colorado 9,604,693 803,595 5,696,405 7,305 948,104 CPHP-III - Highland Park Topeka, Kansas 12,314,118 434,475 6,465,525 251 469,561 CPHP-IV - Forest Glen Estates Kansas City, Missouri 6,752,218 427,519 4,469,134 292 230,903 CPHP-VI - Edgewood Danville, Illinois 3,008,411 223,418 3,316,582 96,407 400,342 CPHP-VII - Gulfway Terrace New Orleans, Louisiana 6,557,097 270,343 5,429,657 237 375,578 CPHP-IX - Wind Ridge Wichita, Kansas 4,001,314 169,514 3,330,486 146 (3,330,486) CPHP-X - Bergen Circle Springfield, Massachusetts 16,370,796 901,206 11,359,794 0 1,373,641 CPHP-V - Jaycee Towers Dayton, Ohio 8,386,592 599,719 5,096,481 0 419,333 CPHP-VIII - Sunset Townhouses Newton, Kansas 1,479,827 50,259 1,174,741 138 140,864 - ------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD 70,930,515 4,059,626 48,256,929 104,776 1,196,092 - ------------------------------------------------------------------------------------------------------------------------ LIFE UPON WHICH GROSS AMOUNT AT WHICH ACCUMULATED DEPRECIATION CARRIED AT CLOSE OF YEAR DEPRECIATION IN LATEST --------------------------------------- ------------ INCOME BUILDINGS AND BUILDINGS AND DATE OF DATE STATEMENT IS DESCRIPTION (1) LAND IMPROVEMENTS TOTAL IMPROVEMENTS CONSTRUCTION ACQUIRED COMPUTED - ------------------------------------------------------------------------------------------------------------------------ Century Pacific Housing Partnership I (CPHP-I) - Charter House Dothan, Alabama $ 179,578 $ 2,086,376 $ 2,265,954 $ 1,000,730 1972 12/87 27.5 years CPHP-II - VOA/ Sunset Park, Ltd. - Sunset Park Denver, Colorado 810,900 6,644,509 7,455,409 3,188,634 1971 12/87 10 - 50 years CPHP-III - Highland Park Topeka, Kansas 434,726 6,935,086 7,369,812 4,351,377 1967 12/87 10 - 40 years CPHP-IV - Forest Glen Estates Kansas City, Missouri 427,811 4,700,037 5,127,848 2,550,348 1971 12/87 40 years CPHP-VI - Edgewood Danville, Illinois 319,825 3,716,924 4,036,749 1,725,601 1970 12/87 27.5 years CPHP-VII - Gulfway Terrace New Orleans, Louisiana 270,580 5,805,235 6,075,815 3,072,148 1970 12/87 10 - 40 years CPHP-IX - Wind Ridge Wichita, Kansas 169,660 4,173,109 4,342,769 2,212,993 1969 12/87 10 - 40 years CPHP-X - Bergen Circle Springfield, Massachusetts 901,206 12,733,435 13,634,641 6,217,675 1976 12/87 10 - 40 years CPHP-V - Jaycee Towers Dayton, Ohio 599,719 5,515,814 6,115,533 2,459,817 1970 12/88 27.5 years CPHP-VIII - Sunset Townhouses Newton, Kansas 50,397 1,315,605 1,366,002 724,623 1971 8/88 10 - 40 years - ------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD 4,164,402 53,626,130 57,790,532 27,503,946 - ------------------------------------------------------------------------------------------------------------------------ See notes to schedule F-13
31 Schedule III ------------ Page 2 of 2 CENTURY PACIFIC HOUSING FUND-I - ------------------------------------------------------------------------------------------------------------------------ REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2000
INITIAL COST TO COST CAPITALIZED OPERATING PARTNERSHIP SUBSEQUENT TO ACQUISITION ------------------------------- ------------------------------- BUILDINGS AND BUILDINGS AND DESCRIPTION (1) ENCUMBRANCES (2) LAND IMPROVEMENTS LAND IMPROVEMENTS - ------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD $ 70,930,515 $4,059,626 $48,256,929 $104,776 $ 5,369,201 CPHP-XI - Continental Terrace Fort Worth, Texas 6,227,083 231,946 4,368,054 1,049 760,519 CPHP-XII - Yale Village Houston, Texas 8,408,437 299,925 4,950,075 19,874 1,009,224 CPHP-XIII - Atlantis Virginia Beach, Virginia 8,825,219 520,607 5,382,387 2,861 875,158 CPHP-XIV - Kings Row Houston, Texas 5,909,468 193,458 3,586,542 947 908,573 CPHP-XV - Castle Gardens Lubbock, Texas 4,778,920 161,989 3,106,011 821 688,837 CPHP-XVI - Rockwell Villa Oklahoma City, Oklahoma 1,586,061 75,255 1,160,145 1,168 280,455 CPHP-XVII - London Square Village Oklahoma City, Oklahoma 4,870,221 203,978 4,009,000 0 730,087 CPHP-XVIII - Ascension Towers Memphis, Tennessee 9,772,998 176,341 6,551,159 0 846,215 Coleman Manor Associates Limited Partnership - Coleman Manor Baltimore, Maryland 2,165,519 61,281 3,384,621 0 184,710 CPHP-XX - Holiday Heights Fort Worth, Texas 3,216,128 202,445 1,942,864 43,132 150,344 CPHP-XXII - Harriet Tubman Terrace - Berkeley, California 6,875,571 361,275 3,807,339 5,097 460,043 - ------------------------------------------------------------------------------------------------------------------------ $133,566,140 $6,548,126 $90,505,126 $179,725 $12,263,366 ======================================================================================================================== LIFE UPON WHICH GROSS AMOUNT AT WHICH ACCUMULATED DEPRECIATION CARRIED AT CLOSE OF YEAR DEPRECIATION IN LATEST --------------------------------------- ------------ INCOME BUILDINGS AND BUILDINGS AND DATE OF DATE STATEMENT IS DESCRIPTION (1) LAND IMPROVEMENTS TOTAL IMPROVEMENTS CONSTRUCTION ACQUIRED COMPUTED - ------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD $4,164,402 $ 53,626,130 $ 57,790,532 $27,503,946 CPHP-XI - Continental Terrace Fort Worth, Texas 232,995 5,128,573 5,361,568 2,721,212 1971 10/88 20 - 40 years CPHP-XII - Yale Village Houston, Texas 319,799 5,959,299 6,279,098 3,628,862 1970 8/88 20 - 40 years CPHP-XIII - Atlantis Virginia Beach, Virginia 532,468 6,257,545 6,781,013 3,396,571 1970 7/88 20 - 40 years CPHP-XIV - Kings Row Houston, Texas 194,405 4,495,115 4,689,520 2,472,826 1968 8/88 20 - 40 years CPHP-XV - Castle Gardens Lubbock, Texas 162,810 3,794,848 3,957,658 2,041,965 1971 7/88 15 - 40 years CPHP-XVI - Rockwell Villa Oklahoma City, Oklahoma 76,423 1,440,600 1,517,023 678,778 1970 7/88 27.5 years CPHP-XVII - London Square Village Oklahoma City, Oklahoma 203,978 4,739,087 4,943,065 2,673,774 1975 8/88 27.5 years CPHP-XVIII - Ascension Towers Memphis, Tennessee 176,341 7,397,374 7,573,715 3,471,720 1979 8/88 27.5 years Coleman Manor Associates Limited Partnership - Coleman Manor Baltimore, Maryland 61,281 3,569,331 3,630,612 1,601,826 1903 8/88 27.5 years CPHP-XX - Holiday Heights Fort Worth, Texas 245,577 2,093,208 2,338,785 1,143,963 1972 10/88 32 years CPHP-XXII - Harriet Tubman Terrace - Berkeley, California 366,372 4,267,382 4,633,754 2,004,506 1975 8/88 27.5 years - ------------------------------------------------------------------------------------------------------------------------ $6,727,851 $102,768,492 $109,496,343 $53,339,949 ======================================================================================================================== See notes to schedule F-14
32 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2000 NOTE 1 - DESCRIPTION OF PROPERTIES - ---------------------------------- The Properties held by the Operating Partnerships in which the Partnership has invested are housing projects, primarily for families and elderly or handicapped individuals of low and moderate income. NOTE 2 - SCHEDULE OF ENCUMBRANCES - ---------------------------------
OPERATING PARTNERSHIP MORTGAGE RESIDUAL PURCHASE OTHER NAME AND PROPERTY NAME NOTES NOTE NOTE NOTES TOTAL - ------------------------------------------------------------------------------------------------------------------- CPHP-I Charter House $ 811,662 $ 1,643,787 $ -- $ -- $ 2,455,449 CPHP-II VOA/Sunset Park, Ltd. Sunset Park 2,262,157 7,310,275 -- 32,261 9,604,693 CPHP-III Highland Park 923,738 11,174,292 -- 216,088 12,314,118 CPHP-IV Forest Glen Estates 1,763,736 4,939,137 -- 49,345 6,752,218 CPHP-V Jaycee Towers 2,192,832 5,929,057 -- 264,703 8,386,592 CPHP-VI Edgewood 1,764,766 1,057,680 -- 185,965 3,008,411 CPHP-VII Gulfway Terrace 2,457,277 3,812,014 -- 287,806 6,557,097 CPHP-VIII Sunset Townhouses 540,391 920,565 -- 18,871 1,479,827 CPHP-IX Wind Ridge 3,053,077 865,075 -- 83,162 4,001,314 CPHP-X Bergen Circle 5,560,640 10,057,572 -- 752,584 16,370,796 CPHP-XI Continental Terrace 1,838,355 4,074,791 -- 313,937 6,227,083 CPHP-XII Yale Village 2,144,061 5,037,340 -- 1,227,036 8,408,437 CPHP-XIII Atlantis 1,889,052 6,936,167 -- -- 8,825,219 CPHP-XIV Kings Row 1,224,337 4,169,127 -- 516,004 5,909,468 CPHP-XV Castle Gardens 1,309,058 3,163,460 -- 306,402 4,778,920 CPHP-XVI Rockwell Villa 459,809 1,071,270 -- 54,982 1,586,061 CPHP-XVII London Square Village 1,935,306 2,934,915 -- -- 4,870,221 CPHP-XVIII Ascension Towers 2,889,611 6,474,361 -- 409,026 9,772,998 Coleman Manor Associates Limited Partnership Coleman Manor 2,125,519 -- -- 40,000 2,165,519 CPHP-XX Holiday Heights 808,334 2,407,794 -- -- 3,216,128 CPHP-XXII Harriet Tubman Terrace 1,293,419 5,360,652 221,500 -- 6,875,571 - ------------------------------------------------------------------------------------------------------------------- $39,247,137 $89,339,331 $221,500 $4,758,172 $133,566,140 =================================================================================================================== F-15
33 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS - CONTINUED DECEMBER 31, 2000 NOTE 3 - RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION - -------------------------------------------------------------------
ACCUMULATED COST DEPRECIATION -------------------------------- Balance at December 31, 1997 $107,207,504 $40,434,942 Additions during year: Improvements 864,012 -- Depreciation -- 4,318,634 ---------------------------------------------------------------------- Balance at December 31, 1998 108,071,516 44,753,576 Additions during year: Improvements 844,445 -- Depreciation -- 4,295,795 ---------------------------------------------------------------------- Balance at December 31, 1999 108,915,961 49,049,371 Additions during year: Improvements 580,382 -- Depreciation -- 4,290,578 ---------------------------------------------------------------------- $109,496,343 $53,339,949 ======================================================================
F-16 34 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------------------------------------------- MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2000 Schedule IV -----------
