-----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, I6HHGkmS36nqC4+PUiRv8AgbHNMmdZP3+8QSBGoesPM268SO6Gw7ewsuQCehPJw6 UGNHrYXLrLojA8Gr98qW9A== 0000950114-99-000079.txt : 19990701 0000950114-99-000079.hdr.sgml : 19990701 ACCESSION NUMBER: 0000950114-99-000079 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PACIFIC TAX CREDIT HOUSING FUND II CENTRAL INDEX KEY: 0000840258 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 954178283 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 033-24537 FILM NUMBER: 99657189 BUSINESS ADDRESS: STREET 1: 1925 CENTURY PARK EAST STE 1760 STREET 2: CENTURY PACIFIC CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3102081888 MAIL ADDRESS: STREET 1: 1925 CENTURY PARK EAST STREET 2: SUITE 1760 CITY: LOS ANGELES STATE: CA ZIP: 90067 10-K405 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 -------------------------------------- FOR THE FISCAL YEAR ENDED MARCH 31, 1999 COMMISSION FILE NUMBER 33-24537 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II A CALIFORNIA LIMITED PARTNERSHIP I.R.S. EMPLOYER IDENTIFICATION NO. 95-4178283 1925 CENTURY PARK EAST, SUITE 1760, LOS ANGELES, CA 90067 REGISTRANT'S TELEPHONE NUMBER: (310) 208-1888 Securities Registered Pursuant to Section 12(b) or 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed with the Commission by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference to part III of this Form 10-K or any amendment to this Form 10-K (X). Yes No X ----- ----- No documents are incorporated into the text by reference. Exhibit Index is located on Page 17 Registrant's Prospectus dated January 4, 1989, as amended (the Prospectus) and the Registrant's Supplement No. 2 dated November 21, 1989 to Prospectus dated January 4, 1989 (Supplement No. 2) but only to the extent expressly incorporated by reference in Parts I through IV hereof. Capitalized terms which are not defined herein have the same meaning as in the Prospectus. 2 TABLE OF CONTENTS PART I ITEM 1 BUSINESS 3 ITEM 2 PROPERTIES 4 ITEM 3 LEGAL PROCEEDINGS 5 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 5 PART II ITEM 5 MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS 6 ITEM 6 SELECTED FINANCIAL DATA 6 ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS 7 ITEM 8 FINANCIAL STATEMENTS 11 ITEM 9 CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 11 PART III ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 13 ITEM 11 EXECUTIVE COMPENSATION 14 ITEM 12 PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 15 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 15 PART IV ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 16 EXHIBIT INDEX 17 SIGNATURES 18
3 PART I ITEM 1. BUSINESS -------- Century Pacific Tax Credit Housing Fund-II (CPTCHF-II or the Partnership) was formed on September 2, 1988 as a limited partnership under the laws of the State of California to invest in multifamily housing developments (the Properties). The Partnership's business is to invest primarily in other limited partnerships (Operating Partnerships) that are organized for the purposes of either constructing or acquiring and operating existing affordable multifamily rental apartments (the Properties) 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 has invested in two Properties, each of which qualifies for the Low Income Housing Tax Credit. Both 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. The partnership does not employ any persons. Alternatively, the partnership reimburses an affiliate for allocated overhead, consisting primarily of payroll costs. In order to stimulate private investment in low and moderate income housing of the types in which CPTCHF-II has invested, the federal government, through the Department of Housing and Urban Development (HUD), has provided investors with significant ownership incentives, such as interest subsidies, rent supplements, mortgage insurance and other measures, with the intent of reducing the risks and providing the investors/owners with certain tax benefits, limited cash distributions and the possibility of long-term capital gains. However, there are significant risks inherent in this type of housing. Long-term investments in real estate limit the ability of CPTCHF-II to vary its portfolio in response to changing economic, financial and investment conditions, 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 owns the Properties. As a limited partner, CPTCHF-II'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 3 4 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. The Partnership's primary objective is to provide Low-Income Housing Tax Credits to its 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 annual amount of the Low-Income Housing Tax Credits for 10 years from the date the Property was placed in service. The required holding period of the Properties is 15 years (the Compliance Period). The Properties must satisfy rent restriction, 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 Credits at all times during the Compliance Period. Once an Operating Partnership has become eligible for the Low-Income Housing Tax Credits, it may lose such eligibility and suffer an event of recapture if its Property fails to remain in compliance with the Low-Income Housing Tax Credit Requirements. To date, neither of the Operating Partnerships have suffered an event of recapture of Low-Income Housing Tax Credit. ITEM 2. PROPERTIES ---------- As of March 31, 1999, CPTCHF-II 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 provided by HUD and the Illinois Housing Development Authority (IHDA). The table below summarizes the Operating Partnerships acquired and the government assistance programs benefiting each Property. Further information concerning these Properties may be found in Supplement No. 2 to the Prospectus, pages 4 through 66, which information is incorporated herein by reference and is summarized below.
Capital Contribution Obligation Percent ----------------------------- Property Date of Acquisition Paid Name, Average Acquisition in Total at through Location and Occupanty of Operating March 31, March 31, Rental Units 1998 Interest Partnership 1999 1999 - --------------------- --------- ----------- ----------- ----------- --------- Washington Courts 92% 5/1/89 90% $2,743,413 $2,743,413 Chicago, IL 103 Residential Units Plumley Village 98% 8/1/89 60% 1,648,026 1,648,026 Boston, MA 430 Residential Units $4,391,439 $4,391,439 ========== ========== December 31, 1998 ----------------------------------------------------------- Government Mortgage Residual Purchase Other Assistance Notes Note Note Note Program ----------- ---------- ---------- -------- ------------------- Washington Courts $ 5,007,487 $--------- $--------- $------- HUD Insured Chicago, IL Section 221(d)(4) 103 Residential Units IHDA HAP Contract Plumley Village 7,572,225 5,895,924 5,393,880 405,895 HUD Boston, MA Section 236 430 Residential Units Section B $12,579,712 $5,895,924 $5,393,880 $405,895 =========== ========== ========== ========
4 5 ITEM 3. LEGAL PROCEEDINGS ----------------- As of June 22, 1999, there were no pending legal proceedings against CPTCHF-II or any Operating Partnership in which it has invested. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS --------------------------------------------------- As of March 31, 1999, there were no submissions of matters to a vote of security holders. 5 6 PART II ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS ------------------------------------------------- There is at present 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 24 and 52 of the Prospectus, which information is incorporated herein by reference. The number of owners of Units as of June 22, 1999 was approximately 508, holding 5,754 units. As of June 22, 1999, there were no cash distributions. ITEM 6. SELECTED FINANCIAL DATA ----------------------- The following summary of selected financial date should be read in conjunction with ITEM 14, herein, which also includes a summary of CPTCHF-II's significant accounting policies.
YEAR ENDED MARCH 31, -------------------------------------------------------------------------- OPERATIONS 1999 1998 1997 1996 1995 ---------------------------- ---------- ----------- ----------- ----------- ----------- Revenues 1,600 200 1,200 2,200 1,500 Operating Expenses (191,110) (182,183) (178,611) (175,115) (194,948) Equity in Net Losses of Operating Partnerships (318,696) (247,924) (146,872) (158,170) (226,083) Net Loss (508,206) (429,907) (324,283) (331,085) (419,531) Net Loss per Unit of Limited Partnership Interest (88) (75) (56) (57) (72) March 31, -------------------------------------------------------------------------- FINANCIAL POSITION 1999 1998 1997 1996 1995 ---------------------------- --------- ----------- ---------- ---------- ---------- Total Assets $ 684,322 $1,001,485 $1,249,411 $1,398,015 $1,555,203 ========= ========== ========== ========== ==========
6 7 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS ------------------------------------------------------------ AND RESULTS OF OPERATIONS ------------------------- Liquidity and Capital Resources - ------------------------------- The Partnership offered limited partnership interests to the public during calendar year 1989, pursuant to a Registration Statement filed under the Securities Act of 1933. The Partnership raised $5,754,000 in equity capital and, thereafter, invested in Operating Partnerships, which own multifamily Properties located in Illinois and Massachusetts representing approximately $25,000,000 of Property value. These properties under Section 42 of the Internal Revenue Code earn low-income housing tax credits which are passed through to the individual partners of the Partnership. Low-Income housing tax credits earned by the Partnership for calendar years 1998, 1997 and 1996 were $870,477, $860,539, and $861,187, respectively. As of March 31, 1999, the Partnership portfolio consists of two Properties totalling 533 units. For a summary of the combined financial status of the Operating Partnerships and the Properties, see the financial information contained under ITEM 14. The market for multifamily residential properties throughout the country continued to show signs of improvement in 1998, as the ongoing absence of significant new construction activity further improved the market's supply and demand characteristics. Management believes that overall real estate market conditions will improve further in 1999 along with the continued improvement in general economic conditions. In addition, the recent increases in market interest rate levels will make new construction more expensive to finance, which should continue to limit the addition of new multifamily units to the existing supply. However, the effects of the gradually improving market conditions on the Partnership's operating property investments, while positive, are limited by the government restrictions on rental rate increases. A substantial amount of the revenue generated by these properties 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 Partnerships, the Partnership does not control property disposition decisions, and management is not aware of any plans or intentions of the general partners of these partnerships to sell any of the investment properties in the near future. 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 administrative expenses and pay the Partnerships management fee. At the present time, the Operating Partnerships have not generated sufficient cash distributions to fund the Partnership's expenses. As a result of the foregoing, the Partnership has been dependent upon its affiliates and the General Partners for continued financial 7 8 support to meet its expenses. Though there can be no assurance, management believes that affiliates and/or the General Partners, though not required to do so, will continue to fund operations of the Partnership and defer receipt of payment of allocated overhead administrative expenses and partnership management fees. 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. The Partnership is not expected to have access to any significant sources of financing. Accordingly, if unforeseen contingencies arise that cause an Operating Partnership to require additional capital to sustain operations, in addition to that previously contributed by the Partnership, the source of the required capital needs may be from (i) limited reserves from the Partnership (which may include distributions received from 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. Tax Reform Act of 1986, Ominbus Budget Reconciliation Act of 1987, Technical - ---------------------------------------------------------------------------- and Miscellaneous Revenue Act of 1988, Ominbus Budget Reconciliation Act of - --------------------------------------------------------------------------- 1989 and Ominbus Budget Reconciliation Act of 1990 and all subsequent tax - ------------------------------------------------------------------------- acts. - ----- The Partnership is organized as a limited partnership and is "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 Ominbus Budget Reconciliation Act of 1989 and the Ominbus Budget Reconciliation Act of 1990 and all subsequent tax acts (collectively the Tax Acts). The Partnership will consider the effect of certain aspects of the Tax Acts on the partners when making investment decisions. The Partnership does not anticipate that the Tax Acts will have a material adverse impact on the Partnership's business operations, capital resources, plans or liquidity. Results of Operations - --------------------- The fiscal year of the Partnership ends on March 31 of each year, however, the fiscal year 8 9 of each Operating Partnership ends on December 31. Therefore, the earnings and losses of the Operating Partnerships reflected on the equity method in the Partnership's financial statements for its current fiscal year are for the calendar year ended December 31, 1998. 1999 Compared to 1998 - --------------------- For the fiscal year ended March 31, 1999, the Partnership recorded a net loss of approximately $508,000, as compared to a net loss of approximately $430,000 for the prior fiscal year. The increase in net loss is the result of a increase in the Partnership's equity in net losses of the Operating Partnerships of approximately $70,000 and a increase in the expenses of approximately $8,000 for the current fiscal year. General and administrative expenses, namely allocated administrative expenses and partnership management fees, continue each fiscal year to comprise an increasing portion of the Partnership's net loss. 