10-K 1 ten-k.txt 10-K 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, 2005 COMMISSION FILE NUMBER 033-11194 CENTURY PACIFIC HOUSING FUND-I A CALIFORNIA LIMITED PARTNERSHIP I.R.S. EMPLOYER IDENTIFICATION NO. 95-3938971 1 E. Stow Road, Marlton, NJ 08053 REGISTRANT'S TELEPHONE NUMBER: (856) 596-3008 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] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] No market exists for the limited partnership interests of the registrant, and therefore, no aggregate market value can be determined. Documents Incorporated by Reference 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. 1 TABLE OF CONTENTS PART 1 3 ITEM 1 BUSINESS 4 ITEM 2 PROPERTIES 6 ITEM 3 LEGAL PROCEEDINGS 6 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS PART II 6 ITEM 5 MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS 6 ITEM 6 SELECTED FINANCIAL DATA 7 ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS 11 ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 11 ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 11 ITEM 9 CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 12 ITEM 9a CONTROLS AND PROCEDURES 12 ITEM 9b OTHER INFORMATION PART III 12 ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 13 ITEM 11 EXECUTIVE COMPENSATION 13 ITEM 12 PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 14 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 14 ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES PART IV 15 ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K 16 SIGNATURES 2 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), 9 of which are still owned at March 31, 2005. 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, significant risks remain inherent in this type of housing. Long-term investments in real estate limit the ability of the Partnership to vary its portfolio in response to changing economic, financial and investment conditions, and such investments are subject to changes in economic circumstances and housing patterns, rising operating costs and vacancies, rent controls and collection difficulties, costs and availability of energy, as well as other factors which normally affect real estate values. In addition, these properties usually are rent restricted and are subject to government agency programs which may or may not require prior consent to transfer ownership. The Partnership acquired the properties by investing as the limited partner in Operating Partnerships which own the properties. As a limited partner, the Partnership's liability for obligations of the Operating Partnerships is limited to its investment. The Partnership made capital contributions to the Operating Partnerships in amounts sufficient to pay the Operating Partnerships' expenses and to reimburse the general partners for their costs incurred in forming the Operating Partnerships, if any, and acquiring the properties. For each acquisition, this typically included a cash down payment (in one or more installments), acceptance of the property's mortgage indebtedness, and execution of a Purchase Money Note in favor of the seller of the property. For a summary of the acquisition financing activities for each property, see the financial information contained under Item 2. 3 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 of previously taken tax credits if its property fails to remain in compliance with the Low-Income Housing Tax Credit Requirements. During 2004, none of the Operating Partnerships have suffered an event of recapture of the Low-Income Housing Tax Credits. 2002 was the final year of credits. Each of the Operating Partnerships receives rental subsidy payments, including payments under Section 8 of Title II of the Housing and Community Development Act of 1974 ("Section 8"). The subsidy agreements expire at various times during and after the 15-year compliance period of the Operating Partnerships. The United States Department of Housing and Urban Development ("HUD") has issued a notice implementing provisions to renew expiring Section 8 contracts as requested by an owner, for an additional one year term at current rent levels. As of May 25, 2005, six of the Operating Partnerships' Section 8 contracts are due to expire in 2005. At the present time, the Partnership cannot reasonably predict legislative initiatives and government budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income and debt structure of any or all Operating Partnerships receiving such subsidy or similar subsidies. Employees The Partnership does not employ any persons. Alternatively, the Partnership reimburses an affiliate for overhead allocation consisting primarily of payroll costs. ITEM 2. PROPERTIES As of March 31, 2005, 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, encumbrances and the government assistance programs benefiting 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. 4
Property Average Name Occupancy Initial Initial Government Location Calendar Purchase Cash Down Mortgage Residual Other Assistance Rental Units Year 2004 Price Payment Assumed Note Notes Program -------------------------- ------------ -------------- ------------- ------------- --------------- -------------- ------------- Century Pacific 92% $5,700,000 $ 400,196 $ 1,661,507 $ 8,129,339 $264,703 Section 236 Housing Partnership V- (CPHP-V)- Jaycee Towers Dayton, Ohio 204 residential units CPHP - XVIII 76% 6,727,500 409,094 2,361,261 8,895,378 556,438 Section 236 Ascension Towers Memphis, TN 197 residential units Coleman Manor 95% 3,990,000 (1) 1,625,000 2,088,887 - 40,000 221(d)(3) Associates Limited Section 8 Partnership Baltimore, MD 50 residential units CPHP - XX 93% 2,200,000 191,000 638,835 3,301,329 - Section 236 Holiday Heights Section 8 Fort Worth, TX 100 residential units CPHP - XXII 98% 4,732,000 593,000 1,064,038 7,387,862 221,500 (2) Section 236 Harriet Tubman Terrace Section 8 Berkeley, CA 91 residential units CPHP - I - Charter 100% 2,146,460 196,000 618,229 1,899,334 - Section 236 House Dothan, AL 100 residential units CPHP - VII - Gulfway 85% 5,700,000 683,000 2,001,225 5,226,658 287,806 Section 236 Terrace Section 8 New Orleans, LA 206 residential units CPHP -IX - Windridge 96% 3,500,000 382,000 2,987,009 990,901 71,294 Section 221(d)(3) Wichita, KS Section 8 136 residential units Flexible Subsidy Loan CPHP - X - Bergen Circle 96% 12,261,000 1,768,000 4,841,673 13,209,816 913,147 Section 236 Springfield, MA Section 8 201 residential units -------------------------------------------------------------------- $46,956,960 $6,247,290 $18,262,664 $49,040,617 $2,354,888 ====================================================================