MONTHLY PAYMENTS ORIGINAL FINAL TO MATURITY FACE CARRYING INTEREST MATURITY (NET OF HUD AMOUNT OF AMOUNT OF DESCRIPTION (1) RATE DATE SUBSIDY) MORTGAGE MORTGAGE (2) - ------------------------------------------------------------------------------------------------------------------- First mortgages assumed by Operating Partnerships: Century Pacific Housing Partnership-I (CPHP-I) Charter House Dothan, Alabama 7% March 2013 $ 8,238 $ 1,325,700 $ 811,662 CPHP-II VOA/Sunset Park, Ltd. Sunset Park Denver, Colorado 7% November 2014 8,736 4,859,300 2,262,157 CPHP-III Highland Park Topeka, Kansas 3% December 2008 10,835 2,914,500 923,738 CPHP-IV Forest Glen Estates Kansas City, Kansas 7.5% April 2013 6,703 2,787,000 1,763,736 CPHP-VI 3% plus Edgewood treasury Danville, Illinois bill rate March 2013 18,928 2,360,000 1,764,766 CPHP-VII Gulfway Terrace New Orleans, Louisiana 7% June 2015 8,320 3,616,200 2,457,277 CPHP-IX Wind Ridge Wichita, Kansas 8.625% July 2010 23,529 3,060,000 3,053,077 CPHP-X Bergen Circle Springfield, Massachusetts 6.92% March 2018 4,818 7,381,100 5,560,640 CPHP-V Jaycee Towers Dayton, Ohio 8.5% September 2012 7,648 3,361,200 2,192,832 CPHP-VIII Sunset Townhouses Newton, Kansas 8.5% September 2012 1,864 828,300 540,391 - ------------------------------------------------------------------------------------------------------------------- BALANCE BROUGHT FORWARD 62,952 31,444,200 21,330,276 - ------------------------------------------------------------------------------------------------------------------- F-17 35 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------------------------------------------- MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2000 Schedule IV ----------- MONTHLY PAYMENTS ORIGINAL FINAL TO MATURITY FACE CARRYING INTEREST MATURITY (NET OF HUD AMOUNT OF AMOUNT OF DESCRIPTION (1) RATE DATE SUBSIDY) MORTGAGE MORTGAGE (2) - ------------------------------------------------------------------------------------------------------------------- BALANCE BROUGHT FORWARD $31,444,200 $21,330,276 CPHP-XI Continental Terrace Fort Worth, Texas 7% March 2013 8,636 3,002,600 1,838,355 CPHP-XII Yale Village Houston, Texas 7% June 2105 10,470 3,363,300 2,144,061 CPHP-XIII Atlantis Virginia Beach, Virginia 8.5% March 2012 7,336 2,946,500 1,889,052 CPHP-XIV Kings Row Houston, Texas 7.05% August 2011 13,925 2,116,000 1,224,337 CPHP-XV Castle Gardens Lubbock, Texas 8.5% June 2015 4,808 1,949,900 1,309,058 CPHP-XVI Rockwell Villa Oklahoma City, Oklahoma 7% September 2013 1,953 812,700 459,809 CPHP-XVII London Square Village Oklahoma City, Oklahoma 7.5% June 2012 7,861 3,153,900 1,935,306 CPHP-XVIII Ascension Towers Memphis, Tennessee 7% May 2015 9,671 4,290,000 2,889,611 Coleman Manor Associates Limited Partnership Coleman Manor Baltimore, Maryland 10% July 2029 12,545 2,365,000 2,125,519 CPHP-XX Holiday Heights Fort Worth, Texas 7% April 2014 3,052 1,252,700 808,334 CPHP-XXII Harriet Tubman Terrace Berkeley, California 7% October 2015 4,233 1,882,700 1,293,419 - ------------------------------------------------------------------------------------------------------------------- $70,586 $58,579,500 $39,247,137 =================================================================================================================== See notes to schedule F-18 36 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------------------------------------------- MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2000 Schedule IV ----------- MONTHLY PAYMENTS ORIGINAL FINAL TO MATURITY FACE CARRYING INTEREST MATURITY (NET OF HUD AMOUNT OF AMOUNT OF DESCRIPTION (1) RATE DATE SUBSIDY) MORTGAGE MORTGAGE (2) - ------------------------------------------------------------------------------------------------------------------- Residual notes (second mortgages): Century Pacific Housing Partnership-I (CPHP-I) Charter House Dothan, Alabama (1) December 2002 (1) $ 781,581 $ 1,643,787 CPHP-II VOA/Sunset Park, Ltd. Sunset Park Denver, Colorado (1) December 2002 (1) 2,462,936 7,310,275 CPHP-III Highland Park Topeka, Kansas (1) December 2002 (1) 3,936,695 11,174,292 CPHP-IV Forest Glen Estates Kansas City, Kansas (1) December 2002 (1) 1,733,923 4,939,137 CPHP-VI Edgewood Danville, Illinois (1) December 2002 (1) 415,192 1,057,680 CPHP-VII Gulfway Terrace New Orleans, Louisiana (1) December 2002 (1) 1,255,000 3,812,014 CPHP-IX Wind Ridge Wichita, Kansas (1) December 2003 (1) 1,053,084 865,075 CPHP-X Bergen Circle Springfield, Massachusetts (1) July 2013 (1) 3,547,072 10,057,572 CPHP-V Jaycee Towers Dayton, Ohio (1) October 2005 (1) 2,245,673 5,929,057 CPHP-VIII Sunset Townhouses Newton, Kansas (1) August 2003 (1) 341,229 920,565 - ------------------------------------------------------------------------------------------------------------------- BALANCE BROUGHT FORWARD 17,772,385 47,709,454 - ------------------------------------------------------------------------------------------------------------------- F-19 37 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------------------------------------------- MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2000 Schedule IV ----------- MONTHLY PAYMENTS ORIGINAL FINAL TO MATURITY FACE CARRYING INTEREST MATURITY (NET OF HUD AMOUNT OF AMOUNT OF DESCRIPTION (1) RATE DATE SUBSIDY) MORTGAGE MORTGAGE (2) - ------------------------------------------------------------------------------------------------------------------- BALANCE BROUGHT FORWARD $17,772,385 $47,709,454 CPHP-XI Continental Terrace Fort Worth, Texas (1) October 2003 (1) 1,595,364 4,074,791 CPHP-XII Yale Village Houston, Texas (1) August 2003 (1) 1,255,000 5,037,340 CPHP-XIII Atlantis Virginia Beach, Virginia (1) July 2003 (1) 2,552,584 6,936,167 CPHP-XIV Kings Row Houston, Texas (1) August 2003 (1) 1,537,518 4,169,127 CPHP-XV Castle Gardens Lubbock, Texas (1) July 2003 (1) 1,160,247 3,163,460 CPHP-XVI Rockwell Villa Oklahoma City, Oklahoma (1) July 2003 (1) 398,629 1,071,270 CPHP-XVII London Square Village Oklahoma City, Oklahoma (1) July 2003 (1) 979,071 2,934,915 CPHP-XVIII Ascension Towers Memphis, Tennessee (1) August 2003 (1) 2,404,667 6,474,361 CPHP-XX Holiday Heights Fort Worth, Texas (1) October 2004 (1) 909,472 2,407,794 CPHP-XXII Harriet Tubman Terrace Berkeley, California (1) December 2003 (1) 2,036,000 5,360,652 - ------------------------------------------------------------------------------------------------------------------- $32,600,937 $89,339,331 ===================================================================================================================
See notes to schedule F-20 38 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2000 NOTE 1 - DESCRIPTION ----------- Each Operating Partnership has invested in a Property. The Operating Partnerships assumed mortgage loan obligations from the sellers of the properties, and with the exception of two mortgages, all mortgage loan obligations are insured by the United States Department of Housing and Urban Development. All mortgages are secured by the land and buildings of the properties. In addition, the Operating Partnerships issued residual notes to the sellers of the properties as partial consideration. The notes bear interest at the minimum long-term federal rate as announced from time-to-time pursuant to Section 1274 of the Internal Revenue Code, provided that such rate shall not be less than 7% nor greater than 15%. The notes are secured by the land and buildings of the properties. The notes are repayable out of future cash available for distribution and unpaid principal and interest are due at maturity. NOTE 2 - RECONCILIATION OF MORTGAGES AND RESIDUAL NOTES ----------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 2000 ------------------------------- MORTGAGE RESIDUAL LOANS NOTES ------------------------------- Balance at December 31, 1997 $41,967,937 $71,306,351 Additions during year: Accrued interest -- 5,929,555 Deductions during year: Payments (733,082) -- ------------------------------------------------------------------------------- Balance at December 31, 1998 41,234,855 77,235,906 Additions during year: Accrued interest -- 7,028,848 Deductions during year: Payments (2,240,789) -- ------------------------------------------------------------------------------- Balance at December 31, 1999 38,994,066 84,264,754 Additions during year: Accrued interest -- 7,119,427 New mortgage loan 3,060,000 -- Deductions during year: Payments 2,806,929 2,044,850 ------------------------------------------------------------------------------- $39,247,137 $89,339,331 ===============================================================================
F-21 39 S2100-020 INDEPENDENT AUDITORS' REPORT To The Partners Coleman Manor Associates Limited Partnership We have audited the accompanying balance sheet of Coleman Manor Associates Limited Partnership, Project No. 052-35464, a limited partnership, as of December 31, 1999 and the related statements of profit and loss, partners' equity (deficit) and cash flows for the year then ended. 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 audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Coleman Manor Associates Limited Partnership as of December 31, 1999 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. January 27, 2000 40 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP 052-35464 - ------------------------------------------------------------------------------------------------------ BALANCE SHEET PAGE 1 OF 2 DECEMBER 31, 1999 ASSETS CURRENT ASSETS 1120 Cash - operations $ 6,814 1130 Tenant accounts receivable 1,939 1135 Accounts receivable - HUD 8,345 1200 Miscellaneous prepaid expenses 21,805 ------------ 1100T TOTAL CURRENT ASSETS $ 38,903 DEPOSITS HELD IN TRUST - FUNDED 1191 Tenant deposits held in trust 6,652 RESTRICTED DEPOSITS AND FUNDED RESERVES 1310 Escrow deposits 28,943 1320 Replacement reserve 40,527 ------------ 1300T TOTAL DEPOSITS 69,470 FIXED ASSETS 1410 Land 61,281 1420 Buildings 3,426,317 1465 Office furniture and equipment 123,514 ------------ 1400T Total Fixed Assets 3,611,112 1495 Less: Accumulated depreciation 1,466,857 ------------ 1400N NET FIXED ASSETS 2,144,255 OTHER ASSETS 1520 Intangible assets - loan costs 1520 Intangible assets - credit application and 97,875 compliance fees 11,844 ------------ 1500T TOTAL OTHER ASSETS 109,719 ------------ 1000T TOTAL ASSETS $2,368,999 ============ - ------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements. Page 2 41 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP 052-35464 - ------------------------------------------------------------------------------------------------------ BALANCE SHEET PAGE 2 OF 2 DECEMBER 31, 1999 LIABILITIES CURRENT LIABILITIES 2105 Bank overdraft - operations $ 398 2110 Accounts payable - operations 6,366 2120 Accrued wages payable 2,311 2113 Accounts payable - entity 186,454 2123 Accrued management fee payable 1,839 2131 Accrued interest payable - first mortgage 14,889 2170 Mortgage payable - first mortgage (short-term) 8,559 2172 Mortgage payable - second mortgage (short-term) 1,382 2210 Prepaid revenue 1,337 ------------ 2122T TOTAL CURRENT LIABILITIES $ 223,535 DEPOSIT AND PREPAYMENT LIABILITIES 2191 Tenant deposits held in trust (contra) 6,638 LONG-TERM LIABILITIES 2320 Mortgage payable - first mortgage 1,415,101 2322 Mortgage payable - second mortgage 710,421 2324 Other loans and notes payable 40,000 ------------ 2300T TOTAL LONG-TERM LIABILITIES 2,165,522 ------------ 2000T TOTAL LIABILITIES 2,395,695 PARTNERS' EQUITY (DEFICIT) 3130 Partners' equity (deficit) (26,696) ------------ 2033T TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT) $2,368,999 ============ - ------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements. Page 3
