-----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, DYRy5RDkL62ZxbUEagZyzsYs5FF/pknoVRF5RKRtEWKvbaHx4e6eoGRalKy67CJk ojtxAYcavEoim4eGESKHBA== 0000825535-97-000011.txt : 19970401 0000825535-97-000011.hdr.sgml : 19970401 ACCESSION NUMBER: 0000825535-97-000011 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASSISTED HOUSING FUND LP I CENTRAL INDEX KEY: 0000825535 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 911391150 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-18756 FILM NUMBER: 97568363 BUSINESS ADDRESS: STREET 1: P O BOX 834 CITY: SEATTLE STATE: WA ZIP: 98111 BUSINESS PHONE: 2064614782 MAIL ADDRESS: STREET 1: P O BOX 834 CITY: SEATTLE STATE: WA ZIP: 98111 10-K 1 THIS IS A LIVE FILING FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year-ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 33-18756 ASSISTED HOUSING FUND L.P. I (Exact name of registrant as specified in its charter) Washington 91-1391150 (State of organization) IRS Employer Identification No.) 1191 Second Avenue, Suite 904, Seattle, WA 98101 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (206) 461-4782 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interest (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 The Exhibit Index appears at page 17 There are 17 pages. PART I Item 1. Business Assisted Housing Fund L.P. I (the Partnership) is a limited partnership formed on November 2, 1987 and organized under the laws of the State of Washington. The Partnership raised $3,511,000 from the sale of 703 units of limited partnership through a public offering completed on April 14, 1989. The Partnership has invested as a limited partner in eleven other limited partnerships (Property Partnerships) which develop, own, and operate residential apartment complexes located in small towns across the country. Each apartment complex benefits from several forms of federal assistance programs and qualifies for low-income housing credits (Tax Credits) pursuant to the Internal Revenue Code by the Tax Reform Act of 1986. There are 332 partners in the Partnership. The Partnership's general partner is Murphey Favre Properties, Inc., (MFP), a wholly-owned subsidiary of WM Financial, Inc. which is a wholly-owned subsidiary of Washington Mutual Bank (WMB), a wholly- owned subsidiary of Washington Mutual, Inc. Table A on page 4 lists the Property Partnerships in which the Partnership has invested. Item 7 of this Report contains other significant information with respect to such Property Partnerships. Each Property Partnership has, as its general partner (developer), one or more individuals or an entity not affiliated with the Partnership or MFP. In accordance with the Partnership Agreements under which such entities are organized, the Partnership depends on the developers for the management of each Property Partnership. As of December 31, 1996, the Property Partnerships and their developers were: PROPERTY PARTNERSHIP DEVELOPER GENERAL PARTNER 1. Fairview Apartments Company Limited Rural Housing Corporation Partnership (Fairview) 2. Ionia Limited Divided Housing Rural Housing Corporation Association (LDHA) Limited Partnership (Ionia) 3. Logan Apartments Company Limited Rural Housing Corporation and Partnership (Logan) Arthur H. Winer 4. Rolling Brook II LDHA Limited Rural Housing Corporation Partnership (Rolling Brook) 5. Wexford Manor LDHA Limited Rural Housing Corporation Partnership (Wexford 6. Blue Heron Apartment Associates Dujardin Development Co. Limited Partnership (Blue Heron) 7. Glenwood Apartment Associates Limited Dujardin Development Co. Partnership (Glenwood) 8. Pacific Place Apartment Associates Dujardin Development Co. Limited Partnership (Pacific Place) 9. Cove LDHA Limited Partnership (Cove) Kenneth & Lowell Werth 10. Washington Street LDHA Limited Kenneth & Lowell Werth Partnership (Washington) 11. Fayette Hills Limited Partnership LeRoy Eslinger and (Fayette) Douglas E. Pauley A wholly-owned subsidiary of MFP, Murphey Favre Housing Managers (MFHM), is a special limited partner in each Property Partnership and has certain approval rights over the actions by the developers of the Property Partnerships. Table A SELECTED PROPERTY PARTNERSHIP DATA
Property Date Interest Number of Partnerships Location Acquired Apt. Units Fairview Plymouth, WI December 1, 1989 40 Ionia Ionia, MI December 1, 1989 24 Logan Logan, OH December 1, 1989 32 Rolling Brook Algonac, MI December 1, 1989 24 Wexford Onsted, MI December 1, 1989 24 Blue Heron Bainbridge Island, WA March 20, 1989 40 Glenwood Lake Stevens, WA June 1, 1988 46 Pacific Place South Bend, WA October 4, 1988 24 Cove Big Rapids, MI July 12, 1989 48 Washington Perry, MI July 12, 1989 24 Fayette Fayetteville, WV December 1, 1989 68 ---- 394
Item 2. Properties Rental property consists of apartment projects renting to low- and moderate-income tenants. As of December 31, 1996, the Property Partnerships had placed rental properties into operation in the following locations: Date Placed Location In Service Plymouth, WI June 13, 1990 Ionia, MI August 8, 1990 Logan, OH January 11, 1991 Algonac, MI March 8, 1990 Onsted, MI February 21, 1990 Bainbridge Island, WA May 1, 1990 Lake Stevens, WA April 1, 1989 South Bend, WA May 1, 1989 Big Rapids, MI March 1, 1990 Perry, MI January 1, 1990 Fayetteville, WV December 1, 1989 Item 3. Legal Proceedings None Item 4. Submission of Matters to a Vote of Security Holders. None PART II Item 5. Market for the Registrant's Securities and Related Security Holder Matters The Registrant's securities consist of 703 units of Limited Partnership Interest, valued at $5,000 per unit, for which there is no market. Units may only be sold, assigned, exchanged or otherwise transferred upon compliance with the terms of the Limited Partnership Agreement. As of the date of filing of this report, the Partnership has 331 limited partners and one general partner. The Partnership has not made any distributions in 1994, 1995 and 1996 and does not anticipate making any significant distributions in the future. Item 6. Selected Financial Data