(1) This amount represents the development cost and not the purchase price. (2) This total includes a flex subsidy loan in the amount of $185,000 and the assumption of a prior residual note in the amount of $200,000. 5 ITEM 3. LEGAL PROCEEDINGS Operating Partnerships - Ascension Towers ----------------------------------------- In May 2005, HUD initiated foreclosure proceedings against an Operating Partnership, Ascension Towers, in which the Partnership has an equity investment. The proceedings resulted from the Operating Partnership defaulting on its HUD-insured non-recourse mortgage in March 2005. As a result, if HUD is successful in the foreclosure proceedings, the Operating Partnership would transfer the real property it owns to HUD. Management of this Operating Partnership is attempting to sell the property before foreclosure. At this time, the outcome of the proceeding cannot be predicted. Other ----- There are no pending legal proceedings against the Partnership or any other Operating Partnership in which the Partnership has an investment as of the date of this report. 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, 2005. PART II ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS There is 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 September 12, 2005 was approximately 2,092, holding 22,315 units. As of September 12, 2005 there were no cash distributions. ITEM 6. SELECTED FINANCIAL DATA The selected financial data set forth below, insofar as they relate to each of the three years ended March 31, 2005, and as of March 31, 2005 and 2004, are derived from, and are qualified by reference to, our audited financial statements included herein and should be read in conjunction with those financial statements and the notes thereto. The selected financial data as of March 31, 2003, 2002 and 2001 and for the years ended March 31, 2002 and 2001 are derived from audited financial statements not included herein. Results for past periods are not necessarily indicative of results that may be expected for future periods. 6
YEAR ENDED MARCH 31, --------------------------------------------------------------------- OPERATIONS 2005 2004 2003 2002 2001 --------- --------- --------- --------- --------- Revenues $ -- $ -- $ -- $ 400 $ 800 Operating Expenses (60,000) (60,000) (65,623) (80,379) (69,421) Equity in Net Losses of Operating Partnerships -- -- -- -- (15,633) --------- --------- --------- --------- --------- Net Loss $ (60,000) $ (60,000) $ (65,623) $ (79,979) $ (84,254) ========= ========= ========= ========= ========= Net Loss per Unit of Limited Partnership Interest $ (2.69) $ (2.69) $ (2.94) $ (4) $ (4) ========= ========= ========= ========= =========
MARCH 31, --------------------------------------------------------------------- 2005 2004 2003 2002 2001 --------- --------- --------- --------- --------- FINANCIAL POSITION Total Assets $ 4,934 $ 4,934 $ 4,934 $ 5,503 $ 9,619 ========= ========= ========= ========= =========
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS Liquidity and Capital Resources 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, 2005, the Partnership's portfolio consists of 9 properties. The properties are located in 9 states and contain 1,285 residential units. The average occupancy level for all properties at December 31, 2004 was approximately 92% 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 15. The government restricts rental rate increases. A substantial amount of the revenue generated by this property comes from rental subsidy payments made by federal or state housing agencies. These features, which are characteristic of all low-income housing properties, limit the pool of potential buyers for these real estate assets. As a limited partner of the Operating Partnership, the Partnership does not control property disposition decisions. At the present time, management is aware of intentions of the general partners to sell the investment properties in the near future. 7 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 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. Allocated administrative expenses paid or accrued to affiliates and the General Partners represent reimbursement of the actual cost of goods and materials used for or by the Partnership, salaries, related payroll costs and other administrative items incurred or allocated, and direct expenses incurred in rendering legal, accounting/bookkeeping, computer, printing and public relations services. Items excluded from the overhead allocation include overhead expenses of the General Partners, including rent and salaries of employees not specifically performing the services described above. Unpaid allocated administrative expenses and partnership management fees, an annual amount up to .5% of invested assets, will accrue for payment in future operating years. Management believes the possibility exists that one or several Operating Partnerships may require additional capital, in addition to that previously contributed by the Partnership, to sustain operations. In such case, the source of the required capital needs may be from (i) limited reserves from the Partnership (which may include distributions received from the Operating Partnerships that would otherwise be available for distribution to partners), (ii) debt financing at the Operating Partnership level (which may not be available), or (iii) additional equity contributions from the general partner of the Operating Partnerships (which may not be available). There can be no assurance that any of these sources would be readily available to provide for possible additional capital requirements which may be necessary to sustain the operations of the Operating Partnerships. However, the Partnership is under no obligation to fund operating deficits of the Operating Partnerships in the form of additional contributions or loans. Due to the uncertainty of the continuation of the Section 8 program, management has been forced to consider several options to prepare for the possible lack of subsidy income to the Operating Partnerships. The loss of subsidy income to the Operating Partnerships will make it more difficult for the Operating Partnerships to provide sufficient cash distributions to the Partnership. Management has identified the courses of action they will take as a result of the potential changes to the Section 8 program. The plan that the Operating Partnerships follow will depend on the federal government's decision to implement the decentralization or elimination of HUD. HUD's proposed Mark-to-Market approach would create an atmosphere where the Projects would have to compete for residents in the conventional market. The following alternatives are listed as plans of action that management plans to pursue in response the HUD's actions: 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. 8 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. Contractual Obligations The Operating Partnerships' contractual cash obligations and other commercial commitments at March 31, 2005 are summarized in the following table:
LESS THAN AFTER TOTAL 1 YEAR 1-3 YEARS 4-5 YEARS 5 YEARS ------------------ ---------------- ---------------- ---------------- ------------------ Mortgage Payable $18,262,664 $ 908,256 $1,990,011 $2,295,550 $13,068,847 ================== ================ ================ ================ ==================
