-----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, KmQ4mpvPTu5ok6YrmfyZ5AlrUPpSdS+Gn0xDJYMBv9VPUQDOBrtywFwOeYY41DO4 z7V6r6e8xIH8ON4VqNnqig== 0000950114-99-000077.txt : 19990701 0000950114-99-000077.hdr.sgml : 19990701 ACCESSION NUMBER: 0000950114-99-000077 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990630 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-K405 SEC ACT: SEC FILE NUMBER: 033-11194 FILM NUMBER: 99656205 BUSINESS ADDRESS: STREET 1: 1925 CENTURY PARK EAST STE 1760 CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3102081888 MAIL ADDRESS: STREET 2: 1925 CENTURY PARK EAST SUITE 1760 CITY: LOS ANGELES STATE: CA ZIP: 90067 10-K405 1 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, 1999 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 X No ----- ----- Exhibit Index is located on Page 18 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 3 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 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 12 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 16 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 16 PART IV ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 17 EXHIBIT INDEX 18 SIGNATURES 19
3 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. 3 4 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. 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 Section 8 contracts expiring during HUD's fiscal year 1997, where requested by an owner, for an additional one year term at current rent levels. As of June 13, 1999, fifteen of the Operating Partnerships' Section 8 contracts are due to expire during 1999. 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. 4 5 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, 1999, 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 1998 PRICE PAYMENT NOTE ASSUMED NOTE PROGRAM - ------------------------------------------------------------------------------------------------------------------------------- Century Pacific Housing Partnership V (CPHP-V) - Jaycee Towers Dayton, OH Section 236 204 residential units 98% $ 5,700,000 $ 400,196 $ 16,500 $ 3,000,123 $ 2,283,18 Section 8 CPHP - VIII - Sunset Townhomes Newton, KS 50 residential units 87% 1,225,000 138,000 -- 751,905 335,095 Section 236 CPHP - XI - Continental Terrace Fort Worth, TX Section 236 200 residential units 92% 4,600,000 482,883 -- 2,609,991 1,507,126 Section 8 CPHP - XII Yale Village Houston, TX Section 236 180 residential units 93% 5,250,000 530,894 -- 3,075,000 1,644,106 Section 8 CPHP - XIII - Atlantis Virginia Beach, VA Section 236 208 residential units 98% 6,032,000 801,000 -- 2,678,416 2,552,584 Section 8 CPHP - XIV - Kings Row Houston, Tx Section 236 180 residential units 94% 3,780,000 394,213 -- 1,848,269 1,537,518 Section 8 CPHP - XV - Castle Gardens Lubbock, TX Section 236 152 residential units 91% 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 95% 4,214,000 414,097 -- 2,820,832 979,071 Section 8 CPHP - XVIII Ascension Towers Memphis, TN 197 residential units 98% 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 1,625,000 -- 2,365,000 -- Section 8 6 7 PROPERTY NAME, AVERAGE CASH GOVERNMENT LOCATION AND OCCUPANCY PURCHASE DOWN PURCHASE MORTGAGE RESIDUAL ASSISTANCE RENTAL UNITS 1998 PRICE PAYMENT NOTE ASSUMED NOTE PROGRAM - ------------------------------------------------------------------------------------------------------------------------------- CPHP - XX Holiday Heights Fort Worth, TX Section 236 100 residential units 97% 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 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 98% 6,500,000 956,000 -- 3,081,144 2,462,856 Subsidy Loan CPHP - III - Highland Section 221(d)(3) Park Section 8 Topeka, KS Flexible 200 residential units 93% 6,900,000 939,000 -- 2,024,000 3,937,000 Subsidy Loan CPHP - IV - Forest Section 236 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 76% 3,540,000 680,000 -- 2,359,950 500,050 Section 8 CPHP - VII - Gulfway Terrace New Orleans, LA Section 236 206 residential units 81% 5,700,000 683,000 -- 3,031,974 1,715,026 Section 8 Section 236 CPHP - IX - Wind Ridge Section 8 Wichita, KS Flexible 136 residential units 97% 3,500,000 382,000 -- 1,791,936 1,326,064 Subsidy Loan CPHP - X - Bergen Circle Springfield, MA Section 236 201 residential units 94% 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 =============================================================================================================================== This amount represents the development cost and not the purchase price. 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 13, 1999, 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, 1999. 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 June 13, 1999 was approximately 2,093, holding 22,315 units. As of June 13, 1999, 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 1999 1998 1997 1996 1995 - ---------------------------- ---------- ---------- ---------- ---------- ---------- Revenues $ 3,715 $ 1,720 $ 2,100 $ 3,900 $ 5,000 Operating Expenses (74,653) (72,591) (73,359) (75,053) (72,069) Equity in Net Losses of Operating Partnerships (122,202) (134,311) (136,010) (176,789) (241,098) ---------- ---------- ---------- ---------- ---------- Net Loss $(193,140) $(205,182) $(207,269) $(247,942) $(308,167) ========== ========== ========== ========== ========== Net Loss per Unit of Limited Partnership Interest $ (9) $ (9) $ (9) $ (11) $ (14) ========== ========== ========== ========== ========== March 31, ------------------------------------------------------------------------------ FINANCIAL POSITION 1999 1998 1997 1996 1995 - ---------------------------- ---------- ---------- ---------- ---------- ---------- Total Assets $ 171,816 $ 277,925 $ 410,633 $547,704 $ 722,045 ========== ========== ========== ========== ========== 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, 1999, 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 each property during calendar year 1998 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 10 11 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 look at 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: 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. 11 12 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 - --------------------- The Partnership generated revenue of $3,700, $1,700 and $2,100, in the fiscal years ended March 31, 1999, 1998 and 1997 respectively, which principally represents transfer fees charged to limited partners to cover administrative costs incurred by the Partnership upon the private transfer of their interests. There were $6,637,121 in tax losses generated during the Partnership's calendar tax year ended December 31, 1998, arising primarily from Operating Partnership losses allocated to the Partnership and the Partnership's general and administrative costs. The Partnership received $1,625,402 in tax credits allocated directly from the Operating Partnerships for the calendar year ended December 31, 1998. Inflation - --------- Inflation is not expected to have a material adverse impact on the Partnership's operations during its period of ownership of the Properties. Year 2000 Compliance - -------------------- Background. Some computers, software, and other equipment include programming code in which calendar year data is abbreviated to only two digits. As a result of this design decision, some of these systems could fail to operate or fail to produce correct results in "00" is interpreted to mean 1900, rather than 2000. These problems are widely expected to increase in frequency and severity as the year 2000 approaches, and are commonly referred to as the "Millennium Bug" or "Year 2000 problem". Assessment. The Year 2000 problem could affect computers, software and other equipment used, operated, or maintained by the Company. Accordingly, the Company is reviewing its internal computers, software, applications and related equipment and its 12 13 systems other than information technology systems to ensure that they will be Year 2000 compliant. The Company believes that its Year 2000 plan will be completed in all material respects prior to the anticipated Year 2000 failure dates. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ------------------------------------------- The financial statements at March 31, 1999 and 1998 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 ----------------------------------- On April 28, 1999, the prior auditors, Novogradac & Company LLP, were dismissed as auditors for the Partnership. The decision to change accountants was approved by the Partnership's Board of Directors. Novogradac & Company LLP's report on the Partnership's financial statements for the years ended March 31, 1998, contained a modification as to uncertainty of the Partnerships to continue as a going concern. Novogradac & Company LLP's report on the above mentioned financial statements contained no adverse opinions or disclaimer of opinions, and was not qualified as to uncertainty, audit scope or accounting principles, other than those previously discussed. Effective April 28, 1999, the Partnership engaged Rubin, Brown, Gornstein & Co., LLP to perform the audit of the Partnership's financial statements as of and for the year ending March 31, 1999. There are no known disagreements on any matter of accounting principles or practices or financial statement disclosure with current or predecessor auditors. 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 58, 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. 14 15 KEY OFFICERS OF CPCC AND AFFILIATES ESSIE SAFAIE, age 50, 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. CHARLES L. SCHWENNESEN, age 53, 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, 1999, 1998, and 1997, CPCC, a general partner of the Partnership, and CPRC, an general partner of the Operating Partnerships, earned $535,596, $512,139 and $507,804, 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 Investment Corporation (CPIC). During fiscal year 1999, the general partners received no payments from the Operating Partnerships. 15 16 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 Investment Corporation (CPIC), 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. 16 17 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K --------------------------------------------------------------- (a) Exhibits - See the Exhibit Index at page 18 of this report. (b) (1) Financial Statements:
Independent Auditors' Reports F-1 Balance Sheet as of March 31, 1999 and 1998 F-4 Statement of Operations for the Years Ended March 31, 1999, 1998 and 1997 F-5 Statement Of Partners' Equity (Deficit) for the Years Ended March 31, 1999, 1998 and 1997 F-6 Statement of Cash Flows for the Years Ended March 31, 1999, 1998 and 1997 F-7 Notes to Financial Statements F-8 (2) Financial Statement Schedules: Schedule III - Real Estate and Accumulated Depreciation of Operating Partnerships in which CPHF-I has Limited Partnership Interests F-15 Notes to Schedule III - Real Estate and Accumulated Depreciation of Operating Partnerships in which CPHF-I has Limited Partnership Interests F-17 Schedule IV - Mortgage Loans on Real Estate of Operating Partnerships in which CPHF-I has Limited Partnership Interests F-19 Notes to Schedule IV - Mortgage Loans on Real Estate of Operating Partnerships in which CPHF-I has Limited Partnership Interests F-23 All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
(b) Reports on Form 8-K Registrant did file with the Securities and Exchange Commission a Current Report on Form 8-K during the year ending March 31, 1999. 17 18 EXHIBIT INDEX These exhibits are numbered in accordance with the exhibit table of Item 601 of Regulation S-K.