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. One of the two investments has had an equity method basis of zero since March 31, 1993. The Partnership's recorded share of the Operating Partnerships' losses in the current fiscal period consists of losses of approximately $319,000 from the Washington Courts Limited Partnership. In the prior fiscal year, losses of approximately $248,000 from the operations of Washington Courts was recorded. The carrying value of the Partnership's investment in Laurel-Clayton was reduced to zero during fiscal 1993. In the aggregate, combined rental revenue of the Operating Partnerships increased during the current calendar year. The combined total rental revenue increased by only approximately $40,000 in the current calendar year. The average occupancy level for Laurel-Clayton remained at 98% in both calendar years, but Washington Court had a decrease to 92% occupancy level in the current year. This decrease in occupancy level caused part of the small increase in total rental revenue. The combined total expenses of the two operating properties increased by approximately $110,000 in the current year primarily due to an increase in repairs and maintenance and depreciation and a decrease in other operating expenses. 1998 Compared To 1997 - --------------------- For the fiscal year ended March 31, 1998, the Partnership recorded a net loss of approximately $430,000, as compared to a net loss of approximately $324,000 for the prior fiscal year. The increase in net loss in the result of an increase in the Partnership's equity in net losses of the Operating Partnerships of approximately $101,000 and an increase in the expenses of approximately $3,500 for the current fiscal year. General and administrative expenses, namely allocated administrative expenses and partnership 9 10 management fees, continue each fiscal year to comprise an increasing portion of the Partnership's net loss. 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. One of the two investments has had an equity method basis of zero since March 31, 1993. The Partnership's recorded share of the Operating Partnership's losses in the current fiscal period consists of losses of approximately $248,000 from the Washington Courts Limited Partnership. In the prior fiscal year, losses of approximately $147,000 from the operations of Washington Courts were recorded. The carrying value of the Partnership's investment in Laurel-Clayton was reduced to zero during fiscal 1993. In the aggregate, combined rental revenue of the Operating Partnerships increased during the current calendar year. The combined total rental revenue increased by approximately $144,000 in the current calendar year, with the largest increase occurring at Laurel-Clayton. The average occupancy levels remained at or above 96% in both calendar years in both properties. Such results reflect the generally improving market conditions referred to above. In addition to the improvement of revenue, the combined total expenses of the two operating properties decreased by approximately $147,000 in the current year primarily due to a decrease in repairs and maintenance. 1997 Compared To 1996 - --------------------- For the fiscal year ended March 31, 1997, the Partnership recorded a net loss of approximately $324,000, as compared to a net loss of approximately $331,000 for the prior fiscal year. The decrease in net loss is the result of a decrease in the Partnership's equity in net losses of the Operating Partnerships of approximately $11,000 and an increase in the expenses of approximately $3,000 for the current fiscal year. General and administrative expenses, namely allocated administrative expenses and partnership management fees, continue each fiscal year to comprise an increasing portion of the Partnership's net loss. This trend results primarily from a decrease in the Partnership's recognition of equity losses from the Operating Partnerships in each subsequent fiscal year. 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. One of the two investments has had an equity method basis of zero since March 31, 1993. The Partnership's recorded share of the Operating Partnership's losses in the current fiscal period consists of losses of approximately $147,000 from the Washington Courts Limited Partnership. In the prior fiscal year, losses of approximately $158,000 from the operations of Washington Courts were recorded. The carrying value of the Partnership's investment in Laurel-Clayton was reduced to zero during fiscal 1993. 10 11 In the aggregate, combined rental revenue of the Operating partnerships increased during the current calendar year. The combined total rental revenue increased by approximately $63,000 in the current calendar year, with the largest increase occurring at Laurel-Clayton. The average occupancy levels remained at or above 96% in both calendar years in both properties. Such results reflect the generally improving market conditions referred to above. In addition to the improvement of revenue, the combined total expenses of the two operating properties decreased by approximately $410,000 in the current year primarily due to certain nonrecurring maintenance projects that were completed in 1995 and no expenses were recorded for the projects in 1996. Inflation - --------- Inflation is not expected to have a material adverse impact on the Partnership's operations during its period of ownership of the Properties. Year 2000 Compliance - -------------------- Background. Some computers, software, and other equipment include programming code in which calendar year data is abbreviated to only two digits. As a result of this design decision, some of these systems could fail to operate or fail to produce correct results in "00" is interpreted to mean 1900, rather than 2000. These problems are widely expected to increase in frequency and severity as the year 2000 approaches, and are commonly referred to as the "Millennium Bug" or "Year 2000 problem". Assessment. The Year 2000 problem could affect computers, software and other equipment used, operated, or maintained by the Company. Accordingly, the Company is reviewing its internal computers, software, applications and related equipment and its systems other than information technology systems to ensure that they will be Year 2000 compliant. The Company believes that its Year 2000 plan will be completed in all material respects prior to the anticipated Year 2000 failure dates. ITEM 8. FINANCIAL STATEMENTS -------------------- The financial statements together with the report of the independent auditors thereon are set forth on the pages indicated in ITEM 14. ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND ------------------------------------------------------------ FINANCIAL DISCLOSURE -------------------- On April 15, 1999, the prior auditors, Novogradac & Company LLP, were dismissed as auditors for the Partnership. The decision to change accountants was approved by the Partnership's Board of Directors. Novogradac & Company LLP's report on the Partnership's financial statements for the years ended March 31, 1998, contained a modification as to uncertainty of the Partnerships to continue as a going concern. 11 12 Novogradac & Company LLP's report on the above mentioned financial statements contained no adverse opinions or disclaimer of opinions, and was not qualified as to uncertainty, audit scope or accounting principles, other than those previously discussed. Effective April 15, 1999, the Partnership engaged Rubin, Brown, Gornstein & Co., LLP to perform the audit of the Partnership's financial statements as of and for the year ending March 31, 1999. There are no known disagreements on any matter of accounting principles or practices or financial statement disclosure with current or predecessor auditors. 12 13 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 II Corporation (CPII) (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 investment objectives. Mr. Deutch, the Managing General Partner, has the overall responsibility for the preparation and transmittal of periodic reports to the Limited Partners, preparation and filing of the Partnership's tax returns with the IRS and the appropriate state tax authorities, and the preparation and filing of reports to HUD and other Government Agencies. Following is biographical information on Mr. Deutch and the Executive Officers of CPII: IRWIN JAY DEUTCH Irwin Jay Deutch, age 58, is Chairman of the Board, President, and Chief Executive Officer of Century Pacific Realty Corporation (CPRC), a General Partner of the Operating Partnerships that own the Properties in which CPTCHF-II has invested, and its Affiliates. Mr. Deutch has been involved with low-income housing investments since 1968. He is the individual general partner in 62 private limited partnerships and two public limited partnerships investing in 209 properties, including 196 multifamily properties with 33,700 apartment units, 10 commercial projects, and 3 hotel properties. Fifty-eight of the 62 private limited partnerships have invested in affordable housing. In his capacity as general partner and officer of CPRC, he oversees the management of these partnerships and assumes overall responsibility for the development, direction, and operation of all affiliated CPRC companies. Mr. Deutch is recognized as an expert in the field of affordable housing and frequently addresses professional groups on topics of real estate investment, syndication, tax law, and the Low-Income Housing Tax Credit program. Mr. Deutch received a B.B.A. with distinction from the University of Michigan School of Business Administration in 1962 and a Juris Doctor degree with honors from the University of Michigan Law School in 1965. He is a member of the Order of the Coif. Mr. Deutch served in the Honors Program in the Office of the Chief Counsel of the Internal Revenue Service from 1965 to 1967, where he was assigned to the Interpretative Division in Washington, D.C. He attended Georgetown Law Center and received his Master of Laws degree in taxation in 1967. Mr. Deutch is a member of the State Bars of Michigan and California, as well as the American, Federal, Los Angeles, and Beverly Hills Bar Associations. 13 14 KEY OFFICERS OF CPII AND AFFILIATES ESSIE SAFAIE, age 50, is Chief Financial Officer and Chief Operating Officer of CPRC. Prior to joining CPRC in 1988, from 1985-88, he was Vice President and Chief Financial Officer of Sunrise Investments, Inc., a real estate syndication firm with $450 million of real estate under management. During this period, Mr. Safaie was also President of an affiliated property management firm, S&L Property Management, Inc., with over 12,000 residential units and 800,000 square feet of commercial office space under direct management. From 1982 to 1985, Mr. Safaie was assistant controller of Standard Management Company, builders and managers of luxury hotels, commercial offices and residential units. From 1980-1982, he served as financial officer of Diamond "M" Drilling Company. Mr. Safaie received a BA degree in Business Administration from California State University with a major in accounting. CHARLES L. SCHWENNESEN, age 53, is Vice President of Acquisition Finance for CPRC and is responsible for financial analysis and "due diligence" reviews of all properties acquired by CPRC. Prior to joining CPRC in 1987, he was a consultant to companies which provided investment opportunities through private placements. From 1984 to 1985, Mr. Schwennesen was vice President of Cranston Securities Company and was responsible for the structuring of more than $30 million of mortgage revenue bond financing for affordable housing projects. From 1977 to 1984, Mr. Schwennesen was a manager with the accounting firm of Price Waterhouse where he specialized in providing auditing and consulting services to publicly held California real estate development companies involved in the affordable housing industry. Mr. Schwennesen is a Certified Public Accountant and holds a Masters degree in Business Administration from the UCLA Graduate School of Management and a B.A. degree in Mathematics from UCLA. ITEM 11. EXECUTIVE COMPENSATION ---------------------- The Partnership has no officers or directors. However, in connection with the operations of the partnership and the Operating Partnerships, the General Partners and their Affiliates will or may receive certain fees, compensation, income and other payments which are described in the Prospectus under "Compensation, Fees and Reimbursements" on page 17, the terms of which are incorporated herein by reference. During the fiscal years ended March 31, 1999, 1998, and 1997, CPII, a General Partner of the Partnership, earned $144,440, $140,708, and $136,106, respectively, of partnership management fees. During the fiscal years ended March 31, 1999, 1998 and 1997, the Partnership accrued $37,600, $37,600 and $37,600, respectively, for the reimbursement of overhead allocation from Century Pacific Investment Corporation (CPIC). During fiscal year 1999, the General Partners received no payments from the Operating Partnerships. 14 15 ITEM 12. PARTNERSHIP INTEREST OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ----------------------------------------------------------- AND MANAGEMENT -------------- No partner in CPTCHF-II 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. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ---------------------------------------------- Irwin J. Deutch is the Managing General Partner of CPTCHF-II, and CPII is also a General Partner. Irwin J. Deutch is the sole Director and President of CPII, and the stock of CPII 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), a General Partner of the Operating Partnerships that own the Properties in which CPTCHF-II has invested. CPII received a partnership management fee for its services in managing and advising the Partnership and its business. CPIC, an affiliate, provides all the services and materials necessary for the operation of the Partnership and is reimbursed for actual costs. These transactions are more particularly set forth in the financial statements found under ITEM 14. 15 16 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K --------------------------------------------------------------- (a) Exhibits - see the Exhibit Index at page 17 of this report. (1) Financial Statements: Independent Auditors' Report F-1 Balance Sheet as of March 31, 1999 and 1998 F-3 Statement of Partners' Equity for the Years Ended March 31, 1999, 1998, and 1997 F-4 Statement of Operations for the Years Ended March 31, 1999, 1998 and 1997 F-5 Statement of Cash Flows for the Years Ended March 31, 1999, 1998 and 1997 F-6 Notes to Financial Statements F-7 (2) Financial Statement Schedules: Schedule III - Real Estate and Accumulated Depreciation of Operating Partnerships in which CPTCHF-II has Limited Partnership Interests F-14 Notes to Schedule III - Real Estate and Accumulated Depreciation of Operating Partnerships in which CPTCHF-II has Limited Partnership Interests F-15 Schedule IV - Mortgage Loans on Real Estate of Operating Partnerships in which CPTCHF-II has Limited Partnership Interests F-16 Notes to Schedule IV - Mortgage Loans on Real Estate of Operating Partnerships in which CPTCHF-II has Limited Partnership Interests F-17 All other schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto. (b) Reports on Form 8-K Registrant did file with the Securities and Exchange Commission a Current Report on Form 8-K during the year ending March 31, 1999.