42 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP 052-35464 - --------------------------------------------------------------------------------------------------------------------- STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 1999 - ---------------------------------------------------------------------------------------------------------------------
PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT - --------------------------------------------------------------------------------------------------------------------- Rent Revenue - Gross Potential 5120 $ 44,692 -------------------------------------------------------------------------------------------------- Tenant Assistance Payments 5121 $330,202 -------------------------------------------------------------------------------------------------- Rent Revenue - Stores and Commercial 5140 $ -------------------------------------------------------------------------------------------------- Garage and Parking Spaces 5170 $ -------------------------------------------------------------------------------------------------- Flexible Subsidy Revenue 5180 $ RENT -------------------------------------------------------------------------------------------------- REVENUE Miscellaneous Rent Revenue 5190 $ 5100 -------------------------------------------------------------------------------------------------- Excess Rent 5191 $ -------------------------------------------------------------------------------------------------- Rent Revenue/Insurance 5192 $ -------------------------------------------------------------------------------------------------- Special Claims Revenue 5193 $ -------------------------------------------------------------------------------------------------- Retained Excess Income 5194 $ -------------------------------------------------------------------------------------------------- TOTAL RENT REVENUE 5100T $ 374,894 - --------------------------------------------------------------------------------------------------------------------- Apartments 5220 $ 5,983 -------------------------------------------------------------------------------------------------- Stores and Commercial 5240 $ -------------------------------------------------------------------------------------------------- Rental Concessions 5250 $ VACANCIES -------------------------------------------------------------------------------------------------- 5200 Garage and Parking Space 5270 $ -------------------------------------------------------------------------------------------------- Miscellaneous 5290 $ -------------------------------------------------------------------------------------------------- TOTAL VACANCIES 5200T $ 5,983 -------------------------------------------------------------------------------------------------- NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 368,911 - --------------------------------------------------------------------------------------------------------------------- 5300 Nursing Homes/Assisted Living/Board and Care/ Other Elderly Care/Coop/ and Other Revenues 5300 $ - --------------------------------------------------------------------------------------------------------------------- Financial Revenue - Project Operations 5410 $ 446 -------------------------------------------------------------------------------------------------- Revenue from Investments - Residual Receipts 5430 $ FINANCIAL -------------------------------------------------------------------------------------------------- REVENUE Revenue from Investments - Replacement Reserve 5440 $ 797 5400 -------------------------------------------------------------------------------------------------- Revenue from Investments - Miscellaneous 5490 $ -------------------------------------------------------------------------------------------------- TOTAL FINANCIAL REVENUE 5400T $ 1,243 - --------------------------------------------------------------------------------------------------------------------- Laundry and Vending Revenue 5910 $ 1,627 -------------------------------------------------------------------------------------------------- Tenant Charges 5920 $ 1,316 -------------------------------------------------------------------------------------------------- Interest Reduction Payments Revenue 5945 $ OTHER -------------------------------------------------------------------------------------------------- REVENUE Miscellaneous Revenue (Schedule) 5990 $ 3,789 5900 -------------------------------------------------------------------------------------------------- TOTAL OTHER REVENUE 5900T $ 6,732 -------------------------------------------------------------------------------------------------- TOTAL REVENUE 5000T $ 376,886 - --------------------------------------------------------------------------------------------------------------------- Conventions and Meetings 6203 $ -------------------------------------------------------------------------------------------------- Management Consultants 6204 $ -------------------------------------------------------------------------------------------------- Advertising and Marketing 6210 $ 93 -------------------------------------------------------------------------------------------------- Other Renting Expenses 6250 $ 4,180 -------------------------------------------------------------------------------------------------- Office Salaries 6310 $ 17,799 -------------------------------------------------------------------------------------------------- Office Expenses 6311 $ 7,368 -------------------------------------------------------------------------------------------------- Office or Model Apartment Rent 6312 $ -------------------------------------------------------------------------------------------------- Management Fee 6320 $ 21,943 ADMINISTRATIVE -------------------------------------------------------------------------------------------------- EXPENSES Manager or Superintendent Salaries 6330 $ 6200/6300 -------------------------------------------------------------------------------------------------- Administrative Rent Free Unit 6331 $ 7,477 -------------------------------------------------------------------------------------------------- Legal Expense - Project 6340 $ 174 -------------------------------------------------------------------------------------------------- Audit Expense 6350 $ 6,000 -------------------------------------------------------------------------------------------------- Bookkeeping Fees/Accounting Services 6351 $ 4,925 -------------------------------------------------------------------------------------------------- Bad Debts 6370 $ 243 -------------------------------------------------------------------------------------------------- Miscellaneous Administrative Expenses 6390 $ 1,421 -------------------------------------------------------------------------------------------------- TOTAL ADMINISTRATIVE EXPENSES 6263T $ 71,623 - --------------------------------------------------------------------------------------------------------------------- Fuel Oil/Coal 6420 $ -------------------------------------------------------------------------------------------------- Electricity 6450 $ 8,104 UTILITIES -------------------------------------------------------------------------------------------------- EXPENSE Water 6451 $ 1,325 6400 -------------------------------------------------------------------------------------------------- Gas 6452 $ -------------------------------------------------------------------------------------------------- Sewer 6453 $ 2,959 -------------------------------------------------------------------------------------------------- TOTAL UTILITIES EXPENSE 6400T $ 12,388 -------------------------------------------------------------------------------------------------- TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) $ 84,011 - --------------------------------------------------------------------------------------------------------------------- Page 1 of 2 - --------------------------------------------------------------------------------------------------------------------- See the accompanying notes to financial statements. Page 4 43 Project Name: Coleman Manor Associates Limited Partnership - --------------------------------------------------------------------------------------------------------------------- BALANCE CARRIED FORWARD $ 84,011 - --------------------------------------------------------------------------------------------------------------------- Payroll 6510 $ 30,806 -------------------------------------------------------------------------------------------------- Supplies 6515 $ 641 -------------------------------------------------------------------------------------------------- Contracts 6520 $ 16,970 -------------------------------------------------------------------------------------------------- Operating and Maintenance Rent Free Unit 6521 $ -------------------------------------------------------------------------------------------------- Garbage and Trash Removal 6525 $ 1,980 OPERATING -------------------------------------------------------------------------------------------------- MAINTENANCE Security Payroll/Contract 