Year Ended Year Ended Year Ended Year Ended Year Ended 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 Rental Revenue $1,415,977 $1,381,245 $1,336,598 $1,297,514 $1,269,593 Interest Revenue 21,800 21,158 18,868 20,582 22,930 Income (Loss) (618,708) (615,345) (600,996) (618,414) (565,005) Income (Loss) per Limited Partnership Unit (871) (867( (846) (871) (796) Total Assets 13,022,213 13,620,436 14,107,470 14,700,620 15,303,724 Mortgage Notes Payable $12,399,750 $12,422,388 $12,442,696 $12,461,471 $12,478,285
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations During the year, management's emphasis was on the continued operation of eleven properties. At December 31, 1996, four properties were 100% occupied, six were between 90% and 97% occupied and one was 78% occupied. The properties are located in rural towns with populations of 14,000 or less. Five properties are located in Michigan, three in Washington, and one each in Ohio, West Virginia and Wisconsin. The properties range in size from 24 to 68 units for a total portfolio of 394 units. Results of Operations On a consolidated basis, net income (loss) before depreciation and amortization for 1996, 1995 and 1994 was $12,241, $12,570 and $28,733 respectively. Rental revenues for 1996 were up 3% from 1995 as compared to increases of 3% from 1994 to 1995, and 3% from 1993 to 1994. Expenses for 1996, including depreciation, were up 1.8% over 1995, while expenses, including depreciation, for 1995 and 1994 were up 3.1% and 1.5% over 1994 and 1993, respectively. The Partnership paid $22,226, $22,666 and $21,259, in accounting expenses for the Partnership for 1996, 1995 and 1994, respectively. Interest revenue for 1996 increased 3% from 1995 and increased 12% from 1994 to 1995. Liquidity and Capital Resources The Partnership completed its public offering of units of limited partnership on April 14, 1989, with proceeds totaling $3,511,000 from 339 limited partners. As of December 31, 1996, the Partnership had invested $2,542,000 of offering proceeds in eleven Property Partnerships. Offering proceeds equal to $175,750 were reserved by the Partnership to fund its operating expenses. As of December 31, 1996, the cash reserves of the Partnership totaled $7,197. It is expected that the Partnership will draw on the reserves in future years to fund accounting and other operating expenses of the Partnership. Nominal cash distributions from the Property Partnerships will supplement the cash reserves. In 1996, the Partnership received $18,895 in distributions from the Property Partnerships. The expectation is that all cash distributions received from the Property Partnerships will be used to defray the operating expenses of the Partnership and thus it is not likely any distribution will be made to the limited partners. The Partnership is not required to fund additional amounts to the Property Partnerships based on each Property Partnership agreement. Additionally, each Property Partnership is operated as an individual project, and without any contractual arrangements of any kind between the Property Partnerships. In 1996, nine properties generated positive cash flow and two properties generated deficit cash flow. The deficits were funded from rental operating cash and from authorized withdrawals from the reserve accounts. As of December 31, 1996, one developer general partner had advanced $14,209 to a Property Partnership under the deficit funding agreement in place during the guarantee period. The guarantee periods ended in 1991 and 1992. The developer general partners are no longer obligated to fund operating deficits. The Property Partnerships financed construction with a combination of bank financing and funds from the Partnership. The permanent loans for the properties were provided by the Farmers Home Administration, now known as Rural Housing Service (RHS), under Section 515 of the National Housing Act of 1949, as amended. RHS provides an interest credit to the Property Partnerships which reduces the interest rates stated in the mortgage notes to an effective 1 percent rate over the lives of the mortgages. All property loans are current. It is expected that capital expenditures on the properties will be low in the initial years because the properties are recently constructed (10 properties) or rehabilitated (1 property). As part of RHS loan requirements, a reserve account is funded at an annual rate of 1% of the original property loan balance until the balance equals 10% of the original loan balance. Additions to reserve accounts are funded from property operations and are established for future capital expenditures. Included in cash deposits on the consolidated balance sheets were $7,197 and $8,037 held as deposits by the Partnership in WMB accounts as of December 31, 1996 and 1995, respectively. As discussed in Part I, Item 1, WMB is affiliated with MFP. There are no additional acquisitions nor any dispositions planned. Regulatory Restrictions Because the properties are operated under RHS loans and benefit from the federal low-income housing tax credit program, the properties are restricted as to their use and must comply with the requirements of the respective federal programs. The tenants of all the properties must be tax credit and RHS eligible tenants. It is management's goal to have all units, except for managers' units, occupied by tax credit eligible tenants. In order to meet established income requirements, tenants must not earn more