Exhibit Number Description ------------------ --------------------------------------- 11 Omitted - inapplicable 12 Omitted - inapplicable 13 Omitted - inapplicable 16 Omitted - inapplicable 18 Omitted - inapplicable 21 Omitted - inapplicable 23 Omitted - inapplicable 27 Financial Data Schedule Financial Statements of Coleman Manor (Equity Investment)
18 19 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: -------------------------- --------------------------------------- and Century Pacific Capital I Corporation, as Corporate General Partner and as Attorney- in-Fact for all Investor Limited Partners Date: -------------------------- --------------------------------------- By: Irwin Jay Deutch, President 19 20 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, 1999 and the related statements of operations, 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. The financial statements of Century Pacific Housing Fund-I for the year ended March 31, 1998 were audited by other auditors, whose report dated June 16, 1998, included an explanatory paragraph describing conditions that raised substantial doubt about the Company's ability to continue as a going concern. We conducted our audit in accordance with generally accepted auditing standards. 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 Century Pacific Housing Fund - - I as of March 31, 1999 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 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(b)(2) as of December 31, 1998. In our opinion the financial statement schedules present fairly, in all material respects, the information required to be set forth therein. St. Louis, Missouri June 13, 1999 F-1 21 REPORT OF INDEPENDENT AUDITORS' To the Partners of Century Pacific Tax Credit Housing Fund I We have audited the accompanying balance sheet of Century Pacific Tax Credit Housing Fund-I (the "Partnership"), as of March 31, 1998, and the related statements of operations, changes in 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. The financial statements of Century Pacific Tax Credit Housing Fund-I for the years ended March 31, 1997 and 1996 were audited by other auditors, whose reports dated June 16, 1997 and June 13, 1996, respectively, included an explanatory paragraph describing conditions that raised substantial doubt about the Partnership's ability to continue as a going concern. We conducted our audit in accordance with generally accepted auditing standards. 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 Century Pacific Tax Credit Housing Fund-I as of March 31, 1998, and the results of its operations, changes in partners' equity (deficit), and 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 to the financial statements, the Partnership's Operating Partnerships have suffered recurring operating losses, have not provided sufficient cash distributions to fund administrative costs and the Partnership has a net capital deficiency, which raises substantial doubt about the Partnership's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. F-2 22 To The Partners of Century Pacific Tax Credit Housing Fund-I - ------------------------------------------------------------------------------ We have also audited the related financial statement schedules listed in Item 14(b)(2) as of December 31, 1997. In our opinion, the financial statement schedules present fairly, in all material respects, the information required to be set forth therein. Atlanta, Georgia June 16, 1998 F-3 23 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------------------------------------------ BALANCE SHEET ASSETS
MARCH 31, ----------------------------------- 1999 1998 ----------------------------------- Cash $ 4,889 $ 2,296 Receivable from related party (Note 4) 29,049 15,549 Investments in Operating Partnerships (Notes 1 and 5) 137,878 260,080 - ------------------------------------------------------------------------------------------------------------------ $ 171,816 $ 277,925 ================================================================================================================== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Accounts payable and accrued expenses $ 15,800 $ 10,800 Advance from affiliate (Note 4) 75,955 62,455 Payable to related parties (Note 4) 853,946 785,415 - ------------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES 945,701 858,670 - ------------------------------------------------------------------------------------------------------------------ COMMITMENTS AND CONTINGENCIES (NOTE 6) -- -- - ------------------------------------------------------------------------------------------------------------------ PARTNERS' EQUITY (DEFICIT) General partners (394,200) (390,337) Limited partners, $1,000 stated value per unit, 50,000 units authorized, 22,315 units issued and outstanding (Note 4) (379,685) (190,408) - ------------------------------------------------------------------------------------------------------------------ TOTAL PARTNERS' EQUITY (DEFICIT) (773,885) (580,745) - ------------------------------------------------------------------------------------------------------------------ TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT) $ 171,816 $ 277,925 ================================================================================================================== - ------------------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements
F-4 24 CENTURY PACIFIC HOUSING FUND-1 - ----------------------------------------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, -------------------------------------------------- 1999 1998 1997 -------------------------------------------------- REVENUES Transfer fees $ 1,900 $ 1,720 $ 2,100 Miscellaneous 1,815 -- -- - ----------------------------------------------------------------------------------------------------------------------- TOTAL REVENUES 3,715 1,720 2,100 - ----------------------------------------------------------------------------------------------------------------------- EXPENSES Allocated overhead expenses - affiliate (Note 4) 60,000 60,000 60,000 Other general and administrative 14,653 12,591 13,359 - ----------------------------------------------------------------------------------------------------------------------- TOTAL EXPENSES 74,653 72,591 73,359 - ----------------------------------------------------------------------------------------------------------------------- LOSS BEFORE EQUITY IN NET LOSSES OF OPERATING PARTNERSHIPS (70,938) (70,871) (71,259) EQUITY IN NET LOSSES OF OPERATING PARTNERSHIPS (NOTE 5) (122,202) (134,311) (136,010) - ----------------------------------------------------------------------------------------------------------------------- NET LOSS $(193,140) $(205,182) $(207,269) ======================================================================================================================= ALLOCATION OF NET LOSS General partners $ (3,863) $ (4,104) $ (4,145) Limited partners (189,277) (201,078) (203,124) - ----------------------------------------------------------------------------------------------------------------------- $(193,140) $(205,182) $(207,269) ======================================================================================================================= NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST (NOTE 1) $ (9) $ (9) $ (9) ======================================================================================================================= AVERAGE NUMBER OF OUTSTANDING UNITS 22,315 22,315 22,315 ======================================================================================================================= - ------------------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements
F-5 25 CENTURY PACIFIC HOUSING FUND-1 - ----------------------------------------------------------------------------------------------------------------------- STATEMENT OF PARTNERS' EQUITY FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
GENERAL LIMITED PARTNERS PARTNERS TOTAL --------------------------------------------------- PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1996 $(382,088) $ 213,794 $(168,294) NET LOSS (4,145) (203,124) (207,269) - ----------------------------------------------------------------------------------------------------------------------- PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1997 (386,233) 10,670 (375,563) NET LOSS (4,104) (201,078) (205,182) - ----------------------------------------------------------------------------------------------------------------------- PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1998 (390,337) (190,408) (580,745) NET LOSS (3,863) (189,277) (193,140) - ----------------------------------------------------------------------------------------------------------------------- PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1999 $(394,200) $(379,685) $(773,885) ======================================================================================================================= PERCENTAGE INTEREST - MARCH 31, 1999 2% 98% 100% ======================================================================================================================= - ----------------------------------------------------------------------------------------------------------------------- See the accompanying notes to financial statements.