6530 $ EXPENSES -------------------------------------------------------------------------------------------------- 6500 Security Rent Free Unit 6531 $ -------------------------------------------------------------------------------------------------- Heating/Cooling Repairs and Maintenance 6546 $ 6,760 -------------------------------------------------------------------------------------------------- Snow Removal 6548 $ 150 -------------------------------------------------------------------------------------------------- Vehicle and Maintenance Equipment Operation and Repairs 6570 $ -------------------------------------------------------------------------------------------------- Miscellaneous Operating and Maintenance Expenses 6590 $ 5,992 -------------------------------------------------------------------------------------------------- TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 63,299 - --------------------------------------------------------------------------------------------------------------------- Real Estate Taxes 6710 $ 34,458 -------------------------------------------------------------------------------------------------- Payroll Taxes (Project's Share) 6711 $ 4,284 -------------------------------------------------------------------------------------------------- Property and Liability Insurance (Hazard) 6720 $ 5,655 -------------------------------------------------------------------------------------------------- TAXES Fidelity Bond Insurance 6721 $ AND -------------------------------------------------------------------------------------------------- INSURANCE Workmen's Compensation 6722 $ 830 6700 -------------------------------------------------------------------------------------------------- Health Insurance and Other Employee Benefits 6723 $ 3,956 -------------------------------------------------------------------------------------------------- Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 1,315 -------------------------------------------------------------------------------------------------- TOTAL TAXES AND INSURANCE 6700T $ 50,498 - --------------------------------------------------------------------------------------------------------------------- Interest on Mortgage Payable 6820 $142,798 -------------------------------------------------------------------------------------------------- Interest on Notes Payable (LongTerm) 6830 $ 7,123 FINANCIAL -------------------------------------------------------------------------------------------------- EXPENSES Interest on Notes Payable (ShortTerm) 6840 $ 6800 -------------------------------------------------------------------------------------------------- Mortgage Insurance Premium/Service Charge 6850 $ 7,153 -------------------------------------------------------------------------------------------------- Miscellaneous Financial Expenses 6890 $ -------------------------------------------------------------------------------------------------- TOTAL FINANCIAL EXPENSES 6800T $ 157,074 - --------------------------------------------------------------------------------------------------------------------- 6900 Nursing Homes/ Assisted Living/ Board and Care/ Other Elderly Care Expenses 6900 $ - --------------------------------------------------------------------------------------------------------------------- TOTAL COST OF OPERATIONS BEFORE DEPRECIATION AND AMORTIZATION 6000T $ 354,882 -------------------------------------------------------------------------------------------------- PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ 22,004 -------------------------------------------------------------------------------------------------- Depreciation Expense 6600 $135,085 -------------------------------------------------------------------------------------------------- Amortization Expense 6610 $ 6,580 -------------------------------------------------------------------------------------------------- TOTAL DEPRECIATION AND AMORTIZATION $ 141,665 -------------------------------------------------------------------------------------------------- OPERATING PROFIT OR (LOSS) 5060N $(119,661) - --------------------------------------------------------------------------------------------------------------------- Officer's Salaries 7110 $ -------------------------------------------------------------------------------------------------- Legal Expenses 7120 $ -------------------------------------------------------------------------------------------------- Federal, State, and Other Income Taxes 7130 $ -------------------------------------------------------------------------------------------------- CORPORATE OR Interest Income 7140 $ MORTGAGOR -------------------------------------------------------------------------------------------------- ENTITY Interest on Notes Payable 7141 $ EXPENSES -------------------------------------------------------------------------------------------------- 7100 Interest on Mortgage Payable 7142 $ -------------------------------------------------------------------------------------------------- Other Expenses (Schedule) 7190 $ 19,800 -------------------------------------------------------------------------------------------------- NET ENTITY EXPENSES 7100T $ 19,800 -------------------------------------------------------------------------------------------------- PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $(139,461) - --------------------------------------------------------------------------------------------------------------------- MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or more, attach a separate schedule describing or explaining the miscellaneous income or expense. - --------------------------------------------------------------------------------------------------------------------- PART II - --------------------------------------------------------------------------------------------------------------------- 1. Total mortgage principal payments required during the audit year (12 monthly payments). This applies to all direct loans and HUD-held and fully insured mortgages. Any HUD approved second mortgages should be included in the figures. (Account S1000-010) $ 9,120 - --------------------------------------------------------------------------------------------------------------------- 2. Total of 12 monthly deposits in the audit year into the Replacement Reserve account, as required by the Regulatory Agreement even if payments may be temporarily suspended or reduced. (Account S1000-020) $ 5,910 - --------------------------------------------------------------------------------------------------------------------- 3. Replacement Reserve or Residual Receipts releases which are included as expense items on this Profit and Loss Statement. (Account S1000-030) $ - --------------------------------------------------------------------------------------------------------------------- 4. Project Improvement Reserve Releases under the Flexible Subsidy Program that are included as expense items on this Profit and Loss Statement. (Account S1000-040) $ - --------------------------------------------------------------------------------------------------------------------- Page 2 of 2 - --------------------------------------------------------------------------------------------------------------------- See the accompanying notes to financial statements. Page 5
44 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP 052-35464 - ------------------------------------------------------------------------------ SCHEDULE OF SUB-ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 1999 5990 - MISCELLANEOUS REVENUE 5990-010 Recovery of bad debts 5990-020 $ 3,500 5990-010 Miscellaneous revenue 5990-020 289 --------- 5990 TOTAL MISCELLANEOUS REVENUE $ 3,789 ========= 7190 OTHER EXPENSES 7190-010 Supervisory management fee 7190-020 $19,800 ========= - ------------------------------------------------------------------------------ See the accompanying notes to financial statements. Page 6a
45 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP 052-35464 - ------------------------------------------------------------------------------ STATEMENT OF PARTNERS' EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 1999 S1100-010 BEGINNING OF YEAR $ 112,765 3250 NET LOSS (139,461) ----------- 3130 END OF YEAR $ (26,696) =========== - ------------------------------------------------------------------------------ See the accompanying notes to financial statements. Page 7
46 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP 052-35464 - ----------------------------------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS PAGE 1 OF 2 FOR THE YEAR ENDED DECEMBER 31, 1999
ACCOUNT AMOUNT -------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Receipts: S1200-010 Rental receipts $ 362,437 S1200-020 Interest receipts 1,243 S1200-030 Other operating receipts 6,732 ----------- S1200-040 Total Receipts 370,412 ----------- Disbursements: S1200-050 Administrative 30,756 S1200-070 Management fee 22,536 S1200-090 Utilities 12,388 S1200-100 Salaries and wages 48,406 S1200-110 Operating and maintenance 32,493 S1200-120 Real estate taxes 32,379 S1200-140 Property insurance 12,134 S1200-150 Miscellaneous taxes and insurance 4,284 S1200-160 Tenant security deposits 287 S1200-180 Interest on mortgages 142,868 S1200-210 Mortgage insurance premium (MIP) 7,130 S1200-220 Miscellaneous financial 7,123 ----------- S1200-230 Total Disbursements 352,784 ----------- S1200-240 NET CASH PROVIDED BY OPERATING ACTIVITIES 17,628 ----------- CASH FLOWS FROM INVESTING ACTIVITIES S1200-245 Net deposits to the mortgage escrow account (8,534) S1200-250 Net deposits to the reserve for replacement account (6,707) S1200-330 Net purchases of fixed assets (4,880) ----------- S1200-350 NET CASH USED IN INVESTING ACTIVITIES (20,121) ----------- CASH FLOWS FROM FINANCING ACTIVITIES S1200-360 Mortgage principal payments (9,120) S1200-450 Other financing activities 398 S1200-455 Entity/Construction financing activities: S1200-456 Supervisory management fees S1200-457 (3,000) ----------- S1200-460 NET CASH USED IN FINANCING ACTIVITIES (11,722) ----------- S1200-470 NET DECREASE IN CASH (14,215) S1200-480 BEGINNING OF PERIOD CASH 21,029 ----------- S1200T END OF PERIOD CASH $ 6,814 =========== - ----------------------------------------------------------------------------------------------------------- See the accompanying notes to financial statements. Page 8 47 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP 052-35464 - ----------------------------------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS PAGE 2 OF 2 FOR THE YEAR ENDED DECEMBER 31, 1999 ACCOUNT AMOUNT -------------------------- RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES 3250 Net loss $(139,461) Adjustments to reconcile net loss to net cash provided by operating activities: 6600 Depreciation 135,085 6610 Amortization 6,580 Change in assets and liabilities: S1200-490 Increase in tenant accounts receivable (1,573) S1200-500 Decrease in accounts receivable - other (5,824) S1200-520 Decrease in prepaid expenses 1,724 S1200-530 Increase in cash restricted for tenant security deposits (270) S1200-540 Increase in accounts payable 1,125 S1200-560 Decrease in accrued liabilities (394) S1200-570 Decrease in accrued interest payable (70) S1200-580 Decrease in tenant security deposits held in trust (17) S1200-590 Increase in prepaid revenue 923 S1200-605 Increase in entity/construction liability accounts S1200-606 Management fee expense S1200-607 19,800 ----------- S1200-610 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 17,628 =========== - ----------------------------------------------------------------------------------------------------------- See the accompanying notes to financial statements. Page 9