than 60% of the median income for the areas in which the properties are located. Seven of the eleven properties are further restricted to renting apartment units only to senior citizens. Additionally, the properties cannot be sold without prior approval of the RHS, cannot make more than an 8% cash distribution annually to its owner (as described in Note 6 to the Partnership's financial statements), and must remain under the low-income housing tax credit program for 15 years to avoid any recapture of the low-income housing tax credits. Furthermore, pursuant to RHS loan agreements, RHS may refuse prepayment of the loans and require the properties be used for the purpose of providing housing to eligible tenants for a minimum period of 20 years. Inflation Operating expenses and rental revenues of each property are subject to inflationary factors. Low rates of inflation could result in rental revenues remaining constant or increasing at slower rates than in periods of high inflation. High rates of inflation raise the operating expenses of the properties, and to the extent the increased operating expenses are not passed on to the tenants by rental increases, the properties' operation could be adversely affected. Tax Credit As of December 31, 1996, 1995 and 1994, tax credits equal to 15.17%, 15.17% and 15.17%, respectively, of the limited partners' capital contributions have been generated. Item 8. Financial Statements and Supplementary Data The financial statements of Assisted Housing Fund L.P. I as of December 31, 1996, 1995 and 1994, together with the independent auditors' reports thereon, are filed herewith in Part IV, Item 14 of this Form 10-K. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant Murphey Favre Properties, Inc. (MFP) is the managing general partner of the Partnership. The Registrant has no employees. Item 11. Executive Compensation Name of Individual Capacities or Number of in Which Cash Persons in Group Served Compensation Year Ended Year Ended Year Ended 12/31/96 12/31/95 12/31/94 None Item 12. Security Ownership of Certain Beneficial Owners and Management Name and Amount and Address of Nature of Title of Beneficial Beneficial Percent Class Owner Owner of Class General Murphey Favre (1) 100% Partner's Properties, Inc. Interest Suite 904 1191 Second Avenue Seattle, WA 98101 (1) The General Partner's interest is owned of record and beneficially by Murphey Favre Properties, Inc. Its capital interest as of December 31, 1996 is ($41,010). Item 13. Certain Relationships and Related Transactions The Property Partnerships have entered into certain agreements with the developer or its affiliates under which the developer or its affiliates receive compensation, perform services, or make loans. Note 2 of the Notes to Financial Statements, which are filed in Part IV, Item 14 of this Form 10-K, provides additional information pertaining to the individual Property Partnerships. 11 PART IV Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K (a) 1. The following financial statements of Assisted Housing Fund L.P. I and subsidiaries are incorporated by reference in Part II and are attached as pages 1 to 13 of Exhibit 13. Page of Annual Report Independent Auditor's Report.......................... 1 Balance Sheets as of December 31, 1996 and 1995....... 2 Statements of Operations for each of the years ended December 31, 1996, 1995 and 1994...................... 3 Statements of Partners' Equity (Deficit) for each of the years ended December 31, 1996, 1995 and 1994...... 4 Statements of Cash Flows for each of the years ended December 31, 1996, 1995 and 1994...................... 5 Notes to Financial Statements for each of the years ended December 31, 1996, 1995 and 1994............... 6-12 2. Financial statement schedules Page of Form 10-K Independent Auditor's Report on Schedules............. 13 Schedule III - Real Estate and Accumulated Depreciation.......................................... 14-16 All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are omitted because either they are not applicable or the required information is shown in the financial statements or notes thereto. 3. Exhibits: All exhibits to this report are listed in the Schedule Index at page 17. (b) No reports on Form 8K were filed during 1996. SIGNATURES Pursuant to the requirements 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. ASSISTED HOUSING FUND L.P. I Registrant By: Murphey Favre Properties, Inc. Its Managing General Partner By: Date: 3/31/97 Herbert F. Fox, Vice President and Principal Financial Officer Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: By: Murphey Favre Properties, Inc. By: Date: 3/31/97 Kerry K. Killinger Its Director By: Date: 3/31/97 David G. Murphy Its Director SIGNATURES Pursuant to the requirements 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. ASSISTED HOUSING FUND L.P. I Registrant By: Murphey Favre Properties, Inc. Its Managing General Partner By: Herbert F. Fox /s/ Date: 3/31/97 Herbert F. Fox, Vice President and Principal Financial Officer Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: By: Murphey Favre Properties, Inc. By: Kerry K. Killinger /s/ Date: 3/31/97 Kerry K. Killinger Its Director By: David G. Murphy /s/ Date: 3/31/97 David G. Murphy Its Director INDEPENDENT AUDITORS' REPORT ON SCHEDULES General Partner and Limited Partners Assisted Housing Fund L.P. I Seattle, Washington We have audited the financial statements of Assisted Housing Fund L.P. I and its subsidiaries, as of and for the years ended December 31, 1996, 1995 and 1994, listed under Item 14(a) 1 hereof and have issued our report thereon dated March 21, 1997 (which report is incorporated by reference elsewhere in this Form 10-K). In the course of our audit of such financial statements we have also audited the schedules listed under Item 14(a)2 for the years ended December 31, 1996, 1995 and 1994. These schedules are the responsibility of the Partnership's management. Our responsibility is to express an opinion based on our audit. In our opinion, these schedules present fairly, in all material respects, when read in conjunction with the related consolidated financial statements, the information therein set forth. Ruljancich, Blume, Loveridge and Co., P.L.L.C. Bellevue, Washington March 21, 1997 ASSISTED HOUSING FUND LP I SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Year Ended December 31, 1996