F-6 26 CENTURY PACIFIC HOUSING FUND-1 - ----------------------------------------------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, ------------------------------------------------ 1999 1998 1997 ------------------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(193,140) $(205,182) $(207,269) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Equity in net losses of Operating Partnerships 122,202 134,311 136,010 Increase in receivable from related parties (13,500) -- -- Decrease in accounts payable and accrued expenses 5,000 (800) (9,240) Increase in advance from affiliate 13,500 -- -- Increase in payable to related parties 68,531 73,274 76,738 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,593 1,603 (3,761) CASH FLOWS PROVIDED BY INVESTING ACTIVITIES Advance to affiliate -- -- 2,700 - ----------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH 2,593 1,603 (1,061) CASH - BEGINNING OF PERIOD 2,296 693 1,754 - ----------------------------------------------------------------------------------------------------------------------- CASH - END OF PERIOD $ 4,889 $ 2,296 $ 693 ======================================================================================================================= - ----------------------------------------------------------------------------------------------------------------------- See the accompanying notes to financial statements.
F-7 27 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, 1998 AND 1997 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-8 28 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, which is 22,315 for the years ending March 31, 1999, 1998, and 1997. 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 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 3). 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-9 29 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 contemplates 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, the Partnership has incurred allocated losses from all but one 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 fifteen of the Operating Partnerships' financial statements contained an explanatory paragraph relating to a going concern issue concerning the expiration of the Housing Assistance Payment Contract. 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 1999. Management has requested one year extensions for the remaining fifteen Operating Partnerships, however, as of June 13, 1999, 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. F-10 30 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------- Notes To Financial Statements (Continued) 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. 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, 1999, 1998 and 1997 as follows:
1999 1998 1997 ----------------------------------------------- Fees and reimbursement from the Partnership: Reimbursement for overhead allocated from Century Pacific Investment Corporation (CPIC) $ 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) 383,681 360,024 355,688 ------------------------------------------------------------------------------------------------------------------------ 535,796 512,139 507,803 ------------------------------------------------------------------------------------------------------------------------ $595,796 $572,139 $567,803 ========================================================================================================================
At March 31, 1999 and 1998, payable to related parties consists of fees and certain general and administrative costs accrued as payable by the Partnership to the general partners and affiliates relating to the above and prior year's amounts totalling $853,946 and $785,415, respectively. Such fees and allocated costs have been deferred until the Partnership has sufficient cash to pay them. Receivable from related party of $29,049 and $15,549 at March 31, 1999 and 1998, respectively, represents cash advances to several of the Operating Partnerships, and the payment of state franchise taxes for CPHP III, IV, V, VIII, IX, XVIII, XX, and XXII. F-11 31 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------- Notes To Financial Statements (Continued) At March 31, 1999 and 1998, CPRC was owed $75,955 and $62,455, respectively, 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, 1999 and 1998, the Partnership had no outstanding advances due to the general partners. 5. INVESTMENTS IN OPERATING PARTNERSHIPS At March 31, 1999 and 1998, 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:
1999 1998 -------------------------------------- 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 (18,702,191) (18,579,989) --------------------------------------------------------------------------------------------------------- $ 137,878 $ 260,080 =========================================================================================================
A summary of the combined balance sheet as of December 31, 1998 and 1997 and statements of operations of the aforementioned Operating Partnerships for the years then ended follows:
COMBINED BALANCE SHEET ASSETS 1998 1997 -------------------------------------- Cash $ 831,921 $ 765,650 Reserve for replacements 2,670,504 2,662,017 Land and buildings 63,317,940 66,772,562 Other assets 3,030,639 3,032,585 --------------------------------------------------------------------------------------------------------- $ 69,851,004 $ 73,232,814 ========================================================================================================= F-12 32 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------- Notes To Financial Statements (Continued) LIABILITIES AND PARTNERS' DEFICIT 1998 1997 --------------------------------------- Notes payable $123,339,239 $ 122,299,736 Other liabilities 7,239,839 3,594,859 Partners' deficit (60,728,074) (52,661,781) --------------------------------------------------------------------------------------------------------- $ 69,851,004 $ 73,232,814 ========================================================================================================= COMBINED STATEMENT OF OPERATIONS 1998 1997 --------------------------------------- REVENUES Rental income $ 16,457,379 $ 16,129,155 Other income 413,609 771,008 --------------------------------------------------------------------------------------------------------- TOTAL REVENUES 16,870,988 16,900,163 --------------------------------------------------------------------------------------------------------- EXPENSES Utilities 2,718,177 2,761,690 Repairs and maintenance 4,645,192 4,034,260 Management fees 1,287,155 1,340,547 Other operating expenses 4,848,663 5,044,824 Interest 7,339,635 7,017,451 Depreciation and amortization 4,378,554 4,299,752 --------------------------------------------------------------------------------------------------------- TOTAL EXPENSES 25,217,376 24,498,524 --------------------------------------------------------------------------------------------------------- NET LOSS $ (8,346,388) $ (7,598,361) ========================================================================================================= ALLOCATION OF LOSS General partners and other limited partners $<36,694,485) $ (7,446,394) CPHF-I (748,867) (151,967) --------------------------------------------------------------------------------------------------------- $(37,443,352) $ (7,598,361) =========================================================================================================
F-13 33 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------- Notes To Financial Statements (Continued) 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 1999, where requested by an owner, for an additional one year term at current rent levels. As of June 13, 1999, fifteen of the Operating Partnerships' Section 8 contracts are due to expire during 1999. 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-14 34 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, 1998