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 2005 Compared to 2004 For the fiscal year ended March 31, 2005, the Partnership recorded a $60,000 net loss, consistent with the prior fiscal year. Overhead expenses remained constant. In accordance with the equity method of accounting for limited partnership 9 interests, the Partnership does not recognize losses from investment properties when losses exceed the Partnership's equity method basis in these properties. All of the Partnership's investments have an equity method basis of zero at March 31, 2005. Combined rental revenue of the Operating Partnerships decreased by approximately $736,000 during the calendar year, due primarily to the sales of four properties during the year. Of the nine remaining properties, combined rental revenues increased approximately 2.2% from 2003 to 2004. The average occupancy level, in total, remained relatively constant in the Operating Partnerships. The combined total expenses of the Operating Partnerships decreased by approximately $1,029,000 in the current year again due primarily to the sales of four properties during 2004. However, expenses of the nine remaining properties increased approximately 5.5% due primarily to increases in interest expense, utilities, and repairs and maintenance. The majority of the properties owned by the Operating Partnerships are in a position of functional obsolescence and need substantial rehabilitation. The Operating Partnerships do not have the funds to address the growing deferred maintenance. Infusion of capital is necessary to keep the projects viable and maintain them as decent, safe and quality housing. Refinancing is not an option due to the indebtedness on the properties surpassing their fair market value. As a result of the above, in 2004, the Operating Partnerships sold the following properties:
BASIS OF CANCELLATION OPERATING PROJECT DATE SELLING ASSET GAIN/ OF DEBT PARTNERSHIP NAME LOCATION SOLD PRICE SOLD (LOSS) INCOME ------------------------ -------------- ------------- ------------ ---------------- --------------- ---------------- -------------- Century Pacific Housing Sunset Denver, Partnership II Park CO 08/30/04 $8,300,000 $4,301,705 $3,998,295 $2,943,232 Century Pacific Virginia Housing Atlantis Beach, Partnership XIII Apartments VA 06/30/04 $8,400,000 $4,602,331 $3,797,669 $2,024,100 Century Pacific Oklahoma Housing Rockwell City, Partnership XVI Villa OK 12/23/04 $1,100,000 $1,139,668 $ (39,668) $1,448,406 Century Pacific Oklahoma Housing London City, Partnership XVII Square OK 12/23/04 $3,900,000 $2,780,690 $1,119,310 $2,765,936
2004 Compared to 2003 For the fiscal year ended March 31, 2004, the Partnership recorded a net loss of approximately $60,000, as compared to a net loss of approximately $66,000 for the prior fiscal year. The decrease in net loss is the result of a decrease in the Partnership's general and administrative expenses. In accordance with the equity method of accounting for limited partnership interests, the Partnership does not recognize losses from investment properties when losses exceed the Partnership's equity method basis in these properties. All of the Partnership's investments have an equity method basis of zero at March 31, 2004. 10 Combined rental revenue of the Operating Partnerships decreased by approximately $5,468,000 during the calendar year. The average occupancy level, in total, remained relatively constant in the Operating Partnerships. The combined total expenses decreased by approximately $6,900,000 in the current year primarily due to decreases in utilities, repairs and maintenance, depreciation and amortization, management fees and other operating expenses. The majority of the properties owned by the Operating Partnerships are in a position of functional obsolescence and need substantial rehabilitation. The Operating Partnerships do not have the funds to address the growing deferred maintenance. Infusion of capital is necessary to keep the projects viable and maintain them as decent, safe and quality housing. Refinancing is not an option due to the indebtedness on the properties surpassing their fair market value. As a result of the above, in 2003, the Operating Partnerships sold the following property:
BASIS OF CANCELLATION OPERATING PROJECT DATE SELLING ASSET OF DEBT PARTNERSHIP NAME LOCATION SOLD PRICE SOLD GAIN INCOME ------------------------ --------------- ------------ ------------- ------------- ------------- -------------- -------------- Century Pacific Housing Partnership Sunset Newton VIII Townhouses KS 12/19/03 $728,008 $656,079 $71,929 $1,145,216
This property was sold at fair market value, which was less than the existing debt on the property. Inflation Inflation is not expected to have a material adverse impact on the Partnership's operations during its period of ownership of the Properties. Other The Partnership's operations are not subject to any significant seasonal fluctuations. The Partnership believes it is in compliance with environmental regulations and does not anticipate material effects of continued compliance. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements together with the report of the independent auditors thereon are incorporated by reference from the Registrants Financial Statements on the pages indicated in ITEM 15. ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On July 28, 2004, the prior auditors, Rubin Brown, Gornstein & Co., LLP ("Rubin") were dismissed as auditors for the Partnership. The decision to change accountants was approved by the general partners of the Partnership. Rubin's report on the Partnership's financial statements for the year ended March 31, 2003 contained a modification as to uncertainty of the Partnership to 11 continue as a going concern. Rubin's report on the above mentioned financial statements contained no adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles, other than those previously discussed. Effective July 28, 2004, the Partnership engaged Asher & Company, Ltd. (Asher) to perform the audit of the Partnership's financial statements as of and for the years ended March 31, 2005 and March 31, 2004. There are no known disagreements on any matter of accounting principles or practices or financial statement disclosure with current or predecessor auditors. ITEM 9a. CONTROLS AND PROCEDURES As of the end of the period reported in this report, an evaluation was carried out, under the supervision of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, pursuant to Rule 13a-15 of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, in all material respects, with respect to the recording, processing, summarizing and reporting of information required to be disclosed by us in the reports that we file or submit under the Exchange Act. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation described above. ITEM 9b. OTHER INFORMATION None. 