48 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP 052-35464 - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (S3100-010) The Partnership is organized as a limited partnership formed under the laws of the State of Maryland on May 16, 1988 to acquire an interest in .723 acres of land in Baltimore City, Maryland, and to construct and operate thereon an apartment complex of 50 units under Section 221(d)(3) of the National Housing Act. Such projects are regulated by the U.S. Department of Housing and Urban Development (HUD) as to rent charges and operating methods. The regulatory agreements limit annual distributions of net operating receipts to "surplus cash" available at the end of each year. There was no "surplus cash" as of December 31, 1999. The following significant accounting policies have been followed in the preparation of the financial statements: Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Partnership provides an allowance for doubtful accounts equal to the estimated collection losses that will be incurred in collection of all receivables. The estimated losses are based on a review of the current status of the existing receivables. No allowance for doubtful accounts was provided for at December 31, 1999 as none was deemed necessary by management. Depreciation is provided using primarily the straight-line method over the estimated useful lives of the assets ranging from seven to twenty-seven years. The replacement reserve can only be used for improvements to buildings upon prior approval of HUD. - ------------------------------------------------------------------------------ Page 10 49 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) Deferred loan costs consist of fees for obtaining the HUD insured mortgage loan and are being amortized using the straight-line method over the life of the mortgage loan. The low income credit application fee and the low income credit compliance fee are being amortized over 15 years, the term of the credit compliance period. Income or loss of the Partnership is allocated 2% to the general partners and 98% to the limited partners. No income tax provision has been included in the financial statements since income or loss of the Partnership is required to be reported by the partners on their respective income tax returns. 2. MORTGAGES PAYABLE (S3100-050) Permanent financing of the project has been provided by three mortgages. The related notes are nonrecourse and are secured by the Partnership's real estate. The first mortgage is insured by the Federal Housing Administration (FHA) and collateralized by a deed of trust on the rental property. The mortgage bears interest at a rate of 10% and is payable in monthly installments of $12,545 (including principal and interest) through July 2029. Under agreements with the mortgage lender and FHA, the Partnership is required to make monthly escrow deposits for taxes, insurance and replacement of project assets, and is subject to restrictions as to operating policies, rental charges, operating expenditures and distributions to partners. The liability of the Partnership under the mortgage note is limited to the underlying value of the real estate collateral plus other amounts deposited with the lender. SUBORDINATED MORTGAGE PAYABLE The second mortgage, a variable interest loan through Community Development Administration (CDA) of Maryland, is serviced by Bogman, Inc. The note matures on July 1, 2029 and is payable as follows: 1. Beginning August 1, 1990, fifteen annual payments of $8,500 are due, which includes interest at 1% annum. - ------------------------------------------------------------------------------ Page 11 50 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) 2. Beginning August 1, 2005, annual payments are due including interest at 10%, in an amount sufficient to amortize the principal balance over the remaining term of the loan. SUBORDINATED PURCHASE MONEY MORTGAGE PAYABLE This mortgage is with the Mayor and City Council of Baltimore and is non-interest bearing. The full balance is due on September 1, 2029. The scheduled maturities of the mortgages payable at December 31, 1999 are as follows: (S3100-x1x)
YEAR ACCOUNT AMOUNT -------------------------------------------------------------- 2000 S3100-060 $ 9,941 2001 S3100-070 10,851 2002 S3100-080 11,855 2003 S3100-090 12,963 2004 S3100-100 14,185 Thereafter S3100-110 2,115,668 -------------------------------------------------------------- $2,175,463 ==============================================================
3. COMMITMENTS (S3100-X3X) (S3100-240) The Partnership has entered into a regulatory agreement with HUD which regulates, among other things, the rents which may be charged for apartment units in the project, prohibits the sale of the Project without HUD consent, limits the annual distribution of cash flow to the partners and otherwise regulates the relationship between the Partnership and HUD. 4. RELATED PARTY TRANSACTIONS (S3100-200) ASSET AND SUPERVISORY MANAGEMENT FEE (S3100-200) The Project has a management agreement with Century Pacific Realty Corporation (CPRC), the supervising general partner, which requires a fee of $19,800 annually. The first portion of the fee ($3,000) is to be paid out of operations. The second portion ($5,000) is to be paid out of surplus cash (as defined by HUD). The remaining balance and any unpaid portions of the above may be paid out of capital transactions. As of December 31, 1999, $186,454 of this fee remains unpaid. - ------------------------------------------------------------------------------ Page 12 51 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) INCENTIVE MANAGEMENT FEE (S3100-200) The Project has an incentive management agreement with the managing general partner. The fee is to be equal to 60% of surplus cash (as defined by HUD) net of the second portion ($5,000) of the asset and supervisory management fee. There were no fees charged nor payments made related to this fee in 1999. S3100-210 COMPANY NAME Century Pacific Realty Corporation S3100-220 AMOUNT RECEIVED $3,000 S3100-210 COMPANY NAME Mt. Washington Management Group, Inc. S3100-220 AMOUNT RECEIVED $27,461 MANAGEMENT FEE (S3100-230) Mt. Washington Management Group, Inc., an affiliate of the general partners, is the exclusive agent for the management of the property. The current management agreement provides for a management fee equal to 6.14% of gross collections. Total management fees incurred during 1999 were $21,943. In addition, Mt. Washington Management Group, Inc. collects an accounting and bookkeeping fee which amounted to $4,925 in 1999. At December 31, 1999, $1,839 of these amounts are due and payable. 5. LOW-INCOME HOUSING TAX CREDITS (S3100-240) The Partnership expects to generate an aggregate of $2,545,410 of low-income housing tax credits. Generally, such credits are expected to become available for use by its partners pro rata over a ten-year period beginning in 1989. In order to qualify for these credits, the Property must comply with various federal and state requirements. These requirements, include, but are not limited to, renting to low-income tenants at rental rates, which do not exceed specified percentages of area median gross income for the first 15 years of operation. - ------------------------------------------------------------------------------ Page 13 52 S2300-020 INDEPENDENT AUDITORS' REPORT To The Partners Coleman Manor Associates Limited Partnership We have audited the accompanying balance sheet of Coleman Manor Associates Limited Partnership, Project No. 052-35464, a limited partnership, as of December 31, 1998 and the related statements of profit and loss, partners' equity and cash flows for the year then ended. 