INITIAL COST TO COST CAPITALIZED OPERATING PARNTERSHIP SUBSEQUENT TO ACQUISITION -------------------------------- ------------------------------- BUILDINGS AND BUILDINGS AND DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS - ------------------------------------------------------------------------------------------------------------------------ Century Pacific Housing Partnership I (CPHP-I) - Charter House Dothan, Alabama $ 2,411,583 $ 179,578 $ 1,918,124 $ -- $ 119,019 CPHP-II VOA/Sunset Park, Ltd. - Sunset Park Denver, Colorado 8,806,079 803,595 5,696,405 7,305 831,712 CPHP-III - Highland Park Topeka, Kansas 10,881,191 434,475 6,465,525 251 469,561 CPHP-IV Forest Glen Estates Kansas City, Missouri 6,197,589 427,519 4,469,134 292 230,903 CPHP-VI - Edgewood Danville, Illinois 2,991,354 223,418 3,316,582 -- 250,554 CPHP-VII - Gulfway Terrace New Orleans, Louisiana 6,185,095 270,343 5,429,657 237 375,578 CPHP-IX - Wind Ridge Wichita, Kansas 4,038,641 169,514 3,330,486 146 789,811 CPHP-X Bergen Circle Springfield, Massachusetts 15,092,874 901,206 11,359,794 -- 1,167,896 CPHP-V - Jaycee Towers Dayton, Ohio 7,721,411 599,719 5,096,481 -- 381,203 CPHP-VIII - Sunset Townhouses Newton, Kansas 1,393,625 50,259 1,174,741 138 126,009 - ------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD 65,719,442 4,059,626 48,256,929 8,369 4,742,246 - ------------------------------------------------------------------------------------------------------------------------ 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 LAND IMPROVEMENTS TOTAL IMPROVEMENTS CONSTRUCTION ACQUIRED COMPUTED - ------------------------------------------------------------------------------------------------------------------------------ Century Pacific Housing Partnership I (CPHP-I) - Charter House Dothan, Alabama $ 179,578 $ 2,037,143 $ 831,208 1972 12/87 27.5 years CPHP-II VOA/Sunset Park, Ltd. - Sunset Park Denver, Colorado 810,900 6,528,117 2,657,784 1971 12/87 10 - 50 years CPHP-III - Highland Park Topeka, Kansas 434,726 6,935,086 3,701,559 1967 12/87 10 - 40 years CPHP-IV Forest Glen Estates Kansas City, Missouri 427,811 4,700,037 2,172,627 1971 12/87 40 years CPHP-VI - Edgewood Danville, Illinois 223,418 3,567,136 1,445,712 1970 12/87 27.5 years CPHP-VII - Gulfway Terrace New Orleans, Louisiana 270,580 5,805,235 2,626,828 1970 12/87 10 - 40 years CPHP-IX - Wind Ridge Wichita, Kansas 169,660 4,120,297 1,904,929 1969 12/87 10 - 40 years CPHP-X Bergen Circle Springfield, Massachusetts 901,206 12,527,690 5,231,927 1976 12/87 10 - 40 years CPHP-V - Jaycee Towers Dayton, Ohio 599,719 5,477,684 2,026,522 1970 12/88 27.5 years CPHP-VIII - Sunset Townhouses Newton, Kansas 50,397 1,300,750 608,059 1971 8/88 40 years - ------------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD 4,067,995 52,999,175 23,207,155 - ------------------------------------------------------------------------------------------------------------------------------ See notes to schedule
F-15 35 Schedule III ------------ Page 2 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, 1998
INITIAL COST TO COST CAPITALIZED OPERATING PARNTERSHIP SUBSEQUENT TO ACQUISITION -------------------------------- ------------------------------- BUILDINGS AND BUILDINGS AND DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS - ------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD $ 65,719,442 $4,059,626 $48,256,929 $ 8,369 $ 4,742,246 CPHP-XI Continental Terrace Fort Worth, Texas 5,801,368 231,946 4,368,054 1,049 615,219 CPHP-XII - Yale Village Houston, Texas 7,555,344 299,925 4,950,075 1,364 909,160 CPHP-XIII - Atlantis Virginia Beach, Virginia 8,005,078 520,607 5,382,387 2,861 768,778 CPHP-XIV - Kings Row Houston, Texas 5,393,820 193,458 3,586,542 947 840,754 CPHP-XV - Castle Gardens Lubbock, Texas 4,425,316 161,989 3,106,011 821 609,564 CPHP-XVI - Rockwell Villa Oklahoma City, Oklahoma 1,477,179 75,255 1,160,145 1,168 239,741 CPHP-XVII - London Square Village Oklahoma City, Oklahoma 4,681,619 203,978 4,009,000 -- 725,109 CPHP-XVIII - Ascension Towers Memphis, Tennessee 8,976,516 176,341 6,551,159 -- 755,378 Coleman Manor Associates Limited Partnership - Coleman Manor Baltimore, Maryland 2,184,583 61,281 3,384,621 -- 160,330 CPHP-XX - Holiday Heights Fort Worth, Texas 2,933,184 202,445 1,942,864 -- 193,476 CPHP-XXII - Harriet Tubman Terrace - Berkeley, California 6,185,790 361,275 3,807,339 5,097 436,832 - ------------------------------------------------------------------------------------------------------------------------ $123,339,239 $6,548,126 $90,505,126 $21,676 $10,996,587 ======================================================================================================================== 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 LAND IMPROVEMENTS TOTAL IMPROVEMENTS CONSTRUCTION ACQUIRED COMPUTED - ------------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD $4,067,995 $ 52,999,175 $23,207,155 CPHP-XI Continental Terrace Fort Worth, Texas 232,995 4,983,273 2,303,684 1971 10/88 20 - 40 years CPHP-XII - Yale Village Houston, Texas 301,289 5,859,235 2,956,985 1970 8/88 20 - 40 years CPHP-XIII - Atlantis Virginia Beach, Virginia 523,468 6,151,165 2,819,948 1970 7/88 20 - 40 years CPHP-SIV - Kings Row Houston, Texas 194,405 4,427,296 2,073,835 1968 8/88 20 - 40 years CPHP-XV - Castle Gardens Lubbock, Texas 162,810 3,715,575 1,644,758 1971 7/88 15 - 40 years CPHP-XVI - Rockwell Villa Oklahoma City, Oklahoma 76,423 1,399,886 573,539 1970 7/88 27.5 years CPHP-XVII - London Square Village Oklahoma City, Oklahoma 203,978 4,734,109 2,269,202 1975 8/88 27.5 years CPHP-XVIII - Ascension Towers Memphis, Tennessee 176,431 7,306,537 2,926,059 1979 8/88 27.5 years Coleman Manor Associates Limited Partnership - Coleman Manor Baltimore, Maryland 61,281 3,354,951 1,331,772 1903 8/88 27.5 years CPHP-XX - Holiday Heights Fort Worth, Texas 202,445 2,166,340 949,791 1972 10/88 32 years CPHP-XXII - Harriet Tubman Terrace - Berkeley, California 366,372 4,244,171 1,696,848 1975 8/88 27.5 years - ------------------------------------------------------------------------------------------------------------------------------ $6,569,802 $101,501,713 $44,753,576 ============================================================================================================================== See notes to schedule
F-16 36 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, 1998 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 $ 889,916 $ 1,521,667 $ -- $ -- $ 2,411,583 CPHP-II VOA/Sunset Park, Ltd. Sunset Park 2,441,712 6,282,260 -- 82,107 8,806,079 CPHP-III Highland Park 1,122,097 9,736,397 -- 22,697 10,881,191 CPHP-IV Forest Glen Estates 1,925,470 4,203,214 -- 68,905 6,197,589 CPHP-V Jaycee Towers 2,393,207 5,063,501 -- 264,703 7,721,411 CPHP-VI Edgewood 1,915,584 903,274 -- 172,496 2,991,354 CPHP-VII Gulfway Terrace 3,345,423 2,551,866 -- 287,806 6,185,095 CPHP-VIII Sunset Townhouses 589,770 786,176 -- 17,679 1,393,625 CPHP-IX Wind Ridge 1,329,763 2,644,713 -- 64,165 4,038,641 CPHP-X Bergen Circle 5,884,375 8,589,310 -- 619,189 15,092,874 CPHP-XI Continental Terrace 2,015,592 3,394,943 -- 390,833 5,801,368 CPHP-XII Yale Village 2,361,371 4,056,822 -- 1,137,151 7,555,344 CPHP-XIII Atlantis 2,073,824 5,878,732 -- 52,522 8,005,078 CPHP-XIV Kings Row 1,363,764 3,560,494 -- 469,562 5,393,820 CPHP-XV Castle Gardens 1,420,315 2,701,640 -- 303,361 4,425,316 CPHP-XVI Rockwell Villa 513,854 908,343 -- 54,982 1,477,179 CPHP-XVII London Square Village 2,132,556 2,285,563 -- 263,500 4,681,619 CPHP-XVIII Ascension Towers 3,108,570 5,532,626 -- 335,320 8,976,516 Coleman Manor Associates Limited Partnership Coleman Manor 2,144,583 -- -- 40,000 2,184,583 CPHP-XX Holiday Heights 876,893 2,056,291 -- -- 2,933,184 CPHP-XXII Harriet Tubman Terrace 1,386,216 4,578,074 221,500 -- 6,185,790 - ------------------------------------------------------------------------------------------------------------------------ $41,234,855 $77,235,906 $221,500 $4,646,978 $123,339,239 ========================================================================================================================
F-17 37 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, 1998 NOTE 3 - RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION - -------------------------------------------------------------------
ACCUMULATED COST DEPRECIATION -------------------------------------- Balance at December 31, 1995 $105,392,749 $31,905,875 Additions during year: Improvements 1,070,611 -- Depreciation -- 4,272,435 ------------ ----------- Balance at December 31, 1996 106,463,360 36,178,310 Additions during year: Improvements 744,144 -- Depreciation -- 4,256,632 ------------ ----------- Balance at December 31, 1997 107,207,504 40,434,942 Additions during year: Improvements 864,012 -- Depreciation -- 4,318,634 ------------ ----------- $108,071,516 $44,753,576 ============ ===========
F-18 38 CENTURY PACIFIC HOUSING FUND-1 - ----------------------------------------------------------------------------------------------------------------------- MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 1998