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 Officer of CPCC: IRWIN JAY DEUTCH Irwin Jay Deutch, age 64, 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 12 209 properties, including 196 multifamily properties with 33,700 apartment units, 10 commercial projects, and 3 hotel properties. Fifty-eight of the 62 private limited partnerships have invested in affordable housing. In his capacity as general partner and officer of CPRC, he oversees the management of these partnerships and assumes overall responsibility for the development, direction, and operation of all affiliated CPRC companies. Mr. Deutch is recognized as an expert in the field of affordable housing and frequently addresses professional groups on topics of real estate investment, syndication, tax law, and the Low-Income Housing Tax Credit program. Mr. Deutch received a B.B.A. with distinction from the University of Michigan School of Business Administration in 1962 and a Juris Doctor degree with honors from the University of Michigan Law School in 1965. He is a member of the Order of the Coif. Mr. Deutch served in the Honors Program in the Office of the Chief Counsel of the Internal Revenue Service from 1965 to 1967, where he was assigned to the Interpretative Division in Washington, D.C. He attended Georgetown Law Center and received his Master of Laws degree in taxation in 1967. Mr. Deutch is a member of the State Bars of Michigan and California, as well as the American, Federal, Los Angeles, and Beverly Hills Bar Associations. KEY OFFICERS OF CPCC AND AFFILIATES JAMES V. BLEILER Mr. Bleiler is chief financial officer of Century Pacific Realty Corporation. He previously was a Senior Auditor for Arthur Anderson & Company, Controller for Atlantic Aviation Corporation and Assistant Controller for Provident National Bank. He has over 37 years of diversified experience in real estate accounting and commercial banking. Mr. Bleiler holds a Bachelor of Science degree in Accounting from Widener University, and is a Certified Public Accountant. 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, 2005, 2004 and 2003, CPCC, a general partner of the Partnership, and CPRC, a general partner of the Operating Partnerships, earned $199,607, $229,170, and $497,467, respectively, in compensation from the Operating Partnerships and $60,000 was accrued for each fiscal year for the reimbursement for overhead allocation from Century Pacific Equity Corporation (CPEC). During the fiscal year 2005, the general partners received no payments from the Operating Partnerships. ITEM 12. PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT No partner in the Partnership owns more than 5% of the total number of partnership interests outstanding. Irwin J. Deutch, the managing general partner, holds a one-half percent general partnership interest and C.P. Westwood Associates holds a one percent limited partnership interest. 13 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Irwin J. Deutch is the managing general partner of the Partnership, and CPCC is also a general partner. Irwin J. Deutch is the sole Director and President of CPCC, and the stock of CPCC is solely owned by the Deutch Family Trust. Mr. Deutch is also the President, sole Director and the Deutch Family Trust is the sole stockholder of Century Pacific Realty Corporation (CPRC), the general partner of the Operating Partnerships that own the properties in which the Partnership has invested. The general partners were allocated their proportionate share of the Partnership's tax losses and allocated tax credits. CPCC and CPRC accrued certain fees for their services in managing and advising the Partnership and its business. Century Pacific Equity Corporation (CPEC), an affiliate, provides all the services and materials necessary for the operation of the Partnership and is reimbursed for actual costs. These transactions are more particularly set forth in the financial statements found under ITEM 15. Four of the properties were sold out of the Operating Partnerships in 2002 through a two-step process which involved a sale to a related partnership, and then a sale of the partnership interests to a third party. The four properties are Castle Gardens, Continental Terrace, Kings Row and Yale Village (the "Texas Properties"). Specifically, each of the Texas Properties was sold to Century Pacific-formed partnerships ("interim buyers") which held title to those properties as of March 31, 2003. Subsequently, the partnership interests in the newly formed partnerships were sold to a third-party buyer in 2004. The sales prices of these properties were established based upon an independent market valuation performed by the accounting firm of Novogradac & Company. In addition, as of March 31, 2005, the third-party buyer had entered into a conditional contract to acquire CPEC, CPCC, CPRC, and their affiliated companies and partnerships from Deutch's family trust. As of March 31, 2005, these acquisitions had not yet occurred, but are anticipated to occur in 2006. ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES a. AUDIT FEES. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Partnership's annual financial statements and review of the financial statements included in the Partnership's Forms 10-Q, or services that are normally provided by the accountant in connection with the statutory and regulatory filings or engagements for such two fiscal years, amounted to $12,000 in 2005 and $12,000 in 2004. b. AUDIT RELATED FEES. There were no fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for assurance and related services by the principal accountant that were reasonably related to the performance of the audit or review of the Partnership's financial statements. c. TAX FEES. There were no fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning services. d. ALL OTHER FEES. There were no fees billed in each of the last two fiscal years for products and services provided by the principal accountant other than the services reported in the three preceding paragraphs. 14 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Exhibits and Financial Statement Schedules (1) Financial Statements: F-1 Report of Independent Registered Public Accounting Firm as of March 31, 2005 and 2004 F-2 Report of Independent Registered Public Accounting Firm as of March 31, 2003 F-3 Balance Sheets as of March 31, 2005 and 2004 F-4 Statements of Operations for the Years Ended March 31, 2005, 2004 and 2003 F-5 Statements of Partners' Deficit for the Years Ended March 31, 2005, 2004 and 2003 F-6 Statements of Cash Flows for the Years Ended March 31, 2005, 2004 and 2003 F-7 Notes to Financial Statements Financial Statement Schedules: F-15 Schedule III - Real Estate and Accumulated Depreciation of Operating Partnerships in which CPHF-I has Limited Partnership interests F-17 Notes to Schedule III - Real Estate and Accumulated Depreciation of Operating Partnerships in which CPHF-I has Limited Partnership Interests F-19 Schedule IV - Mortgage Loans on Real Estate of Operating Partnerships in which CPHF-I has Limited Partnership Interests F-21 Notes to Schedule IV - Mortgage Loans on Real Estate of Operating Partnerships in which CPHF-I has Limited Partnership Interests (b) Reports on Form 8-K Not applicable (c) Exhibits 31.1 Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 31.2 Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* (d) Financial Statement Schedule Not applicable * Filed herewith 15 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Partners Century Pacific Housing Fund - I We have audited the accompanying balance sheets of Century Pacific Housing Fund - I as of March 31, 2005 and 2004, and the related statements of operations, partners' deficit and cash flows for the years 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 audits in accordance with the standards of the Public Company Accounting Oversight Board (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 Century Pacific Housing Fund - I as of March 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 3 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. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed under Item 15 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not a part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ ASHER & COMPANY, LTD. Philadelphia, PA May 24, 2005 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Partners Century Pacific Housing Fund - I We have audited the accompanying balance sheet of Century Pacific Housing Fund - I as of March 31, 2003, and the related statements of operations, partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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, 2003, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. 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. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedules listed under Item 15 are presented for purposes of complying with the Securities and Exchange Commission's rules and are not a part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ RUBIN, BROWN, GORNSTEIN & CO. LLP St. Louis, Missouri June 20, 2003 F-2 CENTURY PACIFIC HOUSING FUND-I BALANCE SHEETS ASSETS
MARCH 31, -------------------------- 2005 2004 ----------- ----------- Cash $ -- $ -- Receivable from related parties (Note 4) 4,934 4,934 Investments in Operating Partnerships (Notes 1 and 5) -- -- ----------- ----------- TOTAL ASSETS $ 4,934 $ 4,934 =========== =========== LIABILITIES AND PARTNERS' DEFICIT Accounts payable and accrued expenses $ 10,800 $ 10,800 Advance from affiliate (Note 4) 62,455 62,455 Payable to related parties (Note 4) 1,264,072 1,204,072 ----------- ----------- TOTAL LIABILITIES 1,337,327 1,277,327 ----------- ----------- COMMITMENTS AND CONTINGENCIES (NOTE 6) -- -- ----------- ----------- PARTNERS' DEFICIT General partners (405,370) (404,170) Limited partners, $1,000 stated value per unit, 50,000 units authorized, 22,315 units issued and outstanding (Note 2) (927,023) (868,223) ----------- ----------- TOTAL PARTNERS' DEFICIT (1,332,393) (1,272,393) ----------- ----------- $ 4,934 $ 4,934 =========== ===========
F-3 See accompanying notes to financial statements. CENTURY PACIFIC HOUSING FUND-I STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, -------------------------------------------- 2005 2004 2003 ------------ ------------ ------------ REVENUES Transfer fees $ -- $ -- $ 400 ------------ ------------ ------------ EXPENSES Allocated overhead expenses - affiliate (Note 4) 60,000 60,000 60,000 Other general and administrative -- -- 5,623 ------------ ------------ ------------ TOTAL EXPENSES 60,000 60,000 65,623 ------------ ------------ ------------ LOSS BEFORE EQUITY IN NET LOSSES OF OPERATING PARTNERSHIPS (60,000) (60,000) (65,623) EQUITY IN NET LOSSES OF OPERATING PARTNERSHIPS (NOTE 5) -- -- -- ------------ ------------ ------------ NET LOSS $ (60,000) $ (60,000) $ (65,623) ============ ============ ============ ALLOCATION OF NET LOSS General partners $ (1,200) $ (1,200) $ (1,312) Limited partners (58,800) (58,800) (64,311) ------------ ------------ ------------ $ (60,000) $ (60,000) $ (65,623) ============ ============ ============ NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST (NOTE 1) $ (2.69) $ (2.69) $ (2.94) ============ ============ ============ AVERAGE NUMBER OF OUTSTANDING UNITS 22,315 22,315 22,315 ============ ============ ============
F-4 See accompanying notes to financial statements. CENTURY PACIFIC HOUSING FUND-I STATEMENTS OF PARTNERS' DEFICIT FOR THE YEARS ENDED MARCH 31, 2005, 2004, AND 2003
GENERAL LIMITED PARTNERS PARTNERS TOTAL ------------ ------------ ------------ PARTNERS' DEFICIT - APRIL 1, 2002 $ (401,658) $ (745,112) $ (1,146,770) NET LOSS (1,312) (64,311) (65,623) ------------ ------------ ------------ PARTNERS' EQUITY DEFICIT - MARCH 31, 2003 (402,970) (809,423) (1,212,393) NET LOSS (1,200) (58,800) (60,000) ------------ ------------ ------------ PARTNERS' EQUITY DEFICIT - MARCH 31, 2004 (404,170) (868,223) (1,272,393) NET LOSS (1,200) (58,800) (60,000) ------------ ------------ ------------ PARTNERS' EQUITY DEFICIT - MARCH 31, 2005 $ (405,370) $ (927,023) $ (1,332,393) ============ ============ ============ PERCENTAGE INTEREST - MARCH 31, 2005 2% 98% 100% ============ ============ ============
F-5 See accompanying notes to financial statements. CENTURY PACIFIC HOUSING FUND-I STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2005 2004 2003 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (60,000) $ (60,000) $ (65,623) Adjustments to reconcile net loss to net cash used in operating activities: Increase (decrease) in accounts payable and accrued expenses -- -- 1,515 Increase in payable to related parties 60,000 60,000 63,539 ------------ ------------ ------------ NET CASH USED IN OPERATING ACTIVITIES -- -- (569) ------------ ------------ ------------ NET DECREASE IN CASH -- -- (569) CASH - BEGINNING OF PERIOD -- -- 569 ------------ ------------ ------------ CASH - END OF PERIOD $ -- $ -- $ -- ============ ============ ============
F-6 See accompanying notes to financial statements. CENTURY PACIFIC HOUSING FUND-I NOTES TO FINANCIAL STATEMENTS MARCH 31, 2005, 2004 AND 2003 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 accounting principles generally accepted in the United States of America. The Partnership fiscal year end is 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, has a calendar year for income tax purposes. ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. SYNDICATION COSTS Public offering costs have been recorded as a direct reduction to the capital accounts of the Limited Partners. F-7 CENTURY PACIFIC HOUSING FUND-I Notes to Financial Statements (Continued) NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST Net loss per unit of limited partnership interest is calculated based upon the weighted average number of units of limited partnership interest (units) outstanding. 