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 audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Coleman Manor Associates Limited Partnership as of December 31, 1998 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 6, the Partnership's contract with the U.S. Department of Housing and Urban Development (HUD) for housing assistance payments is due to expire in 1999. This matter raises substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. January 26, 1999 53 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 052-35464 - ------------------------------------------------------------------------------------- BALANCE SHEET PAGE 1 OF 2 DECEMBER 31, 1998 ASSETS CURRENT ASSETS 1120 Cash - operations $ 21,029 1130 Tenant accounts receivable 366 1135 Accounts receivable - HUD 2,521 1200 Miscellaneous prepaid expenses 23,529 ------------ 1100T TOTAL CURRENT ASSETS 47,445 ------------ DEPOSITS HELD IN TRUST - FUNDED 1191 Tenant deposits held in trust 6,382 ------------ RESTRICTED DEPOSITS AND FUNDED RESERVES 1310 Escrow deposits 20,409 1320 Replacement reserve 33,820 ------------ 1300T TOTAL DEPOSITS 54,229 ------------ FIXED ASSETS 1410 Land 61,281 1420 Buildings 3,426,317 1465 Office furniture and equipment 118,634 ------------ 1400T Total Fixed Assets 3,606,232 1495 Less: Accumulated depreciation 1,331,772 ------------ 1400N NET FIXED ASSETS 2,274,460 ------------ OTHER ASSETS 1520 Intangible assets - loan costs 101,431 1520 Intangible assets - credit application and ------------ compliance fees 14,869 ------------ 1500T TOTAL OTHER ASSETS 116,300 ------------ 1000T TOTAL ASSETS $2,498,816 ============ - ------------------------------------------------------------------------------------- See the accompanying report letter and notes to financial statements. Page 2 54 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 052-35464 - ------------------------------------------------------------------------------------- BALANCE SHEET PAGE 2 OF 2 DECEMBER 31, 1998 LIABILITIES CURRENT LIABILITIES 2110 Accounts payable - operations $ 7,374 2120 Accrued wages payable 2,112 2113 Accounts payable - entity 169,954 2131 Accrued interest payable - first mortgage 14,959 2170 Mortgage payable - first mortgage (short-term) 8,590 2172 Mortgage payable - second mortgage (short-term) 1,355 2210 Prepaid revenue 414 ------------ 2122T TOTAL CURRENT LIABILITIES 204,758 ------------ DEPOSIT AND PREPAYMENT LIABILITIES 2191 Tenant deposits held in trust (contra) 6,655 ------------ LONG-TERM LIABILITIES 2320 Mortgage payable - first mortgage 1,422,822 2322 Mortgage payable - second mortgage 711,816 2324 Other loans and notes payable 40,000 ------------ 2300T TOTAL LONG-TERM LIABILITIES 2,174,638 ------------ 2000T TOTAL LIABILITIES 2,386,051 PARTNERS' EQUITY 3130 Partners' equity 112,765 ------------ 2033T TOTAL LIABILITIES AND PARTNERS' EQUITY $2,498,816 ============ - ------------------------------------------------------------------------------------- See the accompanying report letter and notes to financial statements. Page 3
55 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 052-35464 - --------------------------------------------------------------------------------------------------------------------- STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 1998 - ---------------------------------------------------------------------------------------------------------------------
PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT - --------------------------------------------------------------------------------------------------------------------- Rent Revenue - Gross Potential 5120 $ 47,225 -------------------------------------------------------------------------------------------------- Tenant Assistance Payments 5121 $325,475 -------------------------------------------------------------------------------------------------- Rent Revenue - Stores and Commercial 5140 $ -------------------------------------------------------------------------------------------------- Garage and Parking Spaces 5170 $ -------------------------------------------------------------------------------------------------- Flexible Subsidy Revenue 5180 $ RENT -------------------------------------------------------------------------------------------------- REVENUE Miscellaneous Rent Revenue 5190 $ 5100 -------------------------------------------------------------------------------------------------- Excess Rent 5191 $ -------------------------------------------------------------------------------------------------- Rent Revenue/Insurance 5192 $ -------------------------------------------------------------------------------------------------- Special Claims Revenue 5193 $ -------------------------------------------------------------------------------------------------- Retained Excess Income 5194 $ -------------------------------------------------------------------------------------------------- TOTAL RENT REVENUE 5100T $ 372,700 - --------------------------------------------------------------------------------------------------------------------- Apartments 5220 $ 6,541 -------------------------------------------------------------------------------------------------- Stores and Commercial 5240 $ -------------------------------------------------------------------------------------------------- VACANCIES Rental Concessions 5250 $ 5200 -------------------------------------------------------------------------------------------------- Garage and Parking Space 5270 $ -------------------------------------------------------------------------------------------------- Miscellaneous 5290 $ -------------------------------------------------------------------------------------------------- TOTAL VACANCIES 5200T $ 6,541 -------------------------------------------------------------------------------------------------- NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 366,159 - --------------------------------------------------------------------------------------------------------------------- 5300 Nursing Homes/Assisted Living/Board and Care/ Other Elderly Care/Coop/ and Other Revenues 5300 $ - --------------------------------------------------------------------------------------------------------------------- Financial Revenue - Project Operations 5410 $ 711 -------------------------------------------------------------------------------------------------- Revenue from Investments - Residual Receipts 5430 $ FINANCIAL -------------------------------------------------------------------------------------------------- REVENUE Revenue from Investments - Replacement Reserve 5440 $ 680 5400 -------------------------------------------------------------------------------------------------- Revenue from Investments - Miscellaneous 5490 $ -------------------------------------------------------------------------------------------------- TOTAL FINANCIAL REVENUE 5400T $ 1,391 - --------------------------------------------------------------------------------------------------------------------- Laundry and Vending Revenue 5910 $ 1,826 -------------------------------------------------------------------------------------------------- Tenant Charges 5920 $ 518 -------------------------------------------------------------------------------------------------- Interest Reduction Payments Revenue 5945 $ OTHER -------------------------------------------------------------------------------------------------- REVENUE Miscellaneous Revenue 5990 $ 250 5900 -------------------------------------------------------------------------------------------------- TOTAL OTHER REVENUE 5900T $ 2,594 -------------------------------------------------------------------------------------------------- TOTAL REVENUE 5000T $ 370,144 - --------------------------------------------------------------------------------------------------------------------- Conventions and Meetings 6203 $ -------------------------------------------------------------------------------------------------- Management Consultants 6204 $ -------------------------------------------------------------------------------------------------- Advertising and Marketing 6210 $ 100 -------------------------------------------------------------------------------------------------- Other Renting Expenses 6250 $ 100 -------------------------------------------------------------------------------------------------- Office Salaries 6310 $ 17,122 -------------------------------------------------------------------------------------------------- Office Expenses 6311 $ 6,738 -------------------------------------------------------------------------------------------------- Office or Model Apartment Rent 6312 $ -------------------------------------------------------------------------------------------------- Management Fee 6320 $ 20,229 ADMINISTRATIVE -------------------------------------------------------------------------------------------------- EXPENSES Manager or Superintendent Salaries 6330 $ 6200/6300 -------------------------------------------------------------------------------------------------- Administrative Rent Free Unit 6331 $ 7,454 -------------------------------------------------------------------------------------------------- Legal Expense - Project 6340 $ 16 -------------------------------------------------------------------------------------------------- Audit Expense 6350 $ 5,000 -------------------------------------------------------------------------------------------------- Bookkeeping Fees/Accounting Services 6351 $ 6,600 -------------------------------------------------------------------------------------------------- Bad Debts 6370 $ 1,030 -------------------------------------------------------------------------------------------------- Miscellaneous Administrative Expenses 6390 $ 1,842 -------------------------------------------------------------------------------------------------- TOTAL ADMINISTRATIVE EXPENSES 6263T $ 66,231 - --------------------------------------------------------------------------------------------------------------------- Fuel Oil/Coal 6420 $ -------------------------------------------------------------------------------------------------- Electricity 6450 $ 6,820 UTILITIES -------------------------------------------------------------------------------------------------- EXPENSE Water 6451 $ 1,152 6400 -------------------------------------------------------------------------------------------------- Gas 6452 $ -------------------------------------------------------------------------------------------------- Sewer 6453 $ 2,703 - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- TOTAL UTILITIES EXPENSE 6400T $ 10,675 - --------------------------------------------------------------------------------------------------------------------- TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) $ 76,906 - --------------------------------------------------------------------------------------------------------------------- Page 1 of 2 - --------------------------------------------------------------------------------------------------------------------- See the accompanying report letter and notes to financial statements. Page 4 56 Project Name: Coleman Manor Associates Limited Partnership - --------------------------------------------------------------------------------------------------------------------- BALANCE CARRIED FORWARD $ 76,906 - --------------------------------------------------------------------------------------------------------------------- Payroll 6510 $ 33,596 -------------------------------------------------------------------------------------------------- Supplies 6515 $ 10,748 -------------------------------------------------------------------------------------------------- Contracts 6520 $ 13,316 -------------------------------------------------------------------------------------------------- Operating and Maintenance Rent Free Unit 6521 $ -------------------------------------------------------------------------------------------------- Garbage and Trash Removal 6525 $ 1,650 OPERATING -------------------------------------------------------------------------------------------------- MAINTENANCE Security Payroll/Contract 6530 $ EXPENSES -------------------------------------------------------------------------------------------------- 6500 Security Rent Free Unit 6531 $ -------------------------------------------------------------------------------------------------- Heating/Cooling Repairs and Maintenance 6546 $ 3,640 -------------------------------------------------------------------------------------------------- Snow Removal 6548 $ -------------------------------------------------------------------------------------------------- Vehicle and Maintenance Equipment Operation and Repairs 6570 $ -------------------------------------------------------------------------------------------------- Miscellaneous Operating and Maintenance Expenses 6590 $ 2,471 -------------------------------------------------------------------------------------------------- TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 65,421 - --------------------------------------------------------------------------------------------------------------------- Real Estate Taxes 6710 $ 36,535 -------------------------------------------------------------------------------------------------- Payroll Taxes (Project's Share) 6711 $ 3,972 -------------------------------------------------------------------------------------------------- Property and Liability Insurance (Hazard) 6720 $ 4,271 TAXES -------------------------------------------------------------------------------------------------- AND Fidelity Bond Insurance 6721 $ INSURANCE -------------------------------------------------------------------------------------------------- 6700 Workmen's Compensation 6722 $ 1,529 -------------------------------------------------------------------------------------------------- Health Insurance and Other Employee Benefits 6723 $ 4,050 -------------------------------------------------------------------------------------------------- Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 1,332 -------------------------------------------------------------------------------------------------- TOTAL TAXES AND INSURANCE 6700T $ 51,689 - --------------------------------------------------------------------------------------------------------------------- Interest on Mortgage Payable 6820 $142,975 -------------------------------------------------------------------------------------------------- Interest on Notes Payable (LongTerm) 6830 $ 7,140 FINANCIAL -------------------------------------------------------------------------------------------------- EXPENSES Interest on Notes Payable (ShortTerm) 6840 $ 6800 -------------------------------------------------------------------------------------------------- Mortgage Insurance Premium/Service Charge 6850 $ 7,186 -------------------------------------------------------------------------------------------------- Miscellaneous Financial Expenses 6890 $ -------------------------------------------------------------------------------------------------- TOTAL FINANCIAL EXPENSES 6800T $ 157,301 - --------------------------------------------------------------------------------------------------------------------- 6900 Nursing Homes/ Assisted Living/ Board and Care/ Other Elderly Care Expenses 6900 $ - --------------------------------------------------------------------------------------------------------------------- TOTAL COST OF OPERATIONS BEFORE DEPRECIATION AND AMORTIZATION 6000T $ 351,317 -------------------------------------------------------------------------------------------------- PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ 18,827 -------------------------------------------------------------------------------------------------- Depreciation Expense 6600 $135,879 -------------------------------------------------------------------------------------------------- Amortization Expense 6610 $ 6,580 -------------------------------------------------------------------------------------------------- TOTAL DEPRECIATION AND AMORTIZATION $ 142,459 -------------------------------------------------------------------------------------------------- OPERATING PROFIT OR (LOSS) 5060N $(123,632) - --------------------------------------------------------------------------------------------------------------------- Officer's Salaries 7110 $ -------------------------------------------------------------------------------------------------- Legal Expenses 7120 $ -------------------------------------------------------------------------------------------------- Federal, State, and Other Income Taxes 7130 $ -------------------------------------------------------------------------------------------------- CORPORATE OR Interest Income 7140 $ MORTGAGOR -------------------------------------------------------------------------------------------------- ENTITY Interest on Notes Payable 7141 $ EXPENSES -------------------------------------------------------------------------------------------------- 7100 Interest on Mortgage Payable 7142 $ -------------------------------------------------------------------------------------------------- Other Expenses - Asset and supervisory management fee 7190 $ 19,800 -------------------------------------------------------------------------------------------------- NET ENTITY EXPENSES 7100T $ 19,800 -------------------------------------------------------------------------------------------------- PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $(143,432) - --------------------------------------------------------------------------------------------------------------------- MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or more, attach a separate schedule describing or explaining the miscellaneous income or expense. - --------------------------------------------------------------------------------------------------------------------- PART II - --------------------------------------------------------------------------------------------------------------------- 1. Total mortgage principal payments required during the audit year (12 monthly payments). This applies to all direct loans and HUD-held and fully insured mortgages. Any HUD approved second mortgages should be included in the figures. (Account S1000-010) $ 7,016 - --------------------------------------------------------------------------------------------------------------------- 2. Total of 12 monthly deposits in the audit year into the Replacement Reserve account, as required by the Regulatory Agreement even if payments may be temporarily suspended or reduced. (Account S1000-020) $ 5,910 - --------------------------------------------------------------------------------------------------------------------- 3. Replacement Reserves or Residual Receipts and Releases which are included as expense items on this Profit and Loss Statement. (Account S1000-030) $ - --------------------------------------------------------------------------------------------------------------------- 4. Project Improvement Reserve Releases under the Flexible Subsidy Program that are included as expense items on this Profit and Loss Statement. (Account S1000-040) $ - --------------------------------------------------------------------------------------------------------------------- Page 2 of 2 - --------------------------------------------------------------------------------------------------------------------- See the accompanying report letter and notes to financial statements. Page 5
57 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 052-35464 - ------------------------------------------------------------------------------ STATEMENT OF PARTNERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 1998 S1100-010 BEGINNING OF YEAR $ 256,197 3250 NET INCOME/LOSS (143,432) ------------ 3130 END OF YEAR $ 112,765 ============ - ------------------------------------------------------------------------------ See the accompanying report letter and notes to financial statements. Page 6
58 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 052-35464 - ------------------------------------------------------------------------------------------------ STATEMENT OF CASH FLOWS PAGE 1 OF 2 FOR THE YEAR ENDED DECEMBER 31, 1998