Schedule IV ----------- MONTHLY PAYMENTS ORIGINAL FINAL TO MATURITY FACE CARRYING INTEREST MATURITY (NET OF HUD AMOUNT OF AMOUNT OF DESCRIPTION RATE DATE SUBSIDY) MORTGAGE MORTGAGE - ----------------------------------------------------------------------------------------------------------------------- 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 $ 889,916 CPHP-II VOA/Sunset Park, Ltd. Sunset Park Denver, Colorado 7% November 2014 8,592 4,859,300 2,441,712 CPHP-III Highland Park Topeka, Kansas 3% December 10,835 2,914,500 1,122,097 2008 CPHP-IV Forest Glen Estates Kansas City, Kansas 7.5% April 2013 6,582 2,787,000 1,925,470 CPHP-VI Edgewood Danville, Illinois 3% plus March 2013 18,155 2,360,000 1,915,584 treasury bill rate CPHP-VII Gulfway Terrace New Orleans, Louisiana 7% June 2015 13,576 3,616,200 3,345,423 CPHP-IX Wind Ridge Wichita, Kansas 8.5% November 2010 4,544 2,010,900 1,329,763 CPHP-X Bergen Circle Springfield, 6.92% March 2018 24,646 7,381,100 5,884,375 Massachusetts CPHP-V Jaycee Towers Dayton, Ohio 8.5% September 7,387 3,361,200 2,393,207 2012 CPHP-VIII Sunset Townhouses Newton, Kansas 8.5% September 1,819 828,300 589,770 2012 - ----------------------------------------------------------------------------------------------------------------------- BALANCE BROUGHT FORWARD 104,374 31,444,200 21,837,317 - ----------------------------------------------------------------------------------------------------------------------- F-19 39 CENTURY PACIFIC HOUSING FUND-1 - ----------------------------------------------------------------------------------------------------------------------- MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 1998 Schedule IV ----------- MONTHLY PAYMENTS ORIGINAL FINAL TO MATURITY FACE CARRYING INTEREST MATURITY (NET OF HUD AMOUNT OF AMOUNT OF DESCRIPTION RATE DATE SUBSIDY) MORTGAGE MORTGAGE - ----------------------------------------------------------------------------------------------------------------------- BALANCE BROUGHT FORWARD $104,374 $31,444,200 $21,837,317 CPHP-XI Continental Terrace Fort Worth, Texas 7% March 2013 18,659 3,002,600 2,015,592 CPHP-XII Yale Village Houston, Texas 7% June 2015 12,400 3,363,300 2,361,371 CPHP-XIII Atlantis Virginia Beach, Virginia 8.5% March 2012 7,200 2,946,500 2,073,824 CPHP-XIV Kings Row Houston, Texas 7.05% August 2011 13,925 2,116,000 1,363,764 CPHP-XV Castle Gardens Lubbock, Texas 8.5% June 2015 14,353 1,949,900 1,420,315 CPHP-XVI Rockwell Villa September Oklahoma City, Oklahoma 7% 2013 1,922 812,700 513,854 CPHP-XVII London Square Village Oklahoma City, Oklahoma 7.5% June 2012 7,787 3,153,900 2,132,556 CPHP-XVIII Ascension Towers Memphis, Tennessee 7% May 2015 9,506 4,290,000 3,108,570 Coleman Manor Associates Limited Partnership Coleman Manor Baltimore, Maryland 10% July 2029 12,545 2,365,000 2,144,583 CPHP-XX Holiday Heights Fort Worth, Texas 7% April 2014 2,787 1,252,700 876,893 CPHP-XXII Harriet Tubman Terrace Berkeley, California 7% October 2015 4,155 1,882,700 1,386,216 - ----------------------------------------------------------------------------------------------------------------------- $209,613 $58,579,500 $41,234,855 ======================================================================================================================= See notes to schedule F-20 40 CENTURY PACIFIC HOUSING FUND-1 - ----------------------------------------------------------------------------------------------------------------------- MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 1998 Schedule IV ----------- MONTHLY PAYMENTS ORIGINAL FINAL TO MATURITY FACE CARRYING INTEREST MATURITY (NET OF HUD AMOUNT OF AMOUNT OF DESCRIPTION RATE DATE SUBSIDY) MORTGAGE MORTGAGE - ----------------------------------------------------------------------------------------------------------------------- Residual notes (second mortgages): Century Pacific Housing Partnership-I (CPHP-I) Charter House Dothan, Alabama December $ 781,581 $ 1,521,667 2002 CPHP-II VOA/Sunset Park, Ltd. Sunset Park Denver, Colorado December 2,462,936 6,282,260 2002 CPHP-III Highland Park Topeka, Kansas December 3,936,695 9,736,397 2002 CPHP-IV Forest Glen Estates Kansas City, Kansas December 1,733,923 4,203,214 2002 CPHP-VI Edgewood Danville, Illinois December 415,192 903,274 2002 CPHP-VII Gulfway Terrace New Orleans, Louisiana December 1,255,000 2,551,866 2002 CPHP-IX Wind Ridge Wichita, Kansas December 1,053,084 2,644,713 2003 CPHP-X Bergen Circle Springfield, Massachusetts July 2013 3,547,072 8,589,310 CPHP-V Jaycee Towers Dayton, Ohio October 2005 2,245,673 5,063,501 CPHP-VIII Sunset Townhouses Newton, Kansas August 2003 341,229 786,176 - ----------------------------------------------------------------------------------------------------------------------- BALANCE BROUGHT FORWARD 17,772,385 42,282,378 - ----------------------------------------------------------------------------------------------------------------------- F-21 41 CENTURY PACIFIC HOUSING FUND-1 - ----------------------------------------------------------------------------------------------------------------------- MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 1998 Schedule IV ----------- MONTHLY PAYMENTS ORIGINAL FINAL TO MATURITY FACE CARRYING INTEREST MATURITY (NET OF HUD AMOUNT OF AMOUNT OF DESCRIPTION RATE DATE SUBSIDY) MORTGAGE MORTGAGE - ----------------------------------------------------------------------------------------------------------------------- BALANCE BROUGHT FORWARD $17,772,385 $42,282,378 CPHP-XI Continental Terrace Fort Worth, Texas October 2003 1,595,364 3,394,943 CPHP-XII Yale Village Houston, Texas August 2003 1,255,000 4,056,822 CPHP-XIII Atlantis Virginia Beach, Virginia July 2003 2,552,584 5,878,732 CPHP-XIV Kings Row Houston, Texas August 2003 1,537,518 3,560,494 CPHP-XV Castle Gardens Lubbock, Texas July 2003 1,160,247 2,701,640 CPHP-XVI Rockwell Villa Oklahoma City, Oklahoma July 2003 398,629 908,343 CPHP-XVII London Square Village Oklahoma City, Oklahoma July 2003 979,071 2,285,563 CPHP-XVIII Ascension Towers Memphis, Tennessee August 2003 2,404,667 5,532,626 CPHP-XX Holiday Heights Fort Worth, Texas October 2004 909,472 2,056,291 CPHP-XXII Harriet Tubman Terrace Berkeley, California December 2,036,000 4,578,074 2003 - ----------------------------------------------------------------------------------------------------------------------- $32,600,937 $77,235,906 ======================================================================================================================= See notes to schedule
F-22 42 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, 1998 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, 1998 -------------------------------------------------- MORTGAGE RESIDUAL LOANS NOTES --------------- -------------- Balance at December 31, 1995 $44,540,052 $60,976,263 Additions during year: Accrued interest -- 5,041,436 Deductions during year: Payments (1,242,226) -- --------------- -------------- Balance at December 31, 1996 43,297,826 66,017,699 Additions during year: Accrued interest -- 5,288,652 Deductions during year: Payments (1,329,889) -- --------------- -------------- 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) -- --------------- -------------- $41,234,855 $77,235,906 =============== ==============
F-23 43 ================================================================================ COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP FINANCIAL STATEMENTS DECEMBER 31, 1998 ================================================================================ 44 CONTENTS ==========================================================================================================
PAGE Independent Auditors' Report 1 - 2 Balance Sheet 3 - 4 Statement Of Profit And Loss 5 - 6 Statement Of Partners' Equity 7 Statement Of Cash Flows 8 - 9 Notes To Financial Statements 10 - 14 Supporting Data Required By HUD 15 - 17 Independent Auditors' Report On Internal Controls 18 - 19 Independent Auditors' Report On Compliance With Specific Requirements Applicable To Major HUD Programs 20 - 21 Independent Auditors' Report On Compliance With Specific Requirements Applicable To Fair Housing And Non-Discrimination 22 Schedule Of Findings And Questioned Costs 23 - 25 Auditors' Comments On Audit Resolution Matters Relating To The HUD Programs 26 Mortgagor's Certification 27 Management Agent's Certification 28 Auditor's Transmittal Letter 29
45 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. Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information (shown on pages 15 to 17) is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated January 26, 1999 on our consideration of Coleman Manor Associates Limited Partnership's internal controls and a report dated January 26, 1999 on its compliance with laws and regulations. 46 Board of Directors Coleman Manor Associates Limited Partnership Page 2 - ------------------------------------------------------------------------------ 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 47 CENTURY PACIFIC HOUSING FUND-1 - ---------------------------------------------------------------------------------------------------------------- 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 3 48 CENTURY PACIFIC HOUSING FUND-1 - ---------------------------------------------------------------------------------------------------------------- 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 4