COLUMN A COLUMN B COLUMN C COLUMN D - -------------------------------------------------------------------------------------------------------- Costs Capitalized Subsequent Description Encumbrances Initial Cost to Partnership to Acquisition - -------------------------------------------------------------------------------------------------------- Buildings & Personal Land Improvements Property Improvements ----------------------------------------------------------------- Fairview $1,282,064 $55,413 $1,580,336 Ionia 716,147 24,000 915,896 Logan 1,001,559 55,129 1,208,945 Rolling Brook 753,055 35,000 920,330 Wexford 731,109 22,000 922,925 Blue Heron 1,480,589 248,569 1,967,829 Glenwood 1,449,942 145,000 1,749,651 Pacific Place 762,320 30,000 965,151 Cove 1,442,235 47,000 1,713,304 Washington 720,592 8,000 875,004 Fayette 2,060,138 53,000 1,815,992 40,800 590,726 AHF 444,240 ----------------------------------------------------------------------------------- Total $12,399,750 $723,111 $2,260,232 $40,800 $13,410,097 ================================================================================ Construction in Progress $0 $0 ============= ===========
ASSISTED HOUSING FUND LP I SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) Year Ended December 31, 1996
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I - --------------------------------------------------------------------------------------------------------------------------------- Description Gross Amount at Which Carried at End of Period Accumulated Date of Date of Life on Depreciation Construction Acquisition Which Depreciation in Latest Income Statement is Computed - --------------------------------------------------------------------------------------------------------------------------------- Land Buildings Land Total Improvements and Personal Property ------------------------------------------------------ Fairview $55,413 $1,418,320 $162,016 $1,635,749 $425,502 13-Jun-90 27.5/15/10 Ionia $24,000 805,590 110,306 939,896 244,590 08-Aug-90 27.5/15/10/7 Logan $55,129 1,022,974 185,971 1,264,074 313,908 11-Jan-91 27.5/15/10 Rolling Brook $35,000 794,263 126,067 955,330 261,844 08-Mar-90 27.5/15/10/7 Wexford $22,000 815,821 107,104 944,925 266,832 21-Feb-90 27.5/15/10 Blue Heron $248,569 1,890,967 76,862 2,216,398 509,662 01-May-90 27.5/10 Glenwood $145,000 1,701,975 47,676 1,894,651 510,895 01-Apr-89 27.5/10/7 Pacific Place $30,000 943,619 21,532 995,151 278,904 01-May-89 27.5/10/7 Cove $47,000 1,635,278 78,026 1,760,304 454,447 01-Mar-90 27.5/10/7 Washington $8,000 836,929 38,075 883,004 232,631 01-Jan-90 27.5/10 Fayette $53,000 2,333,019 114,499 2,500,518 662,431 01-Dec-89 27.5/15/10/7 AHF $0 444,240 444,240 111,895 Various ---------------------------------------------------------------- Total $723,111 $14,642,995 $1,068,134 $16,434,240 $4,273,541 ================================================================ Construction in Progress 0 ============
ASSISTED HOUSING FUND LP I SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) Year Ended December 31, 1996
Year Ended Year Ended Year Ended REAL ESTATE December 31, 1994 December 31, 1995 December 31, 1996 - -------------------------------------------------------------------------------------------------------------------------- Balance at beginning of period $16,273,979 $16,315,766 $16,410,747 Additions during period: Property acquisitions $ 0 $0 $0 Acquisitions through foreclosure 0 0 0 Other acquisitions 0 0 0 Improvements etc. (New Construction) 41,787 96,135 23,493 Other (Acquisition Cost) 0 0 0 ------------------------------------------------------------------------------- $16,315,766 $16,411,901 $16,434,240 Deductions during period: Cost of real estate sold $0 $1,154 $0 Other (describe) 0 0 0 1,154 0 0 ------------------------------------------------------------------------------- Balance at close of period $16,315,766 $16,410,747 $16,434,240 ============== =============== ==============
Year Ended Year Ended Year Ended ACCUMULATED DEPRECIATION December 31, 1994 December 31, 1995 December 31, 1996 - -------------------------------------------------------------------------------------------------------------------------- Balance at beginning of period $2,391,713 $3,015,935 $3,642,593 Existing property: 622,259 625,908 629,472 Depreciation on additions: Property acquisitions $ 0 $ 0 $ 0 Acquisitions through foreclosure 0 0 0 Other acquisitions 0 0 0 Improvements etc. (New Construction) 1,963 1,308 1,476 Other (Acquisition Costs) 0 0 0 ------------------------------------------------------------------------------- $3,015,935 $3,643,151 $4,273,541 Depreciation on deductions: Cost of real estate sold $ 0 $ 558 $ 0 Other (describe) 0 0 0 558 0 0 ------------------------------------------------------------------------------- Balance at close of period $3,015,935 $3,642,593 $4,273,541 ============== =============== ==============