16 17 EXHIBIT INDEX These exhibits are numbered in accordance with the exhibit table of Item 601 of Regulation S-K.
Exhibit Number Description -------------------------------------------------------------------------- 11 Omitted - inapplicable 12 Omitted - inapplicable 13 Omitted - inapplicable 16 Omitted - inapplicable 18 Omitted - inapplicable 21 Omitted - inapplicable 23 Omitted - inapplicable 27 Financial Data Schedule Financial Statements of Washington Courts (Equity Investment)
17 18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. CENTURY PACIFIC TAX CREDIT HOUSING FUND Date: ------------------------------- ------------------------------------ By: Irwin Jay Deutch, as Managing General Partner and Century Pacific Capital II Corporation, as Corporate General Partner and as attorney-in-fact for all Investor Limited Partners Date: ------------------------------- ------------------------------------ By: Irwin Jay Deutch, President 18 19 INDEPENDENT AUDITORS' REPORT Partners Century Pacific Tax Credit Housing Fund - II We have audited the accompanying balance sheet of Century Pacific Tax Credit Housing Fund - II as of March 31, 1999, and the related statements of operations, partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Century Pacific Tax Credit Housing Fund - II as of March 31, 1999 and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 6 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 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have also prepared, from information audited by us, the related financial statement schedules listed in Item 14(b)(2) as of December 31, 1998. In our opinion the financial statement schedules present fairly, in all material respects, the information required to be set forth therein. St. Louis, Missouri June 22, 1999 F-1 20 REPORT OF INDEPENDENT AUDITORS' To the Partners of Century Pacific Tax Credit Housing Fund-II We have audited the accompanying balance sheet of Century Pacific Tax Credit Housing Fund-II (the "Partnership"), as of March 31, 1998, and the related statements of operations, changes in partners' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the financial statements of Washington Courts Apartments and Plumley Village Apartments, which statements reflect total assets and revenues constituting 100 percent of the Operating Partnerships. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Washington Courts Apartments and Plumley Village Apartments, is based solely on the report of the other auditors. The financial statements of Century Pacific Tax Credit Housing Fund-II for the years ended March 31, 1997 and 1996 were audited by other auditors, whose reports dated May 30, 1997 and June 13, 1996, respectively, included an explanatory paragraph describing conditions that raised substantial doubt about the partnership's ability to continue as a going concern. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Century Pacific Tax Credit Housing Fund-II as of March 31, 1998, and the results of its operations, changes in partners' equity (deficit) and cash flows for the year then ended in conformity with generally accepted accounting principles. F-2 21 To the Partners of Century Pacific Tax Credit Housing Fund-II - ------------------------------------------------------------------------------ The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 6 to the financial statements, the Partnership's Operating Partnerships have suffered recurring operating losses, have not provided sufficient cash distributions and the Partnership has a net capital deficiency, which raises substantial doubt about the Partnership's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have also audited, from information audited by us and other auditors, the related financial statement schedules listed in Item 14(b)(2) as of December 31, 1997. In our opinion, the financial statement schedules present fairly, in all material respects, the information required to be set forth therein. Atlanta, Georgia June 15, 1998 F-3 22 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - --------------------------------------------------------------------------------------------------------------- BALANCE SHEET ASSETS
MARCH 31, --------------------------------------- 1999 1998 --------------------------------------- Cash $ 1,876 $ 343 Advance to a general partner (Note 3) 871 871 Investments in operating partnerships (Note 4) 681,575 1,000,271 - --------------------------------------------------------------------------------------------------------------- $ 684,322 $1,001,485 =============================================================================================================== LIABILITIES AND PARTNERS' EQUITY LIABILITIES Accounts payable and accrued expenses $ 8,300 $ 3,300 Due to affiliates (Note 3) 1,470,267 1,284,224 Loan payable - affiliate (Note 3) 40,594 40,594 - --------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 1,519,161 1,328,118 - --------------------------------------------------------------------------------------------------------------- PARTNERS' EQUITY General partners (57,402) (52,320) Limited partners, $1,000 stated value per unit, 25,000 units authorized, 5,754 units issued and outstanding (777,437) (274,313) - --------------------------------------------------------------------------------------------------------------- TOTAL PARTNERS' EQUITY (834,839) (326,633) - --------------------------------------------------------------------------------------------------------------- $ 684,322 $1,001,485 =============================================================================================================== F-4 - --------------------------------------------------------------------------------------------------------------- See the accompanying notes to the financial statements.
23 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - --------------------------------------------------------------------------------------------------------------- STATEMENT OF PARTNERS' EQUITY FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997
GENERAL LIMITED PARTNERS PARTNERS TOTAL ----------------------------------------------- PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1996 $(44,778) $ 472,335 $ 427,555 NET LOSS (3,243) (321,040) (324,283) - --------------------------------------------------------------------------------------------------------------- PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1997 (48,021) 151,295 103,272 NET LOSS (4,299) (425,608) (429,907) - --------------------------------------------------------------------------------------------------------------- PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1998 (52,320) (274,313) (326,635) NET LOSS (5,082) (503,124) (508,206) - --------------------------------------------------------------------------------------------------------------- PARTNERS' EQUITY (DEFICIT) - MARCH 31, 1999 $ (57,402) $ (777,437) $ (834,841) =============================================================================================================== PERCENTAGE INTEREST - MARCH 31, 1999 1% 99% 100% =============================================================================================================== F-5 - --------------------------------------------------------------------------------------------------------------- See the accompanying notes to the financial statements.
24 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - --------------------------------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, -------------------------------------------------- 1999 1998 1997 -------------------------------------------------- REVENUES Transfer fees $ 1,600 $ 200 $ 1,200 EXPENSES Partnership management fee - affiliate (Note 3) 144,440 140,708 136,106 Allocated overhead expenses - affiliate (Note 3) 37,600 37,600 37,600 Other general and administrative expenses 9,070 3,875 4,905 - --------------------------------------------------------------------------------------------------------------- TOTAL EXPENSES 191,110 182,183 178,611 - --------------------------------------------------------------------------------------------------------------- LOSS BEFORE EQUITY IN NET LOSSES OF OPERATING PARTNERSHIPS (189,510) (181,983) (177,411) EQUITY IN NET LOSSES OF OPERATING PARTNERSHIPS (NOTE 4) (318,696) (247,924) (146,872) - --------------------------------------------------------------------------------------------------------------- NET LOSS $(508,206) $(429,907) $(324,283) =============================================================================================================== ALLOCATION OF NET LOSS General partners $ (5,082) $ (4,299) $ (3,243) Limited partners (503,124) (425,608) (321,040) - --------------------------------------------------------------------------------------------------------------- $(508,206) $(429,907) $(324,283) =============================================================================================================== NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST $ (88) $ (75) $ (56) =============================================================================================================== AVERAGE NUMBER OF OUTSTANDING UNITS 5,754 5,754 5,754 =============================================================================================================== F-6 - --------------------------------------------------------------------------------------------------------------- See the accompanying notes to the financial statements.
25 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - --------------------------------------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, --------------------------------------------------- 1999 1998 1997 --------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(508,206) $(429,907) $(324,283) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Equity in net losses of operating partnerships 318,696 247,924 146,872 Change in assets and liabilities: Increase in advance to a general partner -- (1) (100) Increase (decrease) in accounts payable and accrued expenses 5,000 (4,024) (4,002) Increase in due to affiliates 186,043 186,004 179,006 Increase in loan payable - affiliate -- 1 675 - --------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,533 (3) (1,832) - --------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH 1,533 (3) (1,832) CASH - BEGINNING OF YEAR 343 346 2,178 - --------------------------------------------------------------------------------------------------------------- CASH - END OF YEAR $ 1,876 $ 343 $ 346 =============================================================================================================== F-7 - --------------------------------------------------------------------------------------------------------------- See the accompanying notes to the financial statements.