49 CENTURY PACIFIC HOUSING FUND-1 - ----------------------------------------------------------------------------------------------------------------------- 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 $ ------------------------------------------------------------------------------------ Rental Concessions 5250 $ VACANCIES ------------------------------------------------------------------------------------ 5200 Garage and Parking Space 5270 $ ------------------------------------------------------------------------------------ Miscellaneous 5290 $ ------------------------------------------------------------------------------------------------- TOTAL VACANCIES 5200T $ 6,541 ------------------------------------------------------------------------------------------------- NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 366,159 - ----------------------------------------------------------------------------------------------------------------------- Nursing Homes/Assisted Living/Board and Care/Other 5300 ------------------------------------------------------------------------------------------------- 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 ------------------------------------------------------------------------------------ OTHER Interest Reduction Payments Revenue 5945 $ REVENUE ------------------------------------------------------------------------------------ 5900 Miscellaneous Revenue 5990 $ 250 ------------------------------------------------------------------------------------------------- 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 ------------------------------------------------------------------------------------ Gas 6452 $ ------------------------------------------------------------------------------------ Sewer 6453 $ 2,703 ------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- TOTAL UTILITIES EXPENSE 6400T $ 10,675 ------------------------------------------------------------------------------------------------- TOTAL EXPENSES (CARRY FORWARD TO PAGE2) $ 76,906 - ----------------------------------------------------------------------------------------------------------------------- Page 1 of 2 - ----------------------------------------------------------------------------------------------------------------------- See the accompanying report letter and notes to financial statements. Page 5 50 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 (Long-Term) 6830 $ 7,140 FINANCIAL ------------------------------------------------------------------------------------ EXPENSES Interest on Notes Payable (Short-Term) 6840 $ 6800 ------------------------------------------------------------------------------------ Mortgage Insurance Premium/Service Charge 6850 $ 7,186 ------------------------------------------------------------------------------------ Miscellaneous Financial Expenses 6890 $ ------------------------------------------------------------------------------------------------- TOTAL FINANCIAL EXPENSES 6800T $ 157,301 - ----------------------------------------------------------------------------------------------------------------------- Nursing Homes/ Assisted Living/ Board and Care/ Other 6900 ------------------------------------------------------------------------------------------------- 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 ------------------------------------------------------------------------------------ MORTGAGOR Interest Income 7140 $ ENTITY ------------------------------------------------------------------------------------ EXPENSES Interest on Notes Payable 7141 $ 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 6
51 CENTURY PACIFIC HOUSING FUND-1 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 7 52 CENTURY PACIFIC HOUSING FUND-1 - ---------------------------------------------------------------------------------------------------------------------- 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 ACTIVITI (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 8
53 CENTURY PACIFIC HOUSING FUND-1 - ---------------------------------------------------------------------------------------------------------------------- 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 9
54 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ 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 10 55 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ 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. - ------------------------------------------------------------------------------ See the accompanying report letter. Page 11 56 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ 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, 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 12 57 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ 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 13 58 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ 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 14 59 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ SUPPORTING DATA REQUIRED BY HUD DECEMBER 31, 1998 REPLACEMENT RESERVE In accordance with the provisions of the regulatory agreement, restricted cash is held by WMF Huntoon Paige to be used for replacement of property with the approval of HUD as follows: 1320P Balance at beginning of year $ 27,230 1320DT Total monthly deposits 5,910 1320ODT Other deposits 680 ------------ 1320OD-010 Interest Income 1320OD-020 $680 1320 Balance at end of year, confirmed by mortgagee $ 33,820 ============
- ------------------------------------------------------------------------------ See the accompanying report letter. Page 15 60 COMPUTATION OF SURPLUS CASH DISTRIBUTIONS AND RESIDUAL RECEIPTS - -----------------------------------------------------------------------------------------------------------------------------
PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER COLEMAN COLEMAN MANOR ASSOCIATES LIMITED PARTNERSHIP 12/31/98 052-35464 -------- - ------------------------------------------------------------------------------------------------------------------------------ PART A - COMPUTE SURPLUS CASH - ----------------------------------------------------------------------------------------------------------------------------- CASH - ----------------------------------------------------------------------------------------------------------------------------- 1. Cash (Accounts 1120, 1170, 1191 minus Account 2105) (S1300010) $27,411 - ----------------------------------------------------------------------------------------- 2. Tenant subsidy due for period covered by financial statement (1135) $ - ----------------------------------------------------------------------------------------- 3. Other (describe) (S1300-030) $ - ----------------------------------------------------------------------------------------------------------------------------- (a) TOTAL CASH (Add Lines 1, 2, and 3) (S1300-040) $27,411 - ----------------------------------------------------------------------------------------------------------------------------- CURRENT OBLIGATIONS - ----------------------------------------------------------------------------------------------------------------------------- 4. Accrued mortgage interest payable (S1300-050) $14,959 - ----------------------------------------------------------------------------------------- 5. Delinquent mortgage principal payments (S1300-060) $ - ----------------------------------------------------------------------------------------- 6. Delinquent deposits to reserve for replacements (S1300070) $ - ----------------------------------------------------------------------------------------- 7. Accounts payable - 30 days (S1300-075) $ 7,374 - ----------------------------------------------------------------------------------------- 8. Loans and notes payable (due within 30 days) (S1300-080) $ - ----------------------------------------------------------------------------------------- 9. Deficient tax insurance or MIP escrow deposits (S1300090) $ - ----------------------------------------------------------------------------------------- 10. Accrued expenses (not escrowed) (S1300-100) $ 2,112 - ----------------------------------------------------------------------------------------- 11. Prepaid revenue (2210) $ 414 - ----------------------------------------------------------------------------------------- 12. Tenant security deposits liability (2191) $ 6,655 - ----------------------------------------------------------------------------------------- 13. Other current obligations (Describe) (S1300-110) $ - ----------------------------------------------------------------------------------------------------------------------------- (b) TOTAL CURRENT OBLIGATIONS (Add Lines 4 through 13) (S1300-140) $31,514 - ----------------------------------------------------------------------------------------------------------------------------- (c) SURPLUS CASH [Line (a) minus Line (b)] (S1300150) $(4,103) - ----------------------------------------------------------------------------------------------------------------------------- PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS - ----------------------------------------------------------------------------------------------------------------------------- 1. Surplus Cash $ NONE - ----------------------------------------------------------------------------------------------------------------------------- LIMITED DIVIDEND PROJECTS - ----------------------------------------------------------------------------------------------------------------------------- 2a. Annual distribution earned during fiscal period covered by the statement (S1300-160) $ - ----------------------------------------------------------------------------------------- 2b. Distribution accrued and unpaid as of the end of the prior fiscal period (S1300-170) $ - ----------------------------------------------------------------------------------------- 2c. Distributions and entity expenses paid during fiscal period covered by statement (S1300-180) $ - ----------------------------------------------------------------------------------------- 3. Distribution earned but unpaid (Line 2a plus 2b minus 2c) (S1300-190) $ - ----------------------------------------------------------------------------------------------------------------------------- 4. Amount available for distribution during next fiscal period (S1300-200) $ NONE - ----------------------------------------------------------------------------------------------------------------------------- 5. Deposit due residual receipts (S1300-210) $ - ----------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------- See the accompanying report letter. Page 16
61 CENTURY PACIFIC HOUSING FUND-1 - -------------------------------------------------------------------------------------------------------------------------- SUPPORTING DATA REQUIRED BY HUD (CONTINUED) DECEMBER 31, 1998
ASSETS ACCUMULATED DEPRECIATION -------------------------------------------------------------- ------------------------------------ BALANCE BALANCE BALANCE JANUARY 1, DECEMBER 31, JANUARY 1, CURRENT 1998 ADDITIONS DEDUCTIONS 1998 1998 PROVISIONS ----------------------------------------------------------------------------------------------------- 1410 Land $ 61,281 $ -- $ -- $ 61,281 $ -- $ -- 1420 Buildings 3,426,317 -- -- 3,426,317 1,095,394 130,633 1465 Office furniture and equipment 118,634 -- -- 118,634 100,499 5,246 - -------------------------------------------------------------------------------------------------------------------------- TOTAL $ 3,606,232 $ -- $ -- $3,606,232 $1,195,893 $ 135,879 ========================================================================================================================== ACCUMULATED DEPRECIATION ----------------------------------------------------------------- NET BALANCE BOOK VALUE DECEMBER 31, DECEMBER 31, DEDUCTIONS 1998 1998 ----------------------------------------------------------------- 1410 Land $ -- $ -- $ 61,281 1420 Buildings -- 1,226,027 2,200,290 1465 Office furniture and equipment -- 105,745 12,889 - ---------------------------------------------------------------------------------------------------------- TOTAL $ -- $ 1,331,772 $ 2,274,460 ========================================================================================================== - -------------------------------------------------------------------------------------------------------------------------- See the accompanying report letter. Page 17 62 S2200-020 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROLS To The Partners Coleman Manor Associates Limited Partnership We have audited the financial statements of Coleman Manor Associates Limited Partnership as of and for the year ended December 31, 1998, and have issued our report thereon dated January 26, 1999. We have also audited Coleman Manor Associates Limited Partnership's compliance with requirements applicable to HUD-assisted programs and have issued our reports thereon dated January 26, 1999. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States and the Consolidated Audit Guide for Audits of HUD Programs (the "Guide") issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General. Those standards and the Guide require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether Coleman Manor Associates Limited Partnership complied with laws and regulations, noncompliance with which would be material to a major HUD-assisted program. In planning and performing our audits, we obtained an understanding of the design of relevant internal controls and determined whether they had been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements of Coleman Manor Associates Limited Partnership and on its compliance with specific requirements applicable to its major HUD-assisted programs and to report on the internal control structure in accordance with the provisions of the Guide and not to provide any assurance on the internal control structure. Page 18 63 To The Partners Coleman Manor Associates Limited Partnership - ------------------------------------------------------------------------------ The management of Coleman Manor Associates Limited Partnership is responsible for establishing and maintaining internal controls. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal controls. The objectives of internal controls are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles and that HUD-assisted programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal controls, errors, irregularities or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. We performed tests of controls, as required by the Guide, to evaluate the effectiveness of the design and operation of internal controls that we considered relevant to preventing or detecting material noncompliance with specific requirements applicable to Coleman Manor Associates Limited Partnership's major HUD-assisted programs. Our procedures were less in scope than would be necessary to render an opinion on internal control. Accordingly, we do not express such an opinion. Our consideration of internal controls would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited or that noncompliance with laws and regulations that would be material to a HUD-assisted program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operations that we consider to be material weaknesses as defined above. This report is intended solely for the information and use of management and the Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. January 26, 1999 - ------------------------------------------------------------------------------ Page 19 64 S2300-020 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS To The Partners Coleman Manor Associates Limited Partnership We have audited the financial statements of Coleman Manor Associates Limited Partnership as of and for the year ended December 31, 1998 and have issued our report thereon dated January 26, 1999. In addition, we have audited Coleman Manor Associates Limited Partnership's compliance with the specific program requirements governing federal financial reports, mortgage status, replacement reserve, security deposits, cash receipts and disbursements, tenant application, eligibility and recertification and management functions that are applicable to each of its major HUD-assisted programs for the year ended December 31, 1998. The management of Coleman Manor Associates Limited Partnership is responsible for compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the Consolidated Audit Guide for Audits of HUD Programs (the "Guide") issued by the U.S. Department of Housing and Urban Development, Office of Inspector General. Those standards and the Guide require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about Coleman Manor Associates Limited Partnership's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion. The results of our audit procedures disclosed immaterial instances of noncompliance with the requirements referred to above, which are described in the accompanying Schedule of Findings and Questioned Costs. We considered those instances of noncompliance in forming our opinion on compliance, which is expressed in the following paragraph. Page 20 65 To The Partners Coleman Manor Associates Limited Partnership - ------------------------------------------------------------------------------ In our opinion, Coleman Manor Associates Limited Partnership complied, in all material respects, with the requirements described above that are applicable to each of its HUD-assisted programs for the year ended December 31, 1998. This report is intended solely for the information and use of management and the Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. January 26, 1999 - ------------------------------------------------------------------------------ Page 21 66 S2500-020 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION To The Partners Coleman Manor Associates Limited Partnership We have audited the financial statements of Coleman Manor Associates Limited Partnership as of and for the year ended December 31, 1998, and have issued our report thereon dated January 26, 1999. We have applied procedures to test Coleman Manor Associates Limited Partnership's compliance with Fair Housing and Non-Discrimination requirements applicable to its HUD-assisted programs, for the year ended December 31, 1998. Our procedures were limited to the applicable compliance requirements described in the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, Office of Inspector General. Our procedures were substantially less in scope than an audit, the objective of which would be the expression of an opinion on Coleman Manor Associates Limited Partnership's compliance with Fair Housing and Non-Discrimination requirements. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under the Guide. This report is intended solely for the information and use of management and the Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. January 26, 1999 Page 22 67 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ SCHEDULE OF FINDINGS AND QUESTIONED COSTS (S2700-X1X) S2700-010 * STATEMENT OF CONDITION - Management is currently operating with no approved management agreement. An agreement has been submitted and is awaiting approval. Mt. Washington is currently charging 6% of cash collected. S2700-020 * CRITERIA - HUD requires management to obtain a current management agreement. S2700-030 * EFFECT - No material direct or indirect effect on the financial statements. S2700-040 * CAUSE - N/A S2700-050 * RECOMMENDATION - Management should obtain a HUD approved current management agreement. S2700-065 Amount of Questioned Costs N/A S2700-010 * STATEMENT OF CONDITION - No copy of an Identity of Interest statement has been located. S2700-020 * CRITERIA - HUD requires management to possess a copy of an Identity of Interest statement. S2700-030 * EFFECT - No material direct or indirect effect on the financial statements. S2700-040 * CAUSE - N/A S2700-050 * RECOMMENDATION - Management should locate a copy of an Identity of Interest statement. S2700-065 Amount of Questioned Costs N/A - ------------------------------------------------------------------------------ Page 23 68 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) (S2700-X1X) S2700-010 * STATEMENT OF CONDITION - Client has fidelity bond coverage; however, it is not enough to cover two months' gross potential rent. It should be noted that it is enough to cover two months' rent collected by the on-site manager. S2700-020 * CRITERIA - HUD requires management to obtain fidelity bond coverage equal to or greater than two months' gross potential rent. S2700-030 * EFFECT - No material direct or indirect effect on the financial statements. S2700-040 * CAUSE - N/A S2700-050 * RECOMMENDATION - Management should obtain coverage of at least $62,120. S2700-065 Amount of Questioned Cost Shortage of $12,120 S2700-010 * STATEMENT OF CONDITION - Client does not possess any support of HUD approval for the accounting charge of $11/unit/month. S2700-020 * CRITERIA - HUD requires management to perform support analysis or obtain HUD approval for any charges. S2700-030 * EFFECT - No material direct or indirect effect on the financial statements. S2700-040 * CAUSE - N/A S2700-050 * RECOMMENDATION - Management should either obtain HUD approval for accounting charges or perform support analysis on the fee charged. S2700-065 Amount of Questioned Costs $6,600 - ------------------------------------------------------------------------------ Page 24 69 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) (S2700-X1X) S2700-010 * STATEMENT OF CONDITION - The security deposit account was $273 less than the related liability at December 31, 1998. S2700-020 * CRITERIA - HUD requires the funds in the security deposit account to equal or exceed the related liability on a continuous basis. S2700-030 * EFFECT - No material direct or indirect effect on the financial statements. S2700-040 * CAUSE - Funds were not being transferred from the operating account to the security deposit account in a timely manner. S2700-050 * RECOMMENDATION - Management should monitor tenants' security deposits more closely to ensure adequate funds are maintained in the security deposit account. S2700-065 Amount of Questioned Costs Under funded by $273 S2700-010 * STATEMENT OF CONDITION - Client could not locate 3 out of 10 invoices requested for cash disbursement testing. S2700-020 * CRITERIA - HUD requires invoices to be examined in connection with cash disbursement testing. S2700-030 * EFFECT - No material direct or indirect effect on the financial statements. S2700-040 * CAUSE - N/A S2700-050 * RECOMMENDATION - Client should keep invoices readily available for inspection. S2700-065 Amount of Questioned Costs N/A - ------------------------------------------------------------------------------ Page 25 70 CENTURY PACIFIC HOUSING FUND-1 - ------------------------------------------------------------------------------ AUDITORS' COMMENT(S) ON AUDIT RESOLUTION MATTERS RELATING TO THE HUD PROGRAMS (S2800-X1X) S2800-010 Narrative Management was unable to provide a current management agreement and/or "Identity of Interest Statement" stating the current management fees. S2800-020 Status OUTSTANDING - repeated comments this year. S2800-030 Reporting Period 12/31/97 S2800-010 Narrative Fidelity bond coverage is not at least equal to two months' gross potential rent collections. S2800-020 Status OUTSTANDING - repeated comment this year. S2800-030 Reporting Period 12/31/97 S2800-010 Narrative In one tenant file reviewed, the rental application was not signed. S2800-020 Status CLEARED. S2800-030 Reporting Period 12/31/97 S2800-010 Narrative In one tenant file reviewed, the security deposit amount stated in the lease does not agree to the rent roll. S2800-020 Status CLEARED. S2800-030 Reporting Period 12/31/97 - ------------------------------------------------------------------------------ Page 26 71 S2900-010 MORTGAGOR'S CERTIFICATION S2900-020 Name of Signatory #1------------------------------------------- *S2900-030 Name of Signatory #2 (if required)----------------------------- * For all owning entities other than a sole proprietor or a limited partnership, this field is required. S2900-040 Auditee Telephone Number--------------------------------------- S2900-050 Date of Certification------------------------------------------ ------------------------------------------ Signature Date ------------------------------------------ Signature Date 52-1565644 ------------------------------------------ Federal Identification Number - ------------------------------------------------------------------------------ Page 27 72 (S3000-010) MANAGEMENT AGENT'S CERTIFICATION We hereby certify that we have examined the accompanying financial statements and supplemental data of Coleman Manor Associates Limited Partnership and, to the best of our knowledge and belief, the same is complete and accurate. Mt. Washington Management Group, Inc. -------------------------------------------------- Name of Managing Agent (S3000-020) Date -------------------------------------------------- Name of Signatory (S3000-030) 52-1618787 -------------------------------------------------- Management Agent TIN (S3000-040) Eldamae Ingram -------------------------------------------------- Name of Individual (i.e., Property Manager) (S3000-050) - ------------------------------------------------------------------------------ Page 28 73 AUDITOR'S TRANSMITTAL LETTER S3200-010 Audit Firm Rubin, Brown, Gornstein & Co. LLP ------------------------------------------------ S3200-020 Lead Auditor First Name Lawrence -------------------------------- S3200-030 Lead Auditor Middle Name Edward ---------------------------------- S3200-040 Lead Auditor Last Name Rubin -------------------------------- S3200-050 Auditor Street Address Line 1 230 South Bemiston Avenue ------------------------------ S3200-060 Auditor Street Address Line 2 ------------------------------ S3200-070 Auditor City St. Louis ----------------------------------------------- S3200-080 Auditor State Missouri ---------------------------------------------- S3200-090 Auditor Zip Code 63105 ------------------------------------------- S3200-100 Auditor Zip Code Extension -------------------------------- S3200-110 Auditor Telephone Number (314) 727-8150 ----------------------------------- S3200-120 Auditor Firm TIN 43-0765316 ------------------------------------------- S3200-130 Date of Submission ---------------------------------------- - ------------------------------------------------------------------------------ Page 29
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