2. OPERATIONS Century Pacific Housing Fund-I, a California limited partnership, (the Partnership), was formed on October 6, 1986 for the purpose of raising capital by offering and selling limited partnership interests and then acquiring limited partnership interests in 21 limited partnerships (the Operating Partnerships), which acquired and operated 21 multi-family residential apartment properties (the properties). As of March 31, 2005, the Operating Partnerships still own 9 of these properties. The general partners of the Partnership are Century Pacific Capital Corporation, a California corporation (CPCC), and Irwin Jay Deutch, an individual (collectively, the general partners). The general partners and affiliates of the general partners (the general partners and affiliates) have interests in the Partnership and receive compensation from the Partnership and the Operating Partnerships (Note 4). The Properties qualify for the Low-Income Housing Tax Credit established by Section 42 of the Tax Reform Act of 1986 (the Low-Income Housing Tax Credit) and one property qualifies for Historic Rehabilitation Tax Credits (collectively the Tax Credits). These properties are leveraged low-income multi-family residential complexes and receive one or more forms of assistance from federal, state or local government agencies (the Government Agencies). In July 1987, the Partnership began raising capital from sales of limited partnership interests, at $1,000 per unit, to limited partners. The Partnership authorized the issuance of a maximum of 50,000 partnership units of which 22,315 were subscribed and issued. The limited partnership interest offering closed in April 1988. The Partnership has acquired limited partnership interests ranging from 97% to 99% in the Operating Partnerships, which have invested in rental property. F-8 CENTURY PACIFIC HOUSING FUND-I Notes to Financial Statements (Continued) 3. GOING CONCERN The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Partnership as a going concern. The Partnership's Operating Partnerships have not achieved the operating results required to provide the Partnership with sufficient cash distributions to fund the Partnership's administrative costs. Additionally, as of March 31, 2005, the Partnership has incurred allocated losses from all of its Operating Partnerships to the extent of the Partnership's cash contributions. As a result of the foregoing, the Partnership is dependent upon the general partners and affiliates for continued financial support. The auditors' reports on five of the Operating Partnerships' financial statements contained an explanatory paragraph relating to a going concern issue, four of which concerned the maturity of purchase notes for which the Operating Partnerships will not be able to satisfy the obligations. The fifth going concern issue related to substantial operating losses suffered by the Operating Partnership. Management maintains that the general partners and affiliates, though not required to do so, will continue to fund current 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 either generate sufficient cash distributions to the Partnership to cover such expenses or when the Operating Partnerships are sold. At the present time, the general partners are making a conscious effort to sell these properties. The financial statements do not 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, whose partners are Irwin Jay Deutch and key employees of CPCC. Century Pacific Placement Corporation (CPPC), an affiliate of the general partners, served as the broker-dealer-manager for sales of the limited partnership interests in the Partnership. Century Pacific Realty Corporation (CPRC), an affiliate of CPCC, is a general partner in each of the Operating Partnerships. The general partners have an aggregate one percent interest in the Partnership, as does the original limited partner. CPRC has a one percent interest in each of the Operating Partnerships, except for one Operating Partnership in which it has a one-half percent interest. F-9 CENTURY PACIFIC HOUSING FUND-I Notes to Financial Statements (Continued) The general partners and affiliates receive compensation and reimbursement of expenses from the Partnership, as set forth in the limited partnership agreement, for their services in managing the Partnership and its business. The general partners and affiliates also receive compensation and reimbursement of expenses from the Operating Partnerships. This compensation and reimbursement includes services provided to the Partnership during its offering stage, acquisition stage, operational stage, and termination of refinancing stage. The general partners and affiliates earned the following fees for services provided to the Partnership and were entitled to reimbursement for costs incurred by the general partners and affiliates on behalf of the Partnership and the Operating Partnerships for the years ended March 31, 2005, 2004 and 2003 as follows:
2005 2004 2003 -------------- ------------- -------------- Reimbursement for overhead allocated from Century Pacific Equity Corporation (CPEC) $ 60,000 $ 60,000 $ 60,000 -------------- ------------- -------------- Supervisory management fee (CPCC and CPRC) $ 47,903 $ 65,178 $ 142,220 Partnership management fee (CPCC and CPRC) 151,704 163,992 355,247 -------------- ------------- -------------- 199,607 229,170 497,467 -------------- ------------- -------------- $ 259,607 $ 289,170 $ 557,467 ============== ============= ==============
At March 31, 2005 and 2004, payable to related parties totaling $1,264,072 and $1,204,072, respectively, consists of fees and certain general and administrative costs accrued as an unsecured non-interest bearing payable by the Partnership to the general partners and affiliates. Such fees and allocated costs have been deferred until the Partnership has sufficient cash to pay them. Receivable from related parties of $4,934 at March 31, 2005 and 2004 represents unsecured cash advances to several of the Operating Partnerships. At March 31, 2005 and 2004, CPRC was owed $62,455 for unsecured 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, 2005 and 2004, the Partnership had no outstanding advances due to the general partners. F-10 CENTURY PACIFIC HOUSING FUND-I Notes to Financial Statements (Continued) 5. INVESTMENTS IN LIMITED PARTNERSHIPS At March 31, 2005, 2004, and 2003 the Partnership owned limited partnership interests in 9, 13, and 14 Operating Partnerships, respectively. At March 31, 2005 and 2004, the Operating Partnerships had investments in 9 and 13 multi-family rental properties, respectively. The Partnership's equity in net operating losses in these Operating Partnerships has exceeded the investment balance. Consequently, the investment balances have been reduced to zero in accordance with the equity method of accounting. Summarized combined balance sheets as of December 31, 2004 and 2003 and statements of operations for the three years ended December 31, 2004 of the aforementioned Operating Partnerships are as follows: CENTURY PACIFIC HOUSING FUND I COMBINED BALANCE SHEETS ASSETS
2004 2003 ------------- ------------- Cash $ 477,773 $ 1,214,875 Reserve for replacements 1,449,989 2,401,190 Land and buildings 21,282,002 31,995,190 Other assets 1,293,298 2,301,586 ------------ ------------ $24,503,062 $37,912,841 ============ ============ LIABILITIES AND PARTNERS' DEFICIT Notes payable $69,658,169 $95,439,666 Other liabilities 3,330,287 6,119,414 ------------ ------------ 72,988,456 101,559,080 Partners' deficit (48,485,394) (63,646,239) ------------ ------------ $24,503,062 $37,912,841 ============ ============
F-11 CENTURY PACIFIC HOUSING FUND-I Notes to Financial Statements (Continued) COMBINED STATEMENTS OF OPERATIONS