Exhibit Incorporated by No. Reference From 3 Certificate of Limited Partnership Exhibit C to Form S-11 Registration Statement No. 91-1391150 13 Annual Report to Security Holders Attached hereto ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 CONTENTS Page INDEPENDENT AUDITOR'S REPORT............................................1 FINANCIAL STATEMENTS: Balance Sheets..........................................................2 Statements of Operations................................................3 Statements of Partners' Equity (Deficit)................................4 Statements of Cash Flows................................................5 Notes to Financial Statements...........................................6-12 INDEPENDENT AUDITOR'S REPORT Partners Assisted Housing Fund L.P. I Seattle, Washington We have audited the accompanying balance sheets of Assisted Housing Fund L.P. I and its subsidiaries, as of December 31, 1996 and 1995, and the related statements of operations, partners' equity (deficit) and cash flows for the years ended December 31, 1996, 1995 and 1994. 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 audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an 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 audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Assisted Housing Fund L.P. I and its subsidiaries, as of December 31, 1996 and 1995, and the results of their operations and cash flows for the years ended December 31, 1996, 1995 and 1994, in conformity with generally accepted accounting principles. Ruljancich, Blume, Loveridge & Co., P.L.L.C. Bellevue, Washington March 21, 1997 ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES BALANCE SHEETS
December 31, 1996 1995 ASSETS Rental property and equipment, at cost: Buildings and equipment $15,711,129 $15,687,636 Accumulated depreciation (4,273,541) (3,642,593) ----------- ----------- 11,437,588 12,045,043 Land 723,111 723,111 ----------- ----------- 12,160,699 12,768,154 Cash: Rental operation 139,121 160,098 Partnership 7,197 8,037 ----------- ------------ 146,318 168,135 Restricted deposits: Tenant trust - security deposits 106,501 108,020 Reserve accounts 552,746 528,498 ----------- ------------ 659,247 636,518 Other assets: Accounts receivable 28,869 36,951 Prepaid expenses 27,080 10,678 ----------- ------------ 55,949 47,629 ----------- ------------ $13,022,213 $13,620,436 =========== ===========
Continued on page 2A. ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES BALANCE SHEETS - (CONTINUED)
December 31, 1996 1995 LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Liabilities: Mortgage notes payable $12,399,750 $12,422,388 Assessment payable 61,712 68,569 Accounts payable 260,146 240,771 Due to affiliates 554,534 491,992 Accrued liabilities 75,487 78,284 Security deposits 104,531 107,080 ----------- ----------- 13,456,160 13,409,084 Minority interests in partnerships 546,353 572,944 Partners' equity (deficit): Limited partners (939,290) (326,769) General partner (41,010) (34,823) ----------- ----------- (980,300) (361,592) ----------- ----------- $13,022,213 $13,620,436 =========== ===========
See accompanying notes to financial statements. Page 2A ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES STATEMENTS OF OPERATIONS
Years Ended December 31, 1996 1995 1994 Revenue: Rent $1,415,977 $1,381,245 $1,336,598 Miscellaneous 88,400 87,496 83,178 ---------- ---------- ---------- 1,504,377 1,468,741 1,419,776 Expenses: Operating and maintenance 208,656 212,139 168,768 Utilities 254,135 245,383 247,296 General and administrative 347,471 321,975 317,922 Taxes and insurance 251,468 254,947 248,767 Interest 336,895 334,529 326,185 Depreciation 630,949 627,216 624,223 ---------- ---------- ---------- 2,029,574 1,996,189 1,933,161 ---------- ---------- ---------- (525,197) (527,448) (513,385) Other revenues (expenses): Interest earned on partnership cash 280 505 975 Minority interest in operations 26,435 26,465 26,334 Accounting and auditing (22,226) (22,666) (21,259) General and administrative (18,081) (11,684) (8,187) Partnership management fees (74,517) (74,517) (74,517) Amortization of organization costs - (699) (5,506) Incentive management fees (3,952) (3,660) (2,685) Miscellaneous (1,450) (1,641) (2,766) ---------- ---------- ---------- (93,511) (87,897) (87,611) ---------- ---------- ---------- Net income (loss) $ (618,708) $ (615,345) $ (600,996) ========== ========== ========== Net income (loss) per unit of limited partnership interest $ (871) $ (867) $ (846) ========== ========== ==========
See accompanying notes to financial statements. Page 3 ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES STATEMENTS OF PARTNERS' EQUITY (DEFICIT) Years Ended December 31, 1996, 1995 and 1994
Limited General Partners Partner Total Profit/loss percentage 99.0% 1.0% 100.0% ========== ======== ======== Balance - January 1, 1994 $ 877,409 $(22,660) $ 854,749 Net income (loss) for 1994 (594,986) (6,010) (600,996) ---------- -------- ---------- Balance - December 31, 1994 282,423 (28,670) 253,753 Net income (loss) for 1995 (609,192) (6,153) (615,345) ---------- -------- ---------- Balance - December 31, 1995 (326,769) (34,823) (361,592) Net income (loss) for 1996 (612,521) (6,187) (618,708) ---------- -------- ---------- Balance - December 31, 1996 $ (939,290) $(41,010) $ (980,300) ========== ======== ==========
See accompanying notes to financial statements. Page 4 ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash
Years Ended December 31, 1996 1995 1994 Cash flows from operating activities: Net income (loss) $(618,708) $(615,345) $(600,996) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 630,948 626,658 624,223 Amortization of organization costs - 698 5,506 Minority interests in operations (26,435) (26,465) (26,333) Changes in certain assets and liabilities: Accounts receivable 8,082 (11,148) (1,402) Prepaid expenses (16,402) 3,916 8,374 Accounts payable 19,375 47,949 29,600 Accrued liabilities (2,797) (2,032) 8,317 Due to affiliates 62,542 53,129 42,608 Security deposits (1,030) (41) 211 --------- --------- --------- Net cash provided by operating activities 55,575 77,319 90,108 Cash flows from investing activities: Purchase of depreciable property (23,493) (26,412) (41,787) Deposits to reserve accounts (140,217) (140,172) (129,854) Withdrawals from reserve accounts 115,969 120,266 66,099 --------- --------- --------- Net cash provided (used) by investing activities (47,741) (46,318) (105,542)