26 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS MARCH 31, 1999, 1998 AND 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The Partnership maintains its financial records on the tax basis. Memorandum entries, while not recorded in the records of the Partnership, have been made in order to prepare the financial statements in accordance with generally accepted accounting principles. On August 7, 1991, management of the Partnership changed from a calendar year end to a fiscal year end of March 31 for financial reporting purposes. Accordingly, the Partnership's quarterly periods end June 30, September 30 and December 31. The Operating Partnerships, for financial reporting purposes, have a calendar year. The Partnership, as well as the Operating Partnerships, have a calendar year for income tax purposes. ESTIMATES AND ASSUMPTIONS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. INVESTMENTS IN OPERATING PARTNERSHIPS The Partnership uses the equity method to account for its investments in the Operating Partnerships (Note 4). Under the equity method of accounting, the investments are 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. SYNDICATION COSTS Public offering costs have been recorded as a direct reduction to the capital accounts of the Limited Partners. F-8 - ------------------------------------------------------------------------------ 27 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) 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. NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST Net loss per unit of limited partnership interest is calculated based upon the weighted average number of units of limited partnership interest (units) outstanding, which is 5,754 for the years ending March 31, 1999, 1998, and 1997. 2. OPERATIONS Century Pacific Tax Credit Housing Fund-II, a California limited partnership, (the Partnership or CPTCHF-II), was formed on September 2, 1988 for the purpose of raising capital by offering and selling limited partnership interests and then acquiring limited partnership interests in partnerships (the Operating Partnerships) owning and operating existing residential apartment rental properties (the Properties). The general partners of the Partnership are Century Pacific Capital II Corporation, a California corporation (CPII), and Irwin Jay Deutch, an individual (collectively, the general partners). The general partners and affiliates of the general partners (the general partners and affiliates) have interests in the Partnership and receive compensation from the Partnership and the Operating Partnerships (Note 3). The Properties qualify for the Low-Income Housing Tax Credit established by Section 42 of the Tax Reform Act of 1986 (the Low-Income Housing Tax Credit). These properties are leveraged low-income multifamily residential complexes and receive one or more forms of assistance from federal, state or local governments, or agencies (the Government Agencies). In September 1988, 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 25,000 Partnership Units of which 5,754 were subscribed and issued. The limited partnership interest offering closed as of December 31, 1989. F-9 - ------------------------------------------------------------------------------ 28 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) As of March 31, 1999, the Partnership has acquired limited partnership interests of 90% in Washington Courts Limited Partnership and 60% in Laurel-Clayton Limited Partnership, two existing Operating Partnerships which own apartment rental properties. The Partnership is currently experiencing a liquidity problem as the Partnership's Operating Partnerships have not achieved operating results required to provide the Partnership with sufficient cash distributions to fund the Partnership's administrative costs. As a result of the foregoing, the Partnership has been dependent upon its affiliates and the general partners for continued financial support to meet its expenses. Though there can be no assurance, management believes that affiliates and/or the general partners, though not required to do so, will continue to fund operations of the Partnership and defer receipt of payment on management fees and allocated overhead expenses. Unpaid management fees and allocated overhead expenses will accrue for payment in future operating years. Management believes that these factors do not permanently impair the net carrying value of the Partnership's investment in the Operating Partnerships. 3. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES OF THE GENERAL PARTNERS 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 CPII, is a general partner in each of the Operating Partnerships. The general partners have an aggregate one percent interest in the Partnership. CPRC has a one-half percent interest in each of the Operating Partnerships. 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. Pursuant to the partnership agreement, the Partnership is required to pay CPII an annual management fee for its services in connection with the management of the affairs of the Partnership. The annual management fee is equal to .5% of invested assets (as defined by the partnership agreement). 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 and operational stage. F-10 - ------------------------------------------------------------------------------ 29 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) The general partners and affiliates earned the following fees for services provided to the Partnership and were entitled to reimbursement for costs incurred by the general partners and affiliates on behalf of the Partnership and the Operating Partnerships for the years ended March 31, 1999, 1998 and 1997 as follows:
1999 1998 1997 ------------------------------------------------ Fees and reimbursement from the Partnership: Partnership management fee (CPII) $144,440 $140,708 $136,106 Reimbursement for overhead allocated from Century Pacific Investment Corporation (CPIC) 37,600 37,600 37,600 -------- -------- -------- $182,040 $178,308 $173,706 ======== ======== ========
At March 31, 1999 and 1998, amounts due to affiliates consist of fees and certain general and administrative costs payable by the Partnership to the general partners and affiliates totalling $1,467,065 and $1,284,224, respectively. At March 31, 1999 and 1998, CPII owed the Partnership for an unsecured, noninterest bearing advance of $871. At March 31, 1999 and 1998, CPRC was owed $40,594 for a noninterest bearing, demand, cash advance to the Partnership. At March 31, 1999, CPII was owed $3,202 for a noninterest bearing, demand cash advance made during the current fiscal year 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. At March 31, 1999 and 1998, the Partnership had no outstanding advances due to the general partners. F-11 - ------------------------------------------------------------------------------ 30 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) 4. INVESTMENTS IN OPERATING PARTNERSHIPS At March 31, 1999 and 1998, the Partnership owned limited partnership interests in two Operating Partnerships, each of which has invested in a Property. Investments in Operating Partnerships consist of the following:
1999 1998 ------------------------------------ Cash contributions to Operating Partnerships to fund purchase of properties and acquisition and organization costs $ 4,536,020 $ 4,536,020 Equity in net losses of Operating Partnerships (3,854,445) (3,535,749) ------------------------------------------------------------------------------------------- $ 681,575 $ 1,000,271 ===========================================================================================
The names and locations of the Properties in which the Operating Partnerships hold beneficial interests are as follows:
NAME OF NAME AND OPERATING PARTNERSHIP LOCATION OF PROPERTY Washington Courts Limited Partnership Washington Courts Chicago, Illinois Laurel-Clayton Limited Partnership Plumley Village Boston, Massachusetts
A summary of the combined balance sheet as of December 31, 1998 and 1997 and statements of operations of the aforementioned Operating Partnerships for the years then ended follows:
COMBINED BALANCE SHEET ASSETS 1998 1997 ------------------------------------ Cash $ 142,430 $ 631,703 Reserve for replacements 1,065,487 733,866 Land and buildings 18,770,286 19,060,724 Other assets 1,223,372 1,139,093 -------------------------------------------------------------------------------------------- $21,201,575 $21,565,386 ============================================================================================
F-12 - ------------------------------------------------------------------------------ 31 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued)
LIABILITIES AND PARTNERS' EQUITY (DEFICIT) 1998 1997 ------------------------------------ Notes payable $24,275,411 $23,853,491 Other liabilities 749,915 910,768 -------------------------------------------------------------------------------------------- 25,025,326 24,764,259 Partners' equity (deficit) (3,823,751) (3,198,873) -------------------------------------------------------------------------------------------- $21,201,575 $21,565,386 ============================================================================================ COMBINED STATEMENT OF OPERATIONS 1998 1997 ------------------------------------ REVENUES Rental income 5,168,701 5,354,267 Other income 804,812 577,812 -------------------------------------------------------------------------------------------- TOTAL REVENUES $ 5,973,513 $ 5,932,079 -------------------------------------------------------------------------------------------- EXPENSES Utilities 813,115 815,616 Repairs and maintenance 1,315,176 1,140,101 Management fees 305,088 303,688 Other operating expenses 1,205,719 1,327,698 Interest 1,847,720 1,831,665 Depreciation and amortization 1,032,170 990,504 -------------------------------------------------------------------------------------------- TOTAL EXPENSES 6,518,988 6,409,272 -------------------------------------------------------------------------------------------- NET LOSS $ (545,475) $ (477,193) ============================================================================================ ALLOCATION OF LOSS General partners and other limited partners (135,549) (143,158) CPTCHF-II (409,926) (334,035) -------------------------------------------------------------------------------------------- $ (545,475) $ (477,193) ============================================================================================
F-13 - ------------------------------------------------------------------------------ 32 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------ Notes To Financial Statements (Continued) 5. COMMITMENTS AND CONTINGENCIES The Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD) exercise control over the projects through provisions of Regulatory Agreements (the Agreements). The Agreements restrict the Projects, without prior written approval from HUD, from encumbering, acquiring, altering or disposing of land, buildings and equipment; using the Properties for any purpose other than the use originally intended; engaging in any other business or activity; and paying distributions to partners, compensation to officers or directors, or for any purpose other than reasonable operating expenses. The Agreements also stipulate that FHA and HUD shall control the rental rates, rate of return on investment and method of operation. In addition, the Agreements require the Properties to make cash deposits on a monthly basis into a reserve fund for replacements. The respective mortgagees are the designated custodians of the reserve funds and withdrawals can only be made with HUD approval. 6. GOING CONCERN The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplates continuation of the Partnership as a going concern. However, the Partnership's Operating Partnerships have not achieved the operating results required to provide the Partnership with sufficient cash distributions to fund the Partnership's administrative costs. Additionally, the Partnership has incurred allocated losses from all but one of its Operating Partnerships to the extent of the Partnership's cash contributions. As a result of the foregoing, the Partnership is dependent upon the general partners and affiliates for continued financial support. Management maintains that the general partners and affiliates, though not required to do so, will continue to fund operations by deferring payment to related parties of allocated overhead expenses, and by funding any Partnership operating costs. Unpaid allocated overhead expenses will accrue and become payable when the Operating Partnerships generate sufficient cash distributions to the Partnership to cover such expenses. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. F-14 - ------------------------------------------------------------------------------ 33 Schedule III Page 1 Of 1 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------------------------------------------------ REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 1998
COST CAPITALIZED INITIAL COST TO SUBSEQUENT OPERATING PARTNERSHIP TO ACQUISITION --------------------------------- --------------------------------- ENCUMBRANCES BUILDINGS AND BUILDINGS AND DESCRIPTION LAND IMPROVEMENTS LAND IMPROVEMENTS - ------------------------------------------------------------------------------------------------------------------------ Washington Courts Apartments Chicago, Illinois 103 Residential Units $ 5,007,487 $ 75,300 $ 1,720,666 $ -- $5,419,675 Plumley Village Apartments Boston, Massachusetts 430 Residential Units 19,267,924 1,100,000 17,383,785 -- 3,188,473 - ------------------------------------------------------------------------------------------------------------------------ $24,275,411 $1,175,300 $19,104,451 $ -- $8,608,148 ======================================================================================================================== LIFE UPON WHICH GROSS AMOUNT AT WHICH ACCUMULATED DEPRECIATION CARRIED AT CLOSE OF YEAR DEPRECIATION IN LATEST -------------------------------------- ------------ INCOME BUILDINGS BUILDINGS DATE OF DATE STATEMENT LAND IMPROVEMENT TOTAL IMPROVEMENT CONSTRUCTION ACQUIRED IS COMPUTED - ------------------------------------------------------------------------------------------------------------------------------------ Washington Courts Apartments Chicago, Illinois 103 Residential Units $ 75,300 $ 7,140,341 $ 7,215,641 $ 2,359,398 1991 1/89 27.5 years Plumley Village Apartments Boston, Massachusetts 430 Residential Units 1,100,000 20,572,258 21,672,258 7,758,215 1972 9/89 27.5 years - ---------------------------------------------------------------------------------------------- $1,175,300 $27,712,599 $28,887,899 $10,117,613 ============================================================================================== See notes to schedule F-14
- ------------------------------------------------------------------------------ 34 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------ NOTES TO SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION OF OPERATING PARTNERSHIPS IN WHICH CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 1998 NOTE 1 - DESCRIPTION OF PROPERTIES - ---------------------------------- The Properties held by the Operating Partnerships in which CPTCHF-II has invested are housing projects, primarily for families and elderly or handicapped individuals of low and moderate income. NOTE 2 - SCHEDULE OF ENCUMBRANCES - ---------------------------------
OPERATING PARTNERSHIP MORTGAGE RESIDUAL PURCHASE OTHER NAME AND PROPERTY NAME NOTES NOTE NOTE NOTES TOTAL - ----------------------------------------------------------------------------------------------------------------- Washington Courts L/P Washington Courts $ 5,007,487 $ -- $ -- $ -- $ 5,007,487 Laurel-Clayton L/P Plumley Village 7,572,225 5,895,924 5,393,880 405,895 19,267,924 - ----------------------------------------------------------------------------------------------------------------- $12,579,712 $5,895,924 $5,393,880 $405,895 $24,275,411 =================================================================================================================
NOTE 3 - RECONCILIATION OF REAL ESTATE AND ACCUMULATED DEPRECIATION - -------------------------------------------------------------------
Accumulated Cost Depreciation ------------------------------------ Balance at December 31, 1995 $26,419,378 $ 7,066,787 Additions during year: Depreciation -- 1,023,530 Improvements 801,892 -- ------------------------------------ Balance at December 31, 1996 27,221,270 8,090,317 Additions during year: Depreciation -- 990,504 Improvements 920,275 -- ------------------------------------ Balance at December 31, 1997 28,141,545 9,080,821 Additions during year: Depreciation -- 1,036,792 Improvements 746,354 -- ------------------------------------ Balance at December 31, 1998 $28,887,899 $10,117,613 ====================================
F-15 - ------------------------------------------------------------------------------ 35 Schedule IV ----------- Page 1 of 1 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ---------------------------------------------------------------------------------------------------------------------- MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 1998
MONTHLY FINAL PAYMENTS TO ORIGINAL CARRYING MATURITY MATURITY (NET OF FACE AMOUNT AMOUNT OF DESCRIPTION INTEREST RATE DATE HUD SUBSIDY) OF MORTGAGE MORTGAGE - --------------------------------------------------------------------------------------------------------------------- First mortgages assumed by Operating Partnerships: Washington Courts Limited Partnership Washington Courts 9.25% 2031 $40,841 $ 5,165,400 $ 5,007,487 Laurel-Clayton Limited Partnership Plumley Village 8.5% 2012 23,015 10,635,000 7,572,225 -------------------------------------------------- Total $63,856 $15,800,400 $12,579,712 ================================================== See notes to schedule F-16
- ------------------------------------------------------------------------------ 36 CENTURY PACIFIC TAX CREDIT HOUSING FUND-II - ------------------------------------------------------------------------------ NOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE OF OPERATING PARTNERSHIPS IN WHICH CPTCHF-II HAS LIMITED PARTNERSHIP INTERESTS DECEMBER 31, 1998 NOTE 1 - DESCRIPTION ----------- Each Operating Partnership has invested in a Property. Laurel-Clayton Limited Partnership assumed a mortgage loan obligation from the seller of the Property. The mortgage loan obligation is insured by the United States Department of Housing and Urban Development and is secured by the land and buildings of the Property. Washington Courts Limited Partnership has obtained permanent financing in the principal amount of $5,165,400 which is insured by the Federal Housing Administration. The loan bears interest at 9.25% per annum. The note will be amortized over a period of 40 years. Prepayment is prohibited during the construction period and for ten years from the date of completion of construction. NOTE 2 - RECONCILIATION OF MORTGAGES ---------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998 ------------------------------------------- MORTGAGE RESIDUAL LOANS NOTES ------------------------------------------- Balance at beginning of year $12,884,235 $4,451,913 Additions during year: Accrued interest -- 1,444,011 Deductions during year: Payments 304,523 -- ------------------------------------------- $12,579,712 $5,895,924 ===========================================
F-17 - ------------------------------------------------------------------------------ 37 ============================================================================== - ------------------------------------------------------------------------------ WASHINGTON COURTS LIMITED PARTNERSHIP 071-35593 FINANCIAL STATEMENTS DECEMBER 31, 1998 - ------------------------------------------------------------------------------ ============================================================================== 38 CONTENTS - ------------------------------------------------------------------------------
PAGE Independent Auditors' Report 1 Balance Sheet 2 - 3 Statement Of Profit And Loss 4 - 7 Statement Of Partners' Equity 8 Statement Of Cash Flows 9 - 10 Notes To Financial Statements 11 - 14 Supporting Data Required By HUD 15 - 17 Independent Auditors' Report On Internal Controls 18 - 19 Independent Auditors' Report On Compliance With Specific Requirements Applicable To Major HUD Programs 20 Independent Auditors' Report On Compliance With Specific Requirements Applicable To Fair Housing And Non-Discrimination 21 Schedule Of Findings And Questioned Costs 22 - 23 Auditors' Comments On Audit Resolution Matters Relating To The HUD Programs 24 Mortgagor's Certification 25 Management Agent's Certification 26 Auditor's Transmittal Letter 27
39 S2300-020 INDEPENDENT AUDITORS' REPORT To The Partners Washington Courts Limited Partnership Los Angeles, California We have audited the accompanying balance sheet of Washington Courts Limited Partnership, Project No. 071-35593, a limited partnership, as of December 31, 1998 and 1997, and the related statements of profit and loss, partners' equity 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 audits. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Washington Courts Limited Partnership as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information (shown on pages 15 to 17 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated January 28, 1999 on our consideration of Washington Courts Limited Partnership's internal controls and a report dated January 28, 1999 on its compliance with laws and regulations. January 28, 1999 40 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - ---------------------------------------------------------------------------------------------------------------------- BALANCE SHEET PAGE 1 OF 2 ASSETS
DECEMBER 31, ------------------------------------------ 1998 1997 ------------------------------------------ CURRENT ASSETS 1120 Cash - operations $ 22,615 $ 148,343 1130 Tenant accounts receivable 2,378 15,110 1135 Accounts receivable - HUD -- 6,870 1190 Miscellaneous current assets 100 100 1200 Miscellaneous prepaid expenses 30,382 31,174 - ---------------------------------------------------------------------------------------------------------------------- 1100T TOTAL CURRENT ASSETS 55,475 201,597 - ---------------------------------------------------------------------------------------------------------------------- DEPOSITS HELD IN TRUST - FUNDED 1191 Tenant deposits held in trust 12,800 13,683 - ---------------------------------------------------------------------------------------------------------------------- RESTRICTED DEPOSITS AND FUNDED RESERVES 1310 Escrow deposits 29,627 22,804 1320 Replacement reserve 64,524 72,078 - ---------------------------------------------------------------------------------------------------------------------- 1300T TOTAL DEPOSITS 94,151 94,882 - ---------------------------------------------------------------------------------------------------------------------- FIXED ASSETS 1410 Land 75,300 75,300 1420 Buildings 7,066,695 7,048,175 1440 Building equipment - portable 8,061 -- 1465 Office furniture and equipment 65,585 65,585 - ---------------------------------------------------------------------------------------------------------------------- 1400T Total Fixed Assets 7,215,641 7,189,060 1495 Less: Accumulated depreciation 2,359,398 2,093,234 - ---------------------------------------------------------------------------------------------------------------------- 1400N NET FIXED ASSETS 4,856,243 5,095,826 - ---------------------------------------------------------------------------------------------------------------------- OTHER ASSETS 1520 Intangible assets 558,807 577,790 - ---------------------------------------------------------------------------------------------------------------------- 1000T TOTAL ASSETS $5,577,476 $5,983,778 ====================================================================================================================== - ---------------------------------------------------------------------------------------------------------------------- See the accompanying notes to financial statements Page 2 41 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - ---------------------------------------------------------------------------------------------------------------------- BALANCE SHEET PAGE 2 OF 2 LIABILITIES DECEMBER 31, ------------------------------------------ 1998 1997 ------------------------------------------ CURRENT LIABILITIES 2110 Accounts payable - operations $ 19,504 $ 64,320 2113 Accounts payable - entity 68,269 69,876 2120 Accrued wages payable 3,357 4,205 2123 Accrued management fee payable 20,744 5,612 2131 Accrued interest payable - first mortgage 38,599 34,350 2150 Accrued property taxes 35,328 38,120 2170 Mortgage payable - first mortgage (short-term) 28,282 25,793 2190 Miscellaneous current liabilities 6,410 2,509 2210 Prepaid revenue 767 -- - ---------------------------------------------------------------------------------------------------------------------- 2122T TOTAL CURRENT LIABILITIES 221,260 244,785 - ---------------------------------------------------------------------------------------------------------------------- DEPOSIT AND PREPAYMENT LIABILITIES 2191 Tenant deposits held in trust (contra) 12,800 12,618 - ---------------------------------------------------------------------------------------------------------------------- LONG-TERM LIABILITIES 2320 Mortgage payable - first mortgage 4,979,205 5,007,290 - ---------------------------------------------------------------------------------------------------------------------- 2000T TOTAL LIABILITIES 5,213,265 5,264,693 PARTNERS' EQUITY 3130 Partners' equity 364,211 719,085 - ---------------------------------------------------------------------------------------------------------------------- 2033T TOTAL LIABILITIES AND PARTNERS' EQUITY $5,577,476 $5,983,778 ====================================================================================================================== - ---------------------------------------------------------------------------------------------------------------------- See the accompanying notes to financial statements Page 3
42 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - ----------------------------------------------------------------------------------------------------------------------- STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------ PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT - ------------------------------------------------------------------------------------------------------------------------ Rent Revenue - Gross Potential 5120 $ 217,046 -------------------------------------------------------------------------------------- Tenant Assistance Payments 5121 $ 815,521 -------------------------------------------------------------------------------------- Rent Revenue - Stores and Commercial 5140 $ -------------------------------------------------------------------------------------- Garage and Parking Spaces 5170 $ -------------------------------------------------------------------------------------- Flexible Subsidy Revenue 5180 $ RENT -------------------------------------------------------------------------------------- REVENUE Miscellaneous Rent Revenue 5190 $ 5100 -------------------------------------------------------------------------------------- Excess Rent 5191 $ -------------------------------------------------------------------------------------- Rent Revenue/Insurance 5192 $ -------------------------------------------------------------------------------------- Special Claims Revenue 5193 $ -------------------------------------------------------------------------------------- Retained Excess Income 5194 $ ---------------------------------------------------------------------------------------------------- TOTAL RENT REVENUE 5100T $ 1,032,567 - ------------------------------------------------------------------------------------------------------------------------ Apartments 5220 $ 107,608 -------------------------------------------------------------------------------------- Stores and Commercial 5240 $ -------------------------------------------------------------------------------------- Rental Concessions 5250 $ VACANCIES -------------------------------------------------------------------------------------- 5200 Garage and Parking Space 5270 $ -------------------------------------------------------------------------------------- Miscellaneous 5290 $ ---------------------------------------------------------------------------------------------------- TOTAL VACANCIES 5200T $ 107,608 ---------------------------------------------------------------------------------------------------- NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 924,959 - ------------------------------------------------------------------------------------------------------------------------ Nursing Homes/Assisted Living/Board and 5300 Care/Other Elderly Care/ ---------------------------------------------------------------------------------------------------- Coop/ and Other Revenues 5300 $ - ------------------------------------------------------------------------------------------------------------------------ Financial Revenue - Project Operations 5410 $ 919 -------------------------------------------------------------------------------------- Revenue from Investments - Residual Receipts 5430 $ FINANCIAL -------------------------------------------------------------------------------------- REVENUE Revenue from Investments - Replacement Reserve 5440 $ 1,630 5400 -------------------------------------------------------------------------------------- Revenue from Investments - Miscellaneous 5490 $ 190 ---------------------------------------------------------------------------------------------------- TOTAL FINANCIAL REVENUE 5400T $ 2,739 - ------------------------------------------------------------------------------------------------------------------------ Laundry and Vending Revenue 5910 $ -------------------------------------------------------------------------------------- Tenant Charges 5920 $ 590 -------------------------------------------------------------------------------------- OTHER Interest Reduction Payments Revenue 5945 $ 1,595 REVENUE -------------------------------------------------------------------------------------- 5900 Miscellaneous Revenue 5990 $ ---------------------------------------------------------------------------------------------------- TOTAL OTHER REVENUE 5900T $ 2,185 ---------------------------------------------------------------------------------------------------- TOTAL REVENUE 5000T $ 929,883 - ------------------------------------------------------------------------------------------------------------------------ Conventions and Meetings 6203 $ -------------------------------------------------------------------------------------- Management Consultants 6204 $ -------------------------------------------------------------------------------------- Advertising and Marketing 6210 $ 509 -------------------------------------------------------------------------------------- Other Renting Expenses 6250 $ 588 -------------------------------------------------------------------------------------- Office Salaries 6310 $ 11,617 -------------------------------------------------------------------------------------- Office Expenses 6311 $ 5,788 -------------------------------------------------------------------------------------- Office or Model Apartment Rent 6312 $ -------------------------------------------------------------------------------------- Management Fee 6320 $ 47,068 ADMINISTRATIVE -------------------------------------------------------------------------------------- EXPENSES Manager or Superintendent Salaries 6330 $ 11,868 6200/6300 -------------------------------------------------------------------------------------- Administrative Rent Free Unit 6331 $ -------------------------------------------------------------------------------------- Legal Expense - Project 6340 $ 5,945 -------------------------------------------------------------------------------------- Audit Expense 6350 $ 7,761 -------------------------------------------------------------------------------------- Bookkeeping Fees/Accounting Services 6351 $ 3,011 -------------------------------------------------------------------------------------- Bad Debts 6370 $ 15,110 -------------------------------------------------------------------------------------- Miscellaneous Administrative Expenses 6390 $ 7,838 ---------------------------------------------------------------------------------------------------- TOTAL ADMINISTRATIVE EXPENSES 6263T $ 117,103 - ------------------------------------------------------------------------------------------------------------------------ Fuel Oil/Coal 6420 $ -------------------------------------------------------------------------------------- Electricity 6450 $ 3,110 UTILITIES -------------------------------------------------------------------------------------- EXPENSE Water 6451 $ 14,226 6400 -------------------------------------------------------------------------------------- Gas 6452 $ 65,998 -------------------------------------------------------------------------------------- Sewer 6453 $ 7,894 ---------------------------------------------------------------------------------------------------- TOTAL UTILITIES EXPENSE 6400T $ 91,228 ---------------------------------------------------------------------------------------------------- TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) $ 208,331 - ------------------------------------------------------------------------------------------------------------------------ Page 1 of 2 - ------------------------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements. Page 4 43 Project Name: Washington Courts Limited Partnership - ------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD $ 208,331 - ------------------------------------------------------------------------------------------------------------------------ Payroll 6510 $ 30,288 -------------------------------------------------------------------------------------- Supplies 6515 $ 86,406 -------------------------------------------------------------------------------------- Contracts 6520 $ 50,830 -------------------------------------------------------------------------------------- Operating and Maintenance Rent Free Unit 6521 $ -------------------------------------------------------------------------------------- Garbage and Trash Removal 6525 $ 14,332 OPERATING -------------------------------------------------------------------------------------- MAINTENANCE Security Payroll/Contract 6530 $ 11,489 EXPENSES -------------------------------------------------------------------------------------- 6500 Security Rent Free Unit 6531 $ -------------------------------------------------------------------------------------- Heating/Cooling Repairs and Maintenance 6546 $ 2,987 -------------------------------------------------------------------------------------- Snow Removal 6548 $ -------------------------------------------------------------------------------------- Vehicle and Maintenance Equipment Operation and Repairs 6570 $ 819 -------------------------------------------------------------------------------------- Miscellaneous Operating and Maintenance Expenses 6590 $ 21,325 ---------------------------------------------------------------------------------------------------- TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 218,476 - ------------------------------------------------------------------------------------------------------------------------ Real Estate Taxes 6710 $ 32,506 -------------------------------------------------------------------------------------- Payroll Taxes (Project's Share) 6711 $ 5,640 -------------------------------------------------------------------------------------- Property and Liability Insurance (Hazard) 6720 $ 14,569 TAXES -------------------------------------------------------------------------------------- AND Fidelity Bond Insurance 6721 $ INSURANCE -------------------------------------------------------------------------------------- 6700 Workmen's Compensation 6722 $ 886 -------------------------------------------------------------------------------------- Health Insurance and Other Employee Benefits 6723 $ 6,287 -------------------------------------------------------------------------------------- Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 1,587 ---------------------------------------------------------------------------------------------------- TOTAL TAXES AND INSURANCE 6700T $ 61,475 - ------------------------------------------------------------------------------------------------------------------------ Interest on Mortgage Payable 6820 $ 464,361 -------------------------------------------------------------------------------------- Interest on Notes Payable (Long-Term) 6830 $ FINANCIAL -------------------------------------------------------------------------------------- EXPENSES Interest on Notes Payable (Short-Term) 6840 $ 6800 -------------------------------------------------------------------------------------- Mortgage Insurance Premium/Service Charge 6850 $ 27,194 -------------------------------------------------------------------------------------- Miscellaneous Financial Expenses 6890 $ ---------------------------------------------------------------------------------------------------- TOTAL FINANCIAL EXPENSES 6800T $ 491,555 - ------------------------------------------------------------------------------------------------------------------------ Nursing Homes/ Assisted Living/ Board and Care/ Other 6900 ---------------------------------------------------------------------------------------------------- Elderly Care Expenses 6900 $ ---------------------------------------------------------------------------------------------------- TOTAL COST OF OPERATIONS BEFORE DEPRECIATION AND AMORTIZATION 6000T $ 979,837 - ------------------------------------------------------------------------------------------------------------------------ PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ (49,954) ---------------------------------------------------------------------------------------------------- Depreciation Expense 6600 $ 266,164 -------------------------------------------------------------------------------------- Amortization Expense 6610 $ 18,984 ---------------------------------------------------------------------------------------------------- TOTAL DEPRECIATION AND AMORTIZATION $ 285,148 ---------------------------------------------------------------------------------------------------- OPERATING PROFIT OR (LOSS) 5060N $ (335,102) - ------------------------------------------------------------------------------------------------------------------------ Officer's Salaries 7110 $ -------------------------------------------------------------------------------------- Legal Expenses 7120 $ -------------------------------------------------------------------------------------- Federal, State, and Other Income Taxes 7130 $ CORPORATE OR -------------------------------------------------------------------------------------- MORTGAGOR Interest Income 7140 $ ENTITY -------------------------------------------------------------------------------------- EXPENSES Interest on Notes Payable 7141 $ 7100 -------------------------------------------------------------------------------------- Interest on Mortgage Payable 7142 $ -------------------------------------------------------------------------------------- Other Expenses (Asset supervisory fees) 7190 $ 19,772 ---------------------------------------------------------------------------------------------------- NET ENTITY EXPENSES 7100T $ 19,772 ---------------------------------------------------------------------------------------------------- PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $ (354,874) - ------------------------------------------------------------------------------------------------------------------------ MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or more, attach a separate schedule describing or explaining the miscellaneous income or expense. - ------------------------------------------------------------------------------------------------------------------------
PART II - ------------------------------------------------------------------------------------------------------------------------ 1. Total mortgage principal payments required during the audit year (12 monthly payments). This applies to all direct loans and HUD-held and fully insured mortgages. Any HUD approved second mortgages should be included in the figures. (Account S1000-010) $ 25,793 - ------------------------------------------------------------------------------------------------------------------------ 2. Total of 12 monthly deposits in the audit year into the Replacement Reserve account, as required by the Regulatory Agreement even if payments may be temporarily suspended or reduced. (Account S1000-020) $ 20,093 - ------------------------------------------------------------------------------------------------------------------------ 3. Replacement Reserve or Residual Receipts releases which are included as expense items on this Profit and Loss Statement. (Account S1000-030) $ 21,217 - ------------------------------------------------------------------------------------------------------------------------ 4. Project Improvement Reserve Releases under the Flexible Subsidy Program that are included as expense items on this Profit and Loss Statement. (Account S1000-040) $ - ------------------------------------------------------------------------------------------------------------------------ Page 2 of 2
- ------------------------------------------------------------------------------ See the accompanying notes to financial statements Page 5 44 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - ------------------------------------------------------------------------------------------------------------------------ STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------------ PART 1 DESCRIPTION OF ACCOUNT ACCT. NO. AMOUNT - ------------------------------------------------------------------------------------------------------------------------ Rent Revenue - Gross Potential 5120 $ 244,975 -------------------------------------------------------------------------------------- Tenant Assistance Payments 5121 $ 817,588 -------------------------------------------------------------------------------------- Rent Revenue - Stores and Commercial 5140 $ -------------------------------------------------------------------------------------- Garage and Parking Spaces 5170 $ -------------------------------------------------------------------------------------- Flexible Subsidy Revenue 5180 $ RENT -------------------------------------------------------------------------------------- REVENUE Miscellaneous Rent Revenue 5190 $ 5100 -------------------------------------------------------------------------------------- Excess Rent 5191 $ -------------------------------------------------------------------------------------- Rent Revenue/Insurance 5192 $ -------------------------------------------------------------------------------------- Special Claims Revenue 5193 $ -------------------------------------------------------------------------------------- Retained Excess Income 5194 $ ---------------------------------------------------------------------------------------------------- TOTAL RENT REVENUE 5100T $ 1,062,563 - ------------------------------------------------------------------------------------------------------------------------ Apartments 5220 $ 84,065 -------------------------------------------------------------------------------------- Stores and Commercial 5240 $ -------------------------------------------------------------------------------------- Rental Concessions 5250 $ VACANCIES -------------------------------------------------------------------------------------- 5200 Garage and Parking Space 5270 $ -------------------------------------------------------------------------------------- Miscellaneous 5290 $ ---------------------------------------------------------------------------------------------------- TOTAL VACANCIES 5200T $ 84,065 ---------------------------------------------------------------------------------------------------- NET RENTAL REVENUE Rent Revenue Less Vacancies 5152N $ 978,498 - ------------------------------------------------------------------------------------------------------------------------ Nursing Homes/Assisted Living/Board and Care/Other 5300 Elderly Care/ ---------------------------------------------------------------------------------------------------- Coop/ and Other Revenues 5300 $ - ------------------------------------------------------------------------------------------------------------------------ Financial Revenue - Project Operations 5410 $ 4,754 -------------------------------------------------------------------------------------- Revenue from Investments - Residual Receipts 5430 $ FINANCIAL -------------------------------------------------------------------------------------- REVENUE Revenue from Investments - Replacement Reserve 5440 $ 1,475 5400 -------------------------------------------------------------------------------------- Revenue from Investments - Miscellaneous 5490 $ ---------------------------------------------------------------------------------------------------- TOTAL FINANCIAL REVENUE 5400T $ 6,229 - ------------------------------------------------------------------------------------------------------------------------ Laundry and Vending Revenue 5910 $ 1,204 -------------------------------------------------------------------------------------- Tenant Charges 5920 $ 3,330 -------------------------------------------------------------------------------------- Interest Reduction Payments Revenue 5945 $ OTHER -------------------------------------------------------------------------------------- REVENUE Miscellaneous Revenue (Schedule) 5990 $ 48,864 5900 ---------------------------------------------------------------------------------------------------- TOTAL OTHER REVENUE 5900T $ 53,398 ---------------------------------------------------------------------------------------------------- TOTAL REVENUE 5000T $ 1,038,125 - ------------------------------------------------------------------------------------------------------------------------ Conventions and Meetings 6203 $ -------------------------------------------------------------------------------------- Management Consultants 6204 $ -------------------------------------------------------------------------------------- Advertising and Marketing 6210 $ 285 -------------------------------------------------------------------------------------- Other Renting Expenses 6250 $ -------------------------------------------------------------------------------------- Office Salaries 6310 $ 17,046 -------------------------------------------------------------------------------------- Office Expenses 6311 $ 1,326 -------------------------------------------------------------------------------------- Office or Model Apartment Rent 6312 $ -------------------------------------------------------------------------------------- Management Fee 6320 $ 53,731 ADMINISTRATIVE -------------------------------------------------------------------------------------- EXPENSES Manager or Superintendent Salaries 6330 $ 6200/6300 -------------------------------------------------------------------------------------- Administrative Rent Free Unit 6331 $ -------------------------------------------------------------------------------------- Legal Expense - Project 6340 $ 22,656 -------------------------------------------------------------------------------------- Audit Expense - Project 6350 $ 7,700 -------------------------------------------------------------------------------------- Bookkeeping Fees/Accounting Services 6351 $ 1,843 -------------------------------------------------------------------------------------- Bad Debts 6370 $ 20,977 -------------------------------------------------------------------------------------- Miscellaneous Administrative Expenses (Schedule) 6390 $ 33,301 ---------------------------------------------------------------------------------------------------- TOTAL ADMINISTRATIVE EXPENSES 6263T $ 158,865 - ------------------------------------------------------------------------------------------------------------------------ Fuel Oil/Coal 6420 $ -------------------------------------------------------------------------------------- Electricity (Light and Misc. Power) 6450 $ 7,584 UTILITIES -------------------------------------------------------------------------------------- EXPENSE Water 6451 $ 28,080 6400 -------------------------------------------------------------------------------------- Gas 6452 $ 100,684 -------------------------------------------------------------------------------------- Sewer 6453 $ ---------------------------------------------------------------------------------------------------- TOTAL UTILITIES EXPENSE 6400T $ 136,348 ---------------------------------------------------------------------------------------------------- TOTAL EXPENSES (CARRY FORWARD TO PAGE 2) $ 295,213 - ------------------------------------------------------------------------------------------------------------------------ Page 1 of 2 - ------------------------------------------------------------------------------------------------------------------------ See the accompanying notes to financial statements. Page 6 45 Project Name: Washington Courts Limited Partnership - ------------------------------------------------------------------------------------------------------------------------ BALANCE CARRIED FORWARD $ 295,213 - ------------------------------------------------------------------------------------------------------------------------ Payroll 6510 $ 41,311 -------------------------------------------------------------------------------------- Supplies 6515 $ 32,086 -------------------------------------------------------------------------------------- Contracts 6520 $ 40,457 -------------------------------------------------------------------------------------- Operating and Maintenance Rent Free Unit 6521 $ -------------------------------------------------------------------------------------- Garbage and Trash Removal 6525 $ 16,636 OPERATING -------------------------------------------------------------------------------------- MAINTENANCE Security Payroll/Contract 6530 $ 3,220 EXPENSES -------------------------------------------------------------------------------------- 6500 Security Rent Free Unit 6531 $ -------------------------------------------------------------------------------------- Heating/Cooling Repairs and Maintenance 6546 $ 19,583 -------------------------------------------------------------------------------------- Snow Removal 6548 $ 294 -------------------------------------------------------------------------------------- Vehicle and Maintenance Equipment Operation and Repairs 6570 $ 488 -------------------------------------------------------------------------------------- Miscellaneous Operating and Maintenance Expenses 6590 $ 2,563 ---------------------------------------------------------------------------------------------------- TOTAL OPERATING AND MAINTENANCE EXPENSES 6500T $ 156,638 - ------------------------------------------------------------------------------------------------------------------------ Real Estate Taxes 6710 $ 37,220 -------------------------------------------------------------------------------------- Payroll Taxes (Project's Share) 6711 $ 6,386 -------------------------------------------------------------------------------------- Property and Liability Insurance (Hazard) 6720 $ 15,008 TAXES -------------------------------------------------------------------------------------- AND Fidelity Bond Insurance 6721 $ INSURANCE -------------------------------------------------------------------------------------- 6700 Workmen's Compensation 6722 $ 2,168 -------------------------------------------------------------------------------------- Health Insurance and Other Employee Benefits 6723 $ 7,432 -------------------------------------------------------------------------------------- Miscellaneous Taxes, Licenses, Permits and Insurance 6790 $ 1,274 ---------------------------------------------------------------------------------------------------- TOTAL TAXES AND INSURANCE 6700T $ 69,488 - ------------------------------------------------------------------------------------------------------------------------ Interest on Mortgage Payable 6820 $ -------------------------------------------------------------------------------------- Interest on Notes Payable (Long-Term) 6830 $ 466,566 FINANCIAL -------------------------------------------------------------------------------------- EXPENSES Interest on Notes Payable (Short-Term) 6840 $ 6800 -------------------------------------------------------------------------------------- Mortgage Insurance Premium/Service Charge 6850 $ 25,267 -------------------------------------------------------------------------------------- Miscellaneous Financial Expenses 6890 $ 18,085 ---------------------------------------------------------------------------------------------------- TOTAL FINANCIAL EXPENSES 6800T $ 509,918 - ------------------------------------------------------------------------------------------------------------------------ Nursing Homes/ Assisted Living/ Board and Care/ Other 6900 ---------------------------------------------------------------------------------------------------- Elderly Care Expenses 6900 $ - ------------------------------------------------------------------------------------------------------------------------ TOTAL COST OF OPERATIONS BEFORE DEPRECIATION AND AMORTIZATION 6000T $ 1,031,257 ---------------------------------------------------------------------------------------------------- PROFIT (LOSS) BEFORE DEPRECIATION AND AMORTIZATION 5060T $ 6,868 ---------------------------------------------------------------------------------------------------- Depreciation Expense 6600 $ 261,542 -------------------------------------------------------------------------------------- Amortization Expense 6610 $ ---------------------------------------------------------------------------------------------------- TOTAL DEPRECIATION AND AMORTIZATION $ 261,542 ---------------------------------------------------------------------------------------------------- OPERATING PROFIT OR (LOSS) 5060N $ (254,674) - ------------------------------------------------------------------------------------------------------------------------ Officer's Salaries 7110 $ -------------------------------------------------------------------------------------- Legal Expenses 7120 $ -------------------------------------------------------------------------------------- Federal, State, and Other Income Taxes 7130 $ CORPORATE OR -------------------------------------------------------------------------------------- MORTGAGOR Interest Income 7140 $ ENTITY -------------------------------------------------------------------------------------- EXPENSES Interest on Notes Payable 7141 $ 7100 -------------------------------------------------------------------------------------- Interest on Mortgage Payable 7142 $ -------------------------------------------------------------------------------------- Other Expenses 7190 $ 20,797 ---------------------------------------------------------------------------------------------------- NET ENTITY EXPENSES 7100T $ 20,797 ---------------------------------------------------------------------------------------------------- PROFIT OR LOSS (NET INCOME OR LOSS) 3250 $ (275,471) - ------------------------------------------------------------------------------------------------------------------------ MISCELLANEOUS OR OTHER INCOME AND EXPENSE SUB-ACCOUNT GROUPS. If miscellaneous or other income and/or expense sub-accounts (5190, 5290, 5490, 5990, 6390, 6590, 6790, 6890 and 7190) exceed the Account Groupings by 10% or more, attach a separate schedule describing or explaining the miscellaneous income or expense. - ------------------------------------------------------------------------------------------------------------------------