ACCOUNT AMOUNT ------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Receipts: S1200-010 Rental receipts $ 369,257 S1200-020 Interest receipts 1,391 S1200-030 Other operating receipts 266 ---------- S1200-040 Total Receipts 370,914 ---------- Disbursements: S1200-050 Administrative (43,626) S1200-070 Management fee (20,229) S1200-090 Utilities (10,675) S1200-100 Salaries and wages (32,939) S1200-110 Operating and maintenance (31,825) S1200-120 Real estate taxes (36,444) S1200-140 Property insurance (11,796) S1200-150 Miscellaneous taxes and insurance (3,972) S1200-160 Tenant security deposits 273 S1200-180 Interest on mortgages (150,579) S1200-210 Mortgage insurance premium (MIP) (7,186) ---------- S1200-230 Total Disbursements (348,998) ---------- S1200-240 NET CASH PROVIDED BY OPERATING ACTIVITIES 21,916 ---------- CASH FLOWS FROM INVESTING ACTIVITIES S1200-245 Net withdrawal from the mortgage escrow account 921 S1200-250 Net deposits to the reserve for replacement account (6,590) ---------- S1200-350 NET CASH USED IN INVESTING ACTIVITIES (5,669) ---------- CASH FLOWS FROM FINANCING ACTIVITIES S1200-360 Mortgage principal payments (8,372) S1200-455 Entity/Construction financing activities: S1200-456 Management fees paid S1200-457 (3,000) ---------- S1200-460 NET CASH USED IN FINANCING ACTIVITIES (11,372) ---------- S1200-470 NET INCREASE IN CASH 4,875 S1200-480 BEGINNING OF PERIOD CASH 16,154 ---------- S1200T END OF PERIOD CASH $ 21,029 ========== - ------------------------------------------------------------------------------------------------ See the accompanying report letter and notes to financial statements. Page 7 59 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 052-35464 - ---------------------------------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS PAGE 2 OF 2 FOR THE YEAR ENDED DECEMBER 31, 1998 ACCOUNT AMOUNT ------------------------- RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES 3250 Net loss $(143,432) Adjustments to reconcile net loss to net cash provided by operating activities: 6600 Depreciation 135,879 6610 Amortization 6,580 Change in assets and liabilities: S1200-490 Increase in tenant accounts receivable (264) S1200-500 Decrease in accounts receivable - other 2,098 S1200-520 Increase in prepaid expenses (523) S1200-530 Decrease in cash restricted for tenant security deposits 202 S1200-540 Increase in accounts payable 2,376 S1200-560 Increase in accrued liabilities 193 S1200-580 Increase in tenant security deposits held in trust 71 S1200-590 Decrease in prepaid revenue (1,064) S1200-605 Increase in entity/construction liability accounts S1200-606 Management fee expense S1200-607 19,800 ---------- S1200-610 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 21,916 ========== - ---------------------------------------------------------------------------------------------------------- See the accompanying report letter and notes to financial statements. Page 8
60 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP HUD PROJECT NO. 052-35464 - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (S3100-010) The Partnership is organized as a limited partnership formed under the laws of the State of Maryland on May 16, 1988 to acquire an interest in .723 acres of land in Baltimore City, Maryland, and to construct and operate thereon an apartment complex of 50 units under Section 221(d)(3) of the National Housing Act. Such projects are regulated by the U.S. Department of Housing and Urban Development (HUD) as to rent charges and operating methods. The regulatory agreements limit annual distributions of net operating receipts to "surplus cash" available at the end of each year. There was no "surplus cash" as of December 31, 1998. The following significant accounting policies have been followed in the preparation of the financial statements: Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Partnership provides an allowance for doubtful accounts equal to the estimated collection losses that will be incurred in collection of all receivables. The estimated losses are based on a review of the current status of the existing receivables. No allowance for doubtful accounts was provided for at December 31, 1998 as none was deemed necessary by management. Depreciation is provided using primarily the straight-line method over the estimated useful lives of the assets ranging from seven to twenty-seven years. The replacement reserve can only be used for improvements to buildings upon prior approval of HUD. - ------------------------------------------------------------------------------ See the accompanying report letter. Page 9 61 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) Deferred loan costs consist of fees for obtaining the HUD insured mortgage loan and are being amortized using the straight-line method over the life of the mortgage loan. The low income credit application fee and the low income credit compliance fee are being amortized over 15 years, the term of the credit compliance period. Income or loss of the Partnership is allocated 2% to the general partners and 98% to the limited partners. No income tax provision has been included in the financial statements since income or loss of the Partnership is required to be reported by the partners on their respective income tax returns. 2. MORTGAGES PAYABLE (S3100-050) Permanent financing of the project has been provided by three mortgages. The related notes are nonrecourse and are secured by the Partnership's real estate. The first mortgage is insured by the Federal Housing Administration (FHA) and collateralized by a deed of trust on the rental property. The mortgage bears interest at a rate of 10% and is payable in monthly installments of $12,545 (including principal and interest) through July 2029. Under agreements with the mortgage lender and FHA, the Partnership is required to make monthly escrow deposits for taxes, insurance and replacement of project assets, and is subject to restrictions as to operating policies, rental charges, operating expenditures and distributions to partners. The liability of the Partnership under the mortgage note is limited to the underlying value of the real estate collateral plus other amounts deposited with the lender. SUBORDINATED MORTGAGE PAYABLE The second mortgage, a variable interest loan through Community Development Administration (CDA) of Maryland, is serviced by Bogman, Inc. The note matures on July 1, 2029 and is payable as follows: 1. Beginning August 1, 1990, fifteen annual payments of $8,500 are due, which includes interest at 1% annum. 2. Beginning August 1, 2005, annual payments are due including interest at 10%, in an amount sufficient to amortize the principal balance over the remaining term of the loan. SUBORDINATED PURCHASE MONEY MORTGAGE PAYABLE - ------------------------------------------------------------------------------ See the accompanying report letter. Page 10 62 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) This mortgage is with the Mayor and City Council of Baltimore and is non-interest bearing. The full balance is due on September 1, 2029. The scheduled maturities of the mortgages payable at December 31, 1998 are as follows: (S3100-x1x)
YEAR ACCOUNT AMOUNT -------------------------------------------------------------- 1999 S3100-060 $ 9,945 2000 S3100-070 10,855 2001 S3100-080 11,860 2002 S3100-090 12,960 2003 S3100-100 14,000 Thereafter S3100-110 2,124,963 -------------------------------------------------------------- $2,184,583 ==============================================================
3. COMMITMENTS (S3100-X3X) (S3100-240) The Partnership has entered into regulatory agreements with HUD which regulate, among other things, the rents which may be charged for apartment units in the project, prohibit the sale of the project without HUD consent, limit the annual distribution of cash flow to the partners and otherwise regulate the relationship between the Partnership and HUD. The Department of Housing and Urban Development, under the U.S. Housing Act of 1937, 42 U.S.C. 1437, and Department of Housing and Urban Development Act, 42 U.S.C. 3531, has contracted with the Partnership to make housing assistance payments to the Partnership on behalf of qualified tenants. The current agreement, dated January 31, 1998, is for a term of 12 months and covers all 50 units at the Project. The current agreement expires December 31, 1999. During 1998, the Partnership received $325,475 in tenant assistance payments under the agreement. - ------------------------------------------------------------------------------ See the accompanying report letter. Page 11 63 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) 4. RELATED PARTY TRANSACTIONS (S3100-200) ASSET AND SUPERVISORY MANAGEMENT FEE (S3100-200) The Project has a management agreement with Century Pacific Realty Corporation (CPRC), the supervising general partner, which requires a fee of $19,800 annually. The first portion of the fee ($3,000) is to be paid out of operations. The second portion ($5,000) is to be paid out of surplus cash (as defined by HUD). The remaining balance and any unpaid portions of the above may be paid out of capital transactions. As of December 31, 1998, $169,954 of this fee remains unpaid. INCENTIVE MANAGEMENT FEE (S3100-200) The Project has an incentive management agreement with the managing general partner. The fee is to be equal to 60% of surplus cash (as defined by HUD) net of the second portion ($5,000) of the asset and supervisory management fee. There were no fees charged nor payments made related to this fee in 1998. S3100-210 Century Pacific Realty Corporation S3100-220 $3,000 S3100-210 Mt. Washington Management Group, Inc. S3100-220 $20,229 MANAGEMENT FEE (S3100-230) Mt. Washington Management Group, Inc., an affiliate of the general partners, is the exclusive agent for the management of the property. The current management agreement provides for a management fee equal to 6% of gross collections. Total management and bookkeeping fees incurred during 1998 were $20,229 and $6,600, respectively. - ------------------------------------------------------------------------------ See the accompanying report letter. Page 12 64 COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) 5. LOW-INCOME HOUSING TAX CREDITS (S3100-240) The Partnership expects to generate an aggregate of $2,545,410 of low-income housing tax credits. Generally, such credits are expected to become available for use by its partners pro rata over a ten-year period beginning in 1989. In order to qualify for these credits, the Property must comply with various federal and state requirements. These requirements, include, but are not limited to, renting to low-income tenants at rental rates, which do not exceed specified percentages of area median gross income for the first 15 years of operation. 6. GOING CONCERN (S3100-240) The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Partnership as a going concern. However, the Partnership's Housing Assistance Payments (HAP) contract with HUD is due to expire in December, 1999 (See Note 3). No extension to the contract has been granted as of January 26, 1999. Management plans to begin negotiations with HUD during 1999 with the intention of obtaining an additional term for the HAP contract. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Partnership, which in turn is dependent upon the Partnership's ability to renegotiate a new HAP contract with HUD. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. - ------------------------------------------------------------------------------ See the accompanying report letter. Page 13 -----END PRIVACY-ENHANCED MESSAGE-----