Continued on page 5A. Page 5 ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES STATEMENTS OF CASH FLOWS - (CONTINUED) Increase (Decrease) in Cash
Years Ended December 31, 1996 1995 1994 Cash flows from financing activities: Minority partners' capital contributions $ (156) $ 128 $ (79) Mortgage principal payments (22,638) (20,308) (18,775) Assessment principal payments (6,857) - - Advances from affiliates - - (32,383) -------- -------- -------- Net cash provided (used) by financing activities (29,651) (20,180) (51,237) -------- --------- -------- Net increase (decrease) in cash (21,817) 10,821 (66,671) Cash - beginning of year 168,135 157,314 223,985 -------- -------- -------- Cash - end of year $146,318 $168,135 $157,314 ======== ======== ======== Supplemental disclosure of cash flow information: Cash paid for interest $340,001 $331,729 $326,237 ======== ======== ======== Supplemental disclosure of noncash investing and financing activities: Land improvements purchased with assessment $ - $ 68,569 $ - ======== ======== =======
See accompanying notes to financial statements. Page 5A ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES General Assisted Housing Fund L.P. I (the Partnership) is a limited partnership which was organized November 2, 1987 under the laws of the state of Washington to acquire limited partnership interests in other partnerships (the Property Partnerships), each of which has been organized to develop or purchase a low- or moderate-income apartment project. The Partnership's general partner is Murphey Favre Properties, Inc. (MFP), a wholly-owned subsidiary of WM Financial, Inc., which is a wholly-owned subsidiary of Washington Mutual Bank (WMB), a wholly-owned subsidiary of Washington Mutual, Inc. As of December 31, 1996, 331 limited partners held the 703 units of limited partnership interests outstanding. The Partnership has invested as a limited partner in eleven Property Partnerships. The developer of each apartment project serves as the general partner (DGP) of the respective Property Partnership. The properties owned by the Property Partnerships are located in Michigan, Wisconsin, Ohio, West Virginia and Washington. The properties were financed and constructed under Section 515 of the National Housing Act, as amended (administered by the U.S. Department of Agriculture, Rural Housing Service (RHS)). Under this program, the Property Partnerships provide housing to low- and moderate-income tenants. Lower rental charges to tenants are recovered by the Property Partnerships through an interest reduction program which reduces the effective interest rate over the lives of the mortgages to 1 percent and a rental assistance program whereby RHS pays the Property Partnerships for a portion of qualified tenant rents. Construction of the rental properties began between June, 1988 and May, 1990 and rental operations began between April, 1989 and February, 1991. Additionally, in exchange for an allocation of federal low-income housing tax credits under Section 42 of the Internal Revenue Code, each Property Partnership has entered into an agreement with an agency of the state in which the apartment project is located, whereby the Property Partnership has agreed to maintain all apartment units as both rent restricted and occupied by low-income tenants for a minimum period of 15 years. During the years ended December 31, 1996, 1995 and 1994, rental revenue from RHS totaled $408,796, $407,684, and $403,456, representing 27.2 percent, 27.8 percent and 28.4 percent of total revenue, respectively. Page 6 ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (CONTINUED) Principles of Consolidation The financial statements include the financial statements of the Partnership and the following eleven Property Partnerships in which it has invested as a limited partner: Fairview Apartments Company Limited Partnership (Fairview) Ionia Limited Dividend Housing Association Limited Partnership (Ionia) Logan Apartments Company Limited Partnership (Logan) Rolling Brook II Limited Dividend Housing Association Limited Partnership (Rolling Brook) Wexford Manor Limited Dividend Housing Association Limited Partnership (Wexford) Blue Heron Apartment Associates Limited Partnership (Blue Heron) Glenwood Apartment Associates Limited Partnership (Glenwood) Pacific Place Apartment Associates Limited Partnership (Pacific Place) Cove Limited Dividend Housing Association Limited Partnership (Cove) Washington Street Limited Dividend Housing Association Limited Partnership (Washington) Fayette Hills Limited Partnership (Fayette) The financial statements are presented on a consolidated basis because the Partnership holds approximately 99 percent of the profit and loss interests and approximately 55 percent of the equity interests in each Property Partnership. Through an affiliate, who is a special limited partner in each of the 11 Property Partnerships, the Partnership controls certain fundamental decisions affecting the operation of the Property Partnerships. These fundamental decisions include significant purchases of assets, material borrowings or creation of liens on the underlying properties, entering into material contracts, making tax elections and any act that would cause termination of the Property Partnership. All material interpartnership transactions and balances have been eliminated. For the years ended December 31, 1996, 1995 and 1994, net losses allocable to the minority partners were $26,435, $26,465 and $26,334, respectively. ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (CONTINUED) Method of Accounting The accrual method of accounting is used for both financial statement and income tax purposes. Cost Overruns The partnership agreements for the Property Partnerships required the DGP's to fund cost overruns on the development of the rental properties. Such cost overruns, totaling $589,462, have been recorded as minority interests in partnerships and have been included in the cost basis of the rental property. All depreciation related thereto has been specially allocated to the respective DGP's. Depreciation Depreciation is computed for financial statement purposes using the straight-line method over the estimated useful lives of the related assets as follows: Building shell and components.............. 27.5 years Land improvements...... ..................... 15 years Appliances............................... 7 - 10 years Carpets and draperies.................... 7 - 10 years Depreciation is computed for income tax purposes using the modified-accelerated- cost-recovery-system (MACRS). Income Taxes No income tax provision has been included in the financial statements since income or loss of a Partnership is required to be reported by the respective partners on their income tax returns. Cash Equivalents For purposes of the statement of cash flows, all investment instruments purchased with a maturity of three months or less are considered to be cash equivalents. At December 31, 1996 and 1995, there were no cash equivalents. Amortization Costs aggregating $71,934 incurred in connection with organization of the partnerships have been capitalized and were amortized on a straight-line basis over a five-year period. Page 8 ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (CONTINUED) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumption that affect certain reported amounts and disclosures. NOTE 2 - TRANSACTIONS WITH AFFILIATES In connection with the acquisition and development of rental property and the management of both the rental property and the Partnership, the Partnership and Property Partnerships have paid or accrued the following amounts to certain affiliates: Years Ended December 31, 1996 1995 1994 Murphey Favre Properties, Inc. Partnership services fee $ 7,500 $ 7,500 $ 7,500 Partnership administration 44,710 44,710 44,710 Developer general partners and affiliates Property management fees 119,365 109,910 106,842 The Partnership maintains deposits in certain of WMB's interest-bearing accounts which aggregated $7,197 and $8,037 at December 31, 1996 and 1995, respectively. Interest earned on such deposits totaled $280, $505 and $975 during the years ended December 31, 1996, 1995 and 1994, respectively. Terms of the RHS Loan Agreements require each DGP to provide interest-free advances of stipulated amounts as initial operating capital to the Property Partnerships. Due to affiliates includes $152,107 of such advances at December 31, 1996 and 1995. In addition, these balances include DGP advances of $35,468 for land improvements and $14,209 to fund operating deficits. The remainder of the balances include property management fees and reimbursements payable to MFP for partnership services and administration. Page 9 ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 2 - TRANSACTIONS WITH AFFILIATES - (CONTINUED) Advances from the DGPs may only be repaid from the proceeds of future sales of the respective properties. Property management fees are paid out of rental operations. Partnership fees and services are payable from future sales of the properties, to the extent they are not paid from distributions of rental operation cash (Note 6). Under the terms of management services agreements, affiliates of the DGP's provide management services for the rental properties and receive compensation for such services in amounts approximating 9.1% of rental receipts. NOTE 3 - CASH IN RESERVE ACCOUNTS The Loan Agreements between the Property Partnerships and RHS require the Property Partnerships to deposit $126,889 annually into separate reserve accounts until the reserve accounts reach $1,268,211. Subject to RHS approval, these funds may be used for various purposes, as further described in the Loan Agreements. The Property Partnerships are in compliance with the minimum funding requirements as set forth by RHS for the years ended December 31, 1996 and 1995, and all withdrawals were approved by RHS and used for their intended purposes. NOTE 4 - MORTGAGE NOTES PAYABLE The mortgage notes are payable to RHS in monthly installments totaling $26,550. In accordance with provisions of Interest Credit Agreements, RHS provides monthly interest credits totaling $69,199 which reduce the interest rates stated in the mortgage notes to effective rates of 1 percent over the lives of the mortgages. Amortization of principal is based on the stated rates of 8.75% to 10.75% under RHS's Predetermined Amortization Schedule System (PASS). The mortgage notes mature May, 2039 through January, 2040. Substantially all of the rental property and equipment is pledged as collateral on the mortgages. No partner is personally liable on the mortgage notes. Page 10 ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 4 - MORTGAGE NOTES PAYABLE - (CONTINUED) The mortgage notes are regulated by the U.S. Government and therefore, have no market price. Accordingly, management has determined that users of the financial statements would derive no benefit from any estimate of fair value and performing such an analysis would