2004 2003 2002 -------------- ------------- ------------- REVENUES Rental income 10,235,954 10,971,490 16,439,759 Other income 306,092 512,719 505,106 ------------ ------------ ------------ TOTAL REVENUES 10,542,046 11,484,209 16,944,865 EXPENSES Utilities 1,711,524 1,810,426 2,589,173 Repairs and maintenance 2,616,958 3,292,371 4,088,639 Management fees 791,391 862,216 1,754,513 Other operating expense 4,780,676 3,956,008 6,334,058 Interest 4,829,705 5,384,436 6,488,810 Depreciation and amortization 2,269,079 2,722,856 3,656,439 ------------ ------------ ------------ TOTAL EXPENSES 16,999,333 18,028,313 24,911,632 ------------ ------------ ------------ OTHER INCOME Cancellation of debt income 10,328,450 1,145,216 18,416,317 Net gain on sales of assets 8,875,606 71,929 12,366,376 ------------ ------------ ------------ 19,204,056 1,217,145 30,782,693 ------------ ------------ ------------ NET INCOME/(LOSS) 12,746,769 (5,326,959) 22,815,926 ============ ============ ============ ALLOCATION OF INCOME/(LOSS) Century Pacific Housing Fund - I $12,491,834 $(5,220,420) $22,359,607 General partners and other limited partners 254,935 (106,539) 456,319 ------------ ------------ ------------ $12,746,769 $(5,326,959) $22,815,926 ============ ============ ============
In 2004, the Operating Partnerships sold the following properties:
CANCELLATION OPERATING PROJECT DATE SELLING BASIS OF GAIN/ OF DEBT PARTNERSHIP NAME LOCATION SOLD PRICE ASSET SOLD (LOSS) INCOME ------------------------ ------------- ----------- ----------- -------------- --------------- -------------- -------------- Century Pacific Housing Sunset Denver, Partnership II Park CO 08/30/04 $8,300,000 $4,301,705 $3,998,295 $2,943,232 Century Pacific Virginia Housing Part- Atlantis Beach, nership XIII Apartments VA 06/30/04 8,400,000 $4,602,331 $3,797,669 $2,024,100 Century Pacific Oklahoma Housing Rockwell City, Partnership XVI Villa OK 12/23/04 $1,100,000 $1,139,668 $(39,668) $1,448,406 Century Pacific Oklahoma Housing London City, Partnership XVII Square OK 12/23/04 $3,900,000 $2,780,690 $1,119,310 $2,765,936
F-12 CENTURY PACIFIC HOUSING FUND-I Notes to Financial Statements (Continued) In 2003, the Operating Partnerships sold the following property:
CANCELLATION OPERATING PROJECT DATE SELLING BASIS OF OF DEBT PARTNERSHIP NAME LOCATION SOLD PRICE ASSET SOLD GAIN INCOME ------------------------- -------------- ------------- ------------ -------------- --------------- ------------- --------------- Century Pacific Housing Partnership Sunset Newton VIII Townhouses KS 12/19/03 $728,008 $656,079 $71,929 $1,145,216
This property was sold at its fair market value, which was less than the existing debt on the property. 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 2005, where requested by an owner, for an additional one-year term at current rent levels. As of March 31, 2005, six of the Operating Partnerships' Section 8 contracts will expire during 2005. 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. 7. FAIR VALUE OF FINANCIAL INSTRUMENTS It is not possible to estimate the fair value of related party receivables, advance from affiliate or payable to related parties since such amounts result from related party transactions, the terms of which may not be available from other sources. F-13 CENTURY PACIFIC HOUSING FUND-I Notes to Financial Statements (Continued) 8. QUARTERLY FINANCIAL DATA (UNAUDITED) The Partnership's unaudited quarterly financial information is as follows:
Net Loss Per Unit of Quarter Ended Net Loss Limited Partnership Interest ------------- -------- ---------------------------- June 30, 2004 $(15,000) $(0.67) September 30, 2004 $(15,000) $(0.67) December 30, 2004 $(15,000) $(0.67) March 31, 2005 $(15,000) $(0.67) Quarter Ended ------------- June 30, 2003 $(15,000) $(0.67) September 30, 2003 $(15,000) $(0.67) December 30, 2003 $(15,000) $(0.67) March 31, 2004 $(15,000) $(0.67)
9. SUBSEQUENT EVENTS In May 2005, an Operating Partnership, Harriet Tubman, located in Berkeley, California sold the property for $6,650,937 for a gain of $4,672,293. There were no cash proceeds resulting from this sale. In March 2005, an Operating Partnership, Ascension Towers, located in Memphis, Tennessee, defaulted on its HUD-insured non-recourse mortgage. In May 2005, this mortgage was assigned to HUD who intends to foreclose upon the property. Management is actively pursuing the sale of the property in early 2006. F-14 Schedule III Page 1 Of 2 CENTURY PACIFIC HOUSING FUND-I REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2004
INITIAL COST TO COST CAPITALIZED (DISPOSED OF) OPERATING PARTNERSHIP SUBSEQUENT TO ACQUISITION ------------------------------- ------------------------------ DESCRIPTION ENCUMBRANCES BUILDINGS AND BUILDINGS AND (1) (2) LAND IMPROVEMENTS LAND IMPROVEMENTS ------------ ------------ ----------- --------------- --------- ---------------- Century Pacific Housing Partnership I (CPHP-I) - Charter House Dothan, Alabama $ 2,517,563 $ 179,578 $ 1,918,124 $ - $ 240,060 CPHP-VII Gulfway Terrace New Orleans, LA 7,515,689 270,343 5,429,657 237 424,680 CPHP-IX Windridge Wichita, Kansas 4,049,204 169,514 3,330,486 146 946,254 CPHP-X Bergen Circle Springfield, MA 18,964,636 901,206 11,359,794 - 1,826,857 CPHP-V Jaycee Towers Dayton, Ohio 10,055,549 599,719 5,096,481 - 493,926 CPHP-XVIII Ascension Towers Memphis, Tennessee 11,813,077 176,341 6,551,159 - 1,091,778 Coleman Manor Associates Limited Partnership Coleman Manor Baltimore, MD 2,128,887 61,281 3,384,621 - 216,598 CPHP-XX Holiday Heights Fort Worth, TX 3,940,164 202,445 1,942,864 43,132 295,207 CPHP-XXII Harriet Tubman Berkeley, CA 8,673,400 361,275 3,807,339 5,097 499,491 ------------ ---------- ------------ -------- ----------- $69,658,169 $2,921,702 $42,820,525 $ 48,612 $ 6,034,851 ============ ========== ============ ======== ===========
F-15 Schedule III Page 2 Of 2 CENTURY PACIFIC HOUSING FUND-I REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS, continued DECEMBER 31, 2004
LIFE ON WHICH DEPRECIATION IN LATEST DATE INCOME GROSS AMOUNT AT WHICH ACCUMULATED OF DATE STATEMENT CARRIED AT CLOSE OF YEAR DEPRECIATION CNSTN ACQUIRED IS COMPUTED ------------------------------------------------------------------ --------- --------- ---------------- DESCRIPTION BUILDINGS AND BUILDINGS AND (1) LAND IMPROVEMENTS TOTAL IMPROVEMENTS ------------ ----------- -------------- ---------- --------------- Century Pacific Housing Partnership I (CPHP-I) - Charter House Dothan, Alabama $ 179,578 $ 2,158,184 $2,337,762 1,357,925 1972 Dec-87 27.5 YEARS CPHP-VII Gulfway Terrace New Orleans, LA 270,580 5,854,337 6,124,917 3,948,493 1970 Dec-87 10-40 YEARS CPHP-IX Windridge Wichita, Kansas 169,660 4,276,740 4,446,400 2,770,472 1969 Dec-87 10-40 YEARS CPHP-X Bergen Circle Springfield, MA 901,206 13,186,651 14,087,857 8,229,472 1976 Dec-87 10-40 YEARS CPHP-V Jaycee Towers Dayton, Ohio 599,719 5,590,407 6,190,126 3,324,822 1970 Dec-88 27.5 YEARS CPHP-XVIII Ascension Towers Memphis, Tennessee 176,341 7,642,937 7,819,278 4,635,567 1979 Aug-88 27.5 YEARS Coleman Manor Associates Limited Partnership Coleman Manor Baltimore, MD 61,281 3,601,219 3,662,500 2,116,502 1903 Aug-88 27.5 YEARS CPHP-XX Holiday Heights Fort Worth, TX 245,577 2,238,071 2,483,648 1,537,277 1972 Oct-88 32 YEARS CPHP-XXII Harriet Tubman Berkeley, CA 366,372 4,306,830 4,673,202 2,623,158 1975 Aug-88 27.5 YEARS ---------- ----------- ----------- ----------- $2,970,314 $48,855,376 $51,825,690 $30,543,688 ========== =========== =========== ===========
F-16 CENTURY PACIFIC HOUSING FUND-I NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2004 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
Mortgage Residual Purchase Other Notes Note Note Notes Total ------------------------------------------------------------------------------ CPHP-I Charter House $ 618,229 $ 1,899,334 $ - $ - $ 2,517,563 CPHP-V Jaycee Towers 1,661,507 8,129,339 - 264,703 10,055,549 CPHP-VII Gulfway Terrace 2,001,225 5,226,658 - 287,806 7,515,689 CPHP-IX Windridge 2,987,009 990,901 - 71,294 4,049,204 CPHP-X Bergen Circle 4,841,673 13,209,816 - 913,147 18,964,636 CPHP-XVIII Ascension Towers 2,361,261 8,895,378 - 556,438 11,813,077 Coleman Manor Associates LP -Coleman Manor 2,088,887 - - 40,000 2,128,887 CPHP-XX Holiday Heights 638,835 3,301,329 - - 3,940,164 CPHP-XXII Harriet Tubman Terrace 1,064,038 7,387,862 221,500 - 8,673,400 ------------------------------------------------------------------------------ $18,262,664 $49,040,617 $221,500 $2,133,388 $69,658,169 ==============================================================================
F-17 CENTURY PACIFIC HOUSING FUND-I NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2004 NOTE 3 - RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION
ACCUMULATED COST DEPRECIATION -------------- -------------- Balance at December 31, 2001 110,171,240 57,607,796 Additions during year: Improvements 439,129 -- Depreciation -- 2,696,180 Deductions during year: Cost of real estate sold (36,915,423) -- Accumulated depreciation of real estate sold -- (21,066,262) ------------ ------------- Balance at December 31, 2002 73,694,946 39,237,714 Additions during year: Improvements 681,543 -- Depreciation -- 2,709,328 Deductions during year: Cost of real estate sold (1,322,852) -- Accumulated depreciation of real estate sold -- (888,595) ------------ ------------- Balance at December 31, 2003 $ 73,053,637 $ 41,058,447 Additions during year: Improvements 355,944 -- Depreciation -- 2,259,733 Deductions during year: Cost of real estate sold (21,583,891) -- Accumulated depreciation of real estate sold -- (12,744,492) ------------ ------------- Balance at December 31, 2004 $ 51,825,690 $ 30,543,688 ============ =============
F-18 CENTURY PACIFIC HOUSING FUND-I MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2004 Schedule IV Page 1 of 2
Monthly Payments Original Final to Maturity Face Carrying Interest Maturity (Net of HUD Amount of Amount of Description (1) Rate Date Subsidy) Mortgage Mortgage (2) ----------------------------------------------------------------------------------------------------------------- Century Pacific Housing Partnership I (CPHP-I) - Charter House Mar Dothan, Alabama 7% 2013 $ 8,238 $ 1,325,700 $ 618,229 CPHP-VII Gulfway Terrace June New Orleans, LA 7% 2015 8,320 3,616,200 2,001,225 CPHP-IX Windridge July Wichita, Kansas 8.625% 2010 23,800 3,060,000 2,987,009 CPHP-X Bergen Circle Mar Springfield, MA 6.92% 2018 4,818 7,381,100 4,841,673 CPHP-V Jaycee Towers Sept Dayton, Ohio 8.5% 2012 7,701 3,361,200 1,661,507 CPHP-XVIII Ascension Towers May Memphis, Tennessee 7% 2015 9,671 4,290,000 2,361,261 Coleman Manor Associates, LP Coleman Manor July Baltimore, MD 10% 2029 12,545 2,365,000 2,088,887 CPHP-XX Holiday Heights April Fort Worth, TX 7% 2014 3,272 1,252,700 638,835 CPHP-XXII Harriet Tubman Oct Berkeley, CA 7% 2015 4,233 1,882,700 1,064,038 --------------------------------------------------- $ 82,598 $28,534,600 $18,262,664 ===================================================
F-19 CENTURY PACIFIC HOUSING FUND-I MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS, continued DECEMBER 31, 2004 Schedule IV Page 2 Of 2
Monthly Payments Original Final to Maturity Face Carrying Interest Maturity (Net of HUD Amount of Amount of Description (1) Rate Date Subsidy) Mortgage Mortgage (2) ----------------------------------------------------------------------------------------------------------- Century Pacific Housing Partnership I (CPHP-I) - Charter House December Dothan, Alabama (1) 2002 (1) $ 781,581 $1,899,334 CPHP-VII Gulfway Terrace December New Orleans, LA (1) 2002 (1) 1,255,000 5,226,658 CPHP-IX Windridge December Wichita, Kansas (1) 2002 (1) 1,053,084 990,901 CPHP-X Bergen Circle July Springfield, MA (1) 2013 (1) 3,547,072 13,209,816 CPHP-V Jaycee Towers October Dayton, Ohio (1) 2005 (1) 2,245,673 8,129,339 CPHP-XVIII Ascension Towers August Memphis, Tennessee (1) 2003 (1) 2,404,667 8,895,378 Coleman Manor Associates, LP Coleman Manor Baltimore, MD - - (1) - - CPHP-XX Holiday Heights October Fort Worth, TX (1) 2004 (1) 909,472 3,301,329 CPHP-XXII Harriet Tubman December Berkeley, CA (1) 2003 (1) 2,036,000 7,387,862 ----------------------------- $14,232,549 $49,040,617 =============================
F-20 CENTURY PACIFIC HOUSING FUND-I NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPHF-I HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 2004 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% or 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
MORTGAGE RESIDUAL LOANS NOTES ------------ ------------ Balance at December 31, 2001 40,432,988 94,123,955 Additions during year: Accrued interest -- 6,839,025 Deductions during year: Forgiveness of note -- (18,416,317) Note assumed in sale (8,670,437) (10,350,167) Payments (5,642,047) (8,011,741) ------------ ------------ Balance at December 31, 2002 26,120,524 64,184,755 Additions during year: Accrued interest -- 4,787,190 Deductions during year: Forgiveness of note (481,884) (1,077,927) Payments (1,149,066) -- ------------- ----------- Balance at December 31, 2003 24,489,574 67,894,018 Additions during year: Accrued interest -- 3,434,909 Deductions during year: Forgiveness of note (5,106,553) (4,075,121) Payments (1,120,357) (18,213,189) ------------- ------------ Balance at December 31, 2004 $ 18,262,664 $ 49,040,617 ============ ============
F-21 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities 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 Date: February 8, 2006 /s/ IRWIN JAY DEUTCH ----------------- ------------------------------------------------- By: Irwin Jay Deutch, as Managing General Partner and Century Pacific Capital I Corporation, as Corporate General Partner and as Attorney-in-Fact for all Investor Limited Partners Date: February 8, 2006 /s/ IRWIN JAY DEUTCH ----------------- ------------------------------------------------- By: Irwin Jay Deutch, President EXHIBITS Exhibit Number Description ------- ----------- 31.1 Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 31.2 Certification Pursuant to 15 U.S.C. Section 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* * Filed herewith