PART II - ------------------------------------------------------------------------------------------------------------------------ 1. Total mortgage principal payments required during the audit year (12 monthly payments). This applies to all direct loans and HUD-held and fully insured mortgages. Any HUD approved second mortgages should be included in the figures. (Account S1000-010) $ 21,479 - ------------------------------------------------------------------------------------------------------------------------ 2. Total of 12 monthly deposits in the audit year into the Replacement Reserve account, as required by the Regulatory Agreement even if payments may be temporarily suspended or reduced. (Account S1000-020) $ 18,414 - ------------------------------------------------------------------------------------------------------------------------ 3. Replacement Reserve or Residual Receipts releases which are included as expense items on this Profit and Loss Statement. (Account S1000-030) $ -- - ------------------------------------------------------------------------------------------------------------------------ 4. Project Improvement Reserve Releases under the Flexible Subsidy Program that are included as expense items on this Profit and Loss Statement. (Account S1000-040) $ -- - ------------------------------------------------------------------------------------------------------------------------ Page 2 of 2
- ------------------------------------------------------------------------------ See the accompanying notes to financial statements Page 7 46 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - --------------------------------------------------------------------------------------------------------- STATEMENT OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, ----------------------------- 1998 1997 ----------------------------- S1100-010 BEGINNING OF YEAR $ 719,085 $1,014,328 3250 NET LOSS (354,874) (275,471) Distributions -- (19,772) - --------------------------------------------------------------------------------------------------------- 3130 END OF YEAR $ 364,211 $ 719,085 =========================================================================================================
- ------------------------------------------------------------------------------ See the accompanying notes to financial statements Page 8 47 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - -------------------------------------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS PAGE 1 OF 2
FOR THE YEARS ENDED DECEMBER 31, -------------------------- ACCOUNT 1998 1997 -------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Receipts: S1200-010 Rental receipts $ 945,328 $ 958,685 S1200-020 Interest receipts 2,739 6,229 S1200-030 Other operating receipts 2,185 53,398 - -------------------------------------------------------------------------------------------------------------- S1200-040 Total Receipts 950,252 1,018,312 - -------------------------------------------------------------------------------------------------------------- Disbursements: S1200-050 Administrative 98,694 88,043 S1200-070 Management fee 31,936 53,327 S1200-090 Utilities 86,102 136,348 S1200-100 Salaries and wages 54,621 -- S1200-110 Operating and maintenance 182,086 126,918 S1200-120 Real estate taxes 35,298 36,305 S1200-140 Property insurance 22,537 24,118 S1200-150 Miscellaneous taxes and insurance 5,640 7,660 S1200-160 Tenant security deposits (1,065) (194) S1200-180 Interest on mortgages 460,112 466,746 S1200-210 Mortgage insurance premium (MIP) 27,194 25,267 S1200-220 Miscellaneous financial -- 125 - -------------------------------------------------------------------------------------------------------------- S1200-230 Total Disbursements 1,003,155 964,663 - -------------------------------------------------------------------------------------------------------------- S1200-240 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (52,903) 53,649 - -------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES S1200-245 Net (deposits to) withdrawals from the mortgage escrow account (6,823) 5,712 S1200-250 Net (deposits to) withdrawals from the reserve for replacement account 7,554 (19,889) S1200-330 Net purchases of fixed assets (26,581) (5,311) - -------------------------------------------------------------------------------------------------------------- S1200-350 NET CASH USED IN INVESTING ACTIVITIES (25,850) (19,488) - -------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES S1200-360 Mortgage principal payments (25,596) (21,479) S1200-450 Other financing activities -- 298 S1200-455 Entity/Construction financing activities: S1200-456 Administrative fee paid to general partner S1200-457 (21,379) (39,544) - -------------------------------------------------------------------------------------------------------------- S1200-460 NET CASH USED IN FINANCING ACTIVITIES (46,975) (60,725) - -------------------------------------------------------------------------------------------------------------- S1200-470 NET DECREASE IN CASH AND CASH EQUIVALENTS (125,728) (26,564) S1200-480 BEGINNING OF PERIOD CASH 148,343 174,907 - -------------------------------------------------------------------------------------------------------------- S1200T END OF PERIOD CASH $ 22,615 $ 148,343 ============================================================================================================== - -------------------------------------------------------------------------------------------------------------- See the accompanying notes to financial statements Page 9 48 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - -------------------------------------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS PAGE 2 OF 2 FOR THE YEARS ENDED DECEMBER 31, -------------------------- ACCOUNT 1998 1997 -------------------------- RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 3250 Net loss $ (354,874) $ (275,471) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: 6600 Depreciation 266,164 261,543 6610 Amortization 18,984 18,984 Change in assets and liabilities: S1200-490 Decrease in tenant accounts receivable 12,732 1,773 S1200-500 (Increase) decrease in accounts receivable - other 6,870 (786) S1200-510 Decrease in accrued receivable -- 177 S1200-520 Decrease in prepaid expenses 792 490 S1200-530 (Increase) decrease in cash restricted for tenant security deposits 883 (157) S1200-540 Increase (decrease) in accounts payable (44,816) 26,973 S1200-560 Increase in accrued liabilities 15,392 -- S1200-570 Increase in accrued interest payable 4,249 -- S1200-580 Increase in tenant security deposits held in trust 182 351 S1200-590 Increase in prepaid revenue 767 -- S1200-605 Increase in entity/construction liability accounts S1200-606 Administrative fees paid to general partner S1200-457 19,772 19,772 - -------------------------------------------------------------------------------------------------------------- S1200-610 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ (52,903) $ 53,649 ==============================================================================================================
- ------------------------------------------------------------------------------ See the accompanying notes to financial statements Page 10 49 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - ------------------------------------------------------------------------------ NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (S3100-010) ORGANIZATION (S3100-010) The Partnership is organized as a limited partnership formed April 6, 1988 to acquire an interest in real property located in Chicago, Illinois and to construct and operate thereon an apartment complex of 103 units under Section 221(d)(4) of the National Housing Act. Such projects are regulated by the U.S. Department of Housing and Urban Development (HUD) and the Illinois Housing Development Authority (IDHA) as to rent charges and operating methods. The regulatory agreements limit annual distributions of net operating receipts to "surplus cash" available at the end of each year. There was no available "surplus cash" at December 31, 1998. The following significant accounting policies have been followed in the preparation of the financial statements: Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The Partnership provides an allowance for doubtful accounts equal to the estimated collection losses that will be incurred in collection of all receivables. The estimated losses are based on a review of the current status of the existing receivables. No allowance for doubtful accounts was provided for at December 31, 1998 or 1997 as none was deemed necessary by management. Depreciation is provided using primarily the straight-line method over the estimated useful lives of the assets ranging from seven to twenty-seven and a half years. The replacement reserve can only be used for improvements to buildings upon prior approval of HUD. - ------------------------------------------------------------------------------ Page 11 50 WASHINGTON COURTS LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes to Financial Statements (Continued) Deferred loan costs consist of fees for obtaining the HUD insured mortgage loan and are being amortized using the straight-line method over the life of the mortgage loan. Low income housing credit fees are amortized over ten years. Income or loss of the Partnership is allocated 1.005% to the general partners and 98.995% to the limited partners. No income tax provision has been included in the financial statements since income or loss of the Partnership is required to be reported by the partners on their respective income tax returns. No adjustment of financial statement loss to tax loss is required. 2. OTHER ASSETS (S3100-X3X) (S3100-240) Other assets consist of:
1998 1997 -------------------------- Loan costs, less amortization $556,754 $ -- Low income housing credit fees, less amortization 2,053 -- -------------------------- $558,807 $ -- ==========================
3. MORTGAGE PAYABLE (S3100-050) The 9.25% mortgage note payable is insured by HUD and is payable in monthly installments of $40,841 (including principal and interest) through February 2031. The note is secured by a first deed of trust on real estate. The scheduled maturities of the mortgage payable at December 31, 1998 are as follows: (S3100-x1x)
YEAR ACCOUNT AMOUNT ---------------------------------------------------------------------- 1999 S3100-060 $ 28,282 2000 S3100-070 31,013 2001 S3100-080 34,007 2002 S3100-090 37,289 2003 S3100-100 40,575 Thereafter S3100-110 4,836,321 ---------------------------------------------------------------------- $5,007,487 ======================================================================
- ------------------------------------------------------------------------------ Page 12 51 WASHINGTON COURTS LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes to Financial Statements (Continued) 4. COMMITMENTS (S3100-X3X) (S3100-240) The partnership has entered into regulatory agreements with HUD and IHDA which regulate, among other things, the rents which may be charged for apartment units in the Project, prohibit the sale of the Project without HUD and IHDA consent, limit the annual distribution of cash flow to the partners and otherwise regulate the relationship between the Partnership, HUD and IHDA Pursuant to an agreement with HUD, under Section 8 of the Housing Assistance Payment Program, the Partnership is entitled to receive housing assistance payments on behalf of qualified tenants. The term of the agreement is for a maximum of 15 years. The Partnership cannot sell of otherwise substantially liquidate its assets during each period that the agreement for housing assistance program with HUD is in existence without their approval. 5. RELATED PARTY TRANSACTIONS (S3100-200) INCENTIVE MANAGEMENT FEE Commencing in 1990, the Managing General Partner will receive from Permissible Sources a non-cumulative incentive management fee equal to the lesser of (i) 10% of the gross income of the Partnership for such fiscal year less the management fee paid or payable in respect of such fiscal year or (ii) seventy percent (70%) of the amount of the Partnership's Available Cash remaining after payment of the Preferred Distribution, the Administration Fee, and repayment of any Operating Deficit Advances made to the Partnership. For its services in administering the Local Affairs of the Partnership within the state, including, without limitation, coordinating the activities of the Partnership relating to HUD, the lender and the agency, and overseeing local compliance with applicable regulations, the Partnership shall be required to pay the local general partners from Permissible Sources an annual Administrative Fee of $19,772 beginning in 1990. A portion of the Administrative Fee equal to one percent (1%) of the gross income of the Partnership shall be payable each year from the Partnership's Available Cash (to the extent that such Available Cash constitutes Permissible Sources remaining after payment of the Preferred Distribution). The balance of the Administration Fee shall be payable from available cash (to the extent that such Available Cash constitutes a Permissible Source) remaining after full payment of the Preferred Distribution and repayment of any operating deficit advances, such payment to be made dollar-for-dollar with payments of the Preferred Distribution (plus unpaid amounts thereof accruing from prior taxable years) until one of such fees is paid in full, with any remainder of such Available Cash applied to any balance of the other such fee. The Partnership owes the Managing General Partner $68,269 and $69,876 at December 31, 1998 and 1997, respectively. - ------------------------------------------------------------------------------ Page 13 52 WASHINGTON COURTS LIMITED PARTNERSHIP - ------------------------------------------------------------------------------ Notes to Financial Statements (Continued) The Investor Limited Partner will, beginning in 1989, receive from Permissible Sources an annual cumulative cash distribution (the "Annual Preferred Distribution") of $39,545. Beginning in 1990, a portion of the Annual Preferred Distribution equal to one percent (1%) of the annual gross income of the Partnership (the "Guaranteed Portion") shall be distributed to the Investor Limited Partner from Permissible Sources without regard to Partnership income. An amount of the Annual Preferred Distribution equal to $19,772 (the "Priority Portion"), reduced by the Guaranteed Portion payable for such year, shall be payable from the Partnership's Available Cash (to the Permissible Source) after payment of the Primary Portion of the Administration Fee and repayment of any outstanding Operating Deficit Advances, such payment to be made dollar-for-dollar with repayments of the Administration Fee (other than the Primary Portion thereof) until one of such items is paid in full, with any remainder of such