not be practicable. Principal payments on the mortgage notes for the next 5 years are as follows: Year Amounts 1997 24,562 1998 26,868 1999 29,388 2000 32,144 2001 35,113 2002 and later years 12,251,675 ----------- $12,399,750 NOTE 5 - ASSESSMENT PAYABLE In September, 1995, the city of Bainbridge Island issued an assessment for Blue Heron's share of street and utility improvements in the amount of $68,569. The assessment is payable in 10 equal annual installments together with interest at the rate of 5.6 percent. At December 31, 1996, the fair value of the assessment approximates the amount recorded in the financial statements. Principal payments on the assessment for the next 5 years are as follows: Year Amount 1997 $ 6,857 1998 6,857 1999 6,857 2000 6,857 2001 6,857 2002 and later years 27,427 ------- $61,712 Page 11 ASSISTED HOUSING FUND L.P. I AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS NOTE 6 - RENTAL OPERATION CASH RHS regulations limit the distribution of rental operation cash to a maximum of $38,090 annually. Any distribution to the Partnership from rental operation cash is to be made in accordance with the respective partnership agreements. Whether or not a Property Partnership makes any limited distribution is based on the results of its own operations and is at the discretion of the DGP. NOTE 7 - GUARANTEES Each of the DGP's has made a guarantee to the respective Property Partnership that they will compensate the Partnership in the event the actual low-income housing tax credit is less than 85% to 90% of the available credit. Through December 31, 1996, no payments have been made under these guarantee agreements. NOTE 8 - RECLASSIFICATIONS Certain reclassifications have been made to the 1995 and 1994 financial statements to conform with the 1996 financial statement presentation. Such reclassification had no effect on net income as previously reported. Page 12 March 21, 1997 Ruljancich, Blume, Loveridge & Company Certified Public Accountants 11100 NE Eighth Street, Suite 410 Bellevue, WA 98004-4441 RE: Assisted Housing Fund L.P. I and subsidiaries The following representations are made to the best of our knowledge and belief. They are being provided to you in connection with your audit of the balance sheet of Assisted Housing Fund L.P. I and subsidiaries as of December 31, 1996 and the related statements of operations, changes in partners' equity (deficit) and cash flows for the year then ended. Your audit is for the purpose of expressing an opinion as to whether the financial statements present fairly the financial position, results of operations and cash flows in conformity with generally accepted accounting principles. 1. In the financial statements, we are responsible for the fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. 2. We have made available to you all - a. Financial records and related data. b. Amendments to the partnership agreement. 3. There have been no - a. Irregularities involving management or employees who have significant roles in the internal control structure. b. Irregularities involving other employees that could have a material effect on the financial statements. c. Communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices that could have a material effect on the financial statements. 4. We have no plans or intentions that may materially affect the carrying value or classification of assets and liabilities. 5. The following have been properly recorded or disclosed in the financial statements: a. Related party transactions and related amounts receivable or payable, including sales, purchases, loans, transfers, leasing arrangements, and guarantees. b. Arrangements with financial institutions involving compensating balances or other arrangements involving restrictions on cash balances and line-of-credit or similar arrangements. Representation Letter Page Two c. Agreements to repurchase assets previously sold. 6. There are no - a. Violations or possible violations of laws or regulations whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency. b. Other material liabilities or gain or loss contingencies that are required to be accrued or disclosed. 7. We are not aware of any pending or threatened litigation, claims or assessments or unasserted claims or assessments that are required to be disclosed in the financial statements and we have not consulted a lawyer concerning litigation, claims or assessments. 8. There are no material transactions that have not been properly recorded in the accounting records underlying the financial statements. 9. The Partnerships have satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as security for any liability (other than the mortgage notes payable and the assessment payable). 10. We have complied with all aspects of laws, regulations and contractual agreements that would have a material effect on the financial statements in the event of noncompliance. 11. No events have occurred subsequent to the balance sheet date that would require adjustment to, or disclosure in, the financial statements. 12. We have identified all accounting estimates that could be material to the financial statements including the key factors and significant assumptions underlying those estimates, and we believe the estimates are reasonable in the circumstances. 13. We agree with all closing and adjusting journal entries made subsequent to the close of the books which are included in the financial statements as of December 31, 1996. EX-27 2 ART.5 FDS FOR YEAR END 10-K
5 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 146,318 0 28,869 0 0 202,267 16,434,240 4,273,541 13,022,213 364,677 0 0 0 0 0 13,022,213 0 1,504,377 0 2,029,574 93,511 0 296,137 (618,708) 0 0 0 0 0 (618,708) 0 0 -----END PRIVACY-ENHANCED MESSAGE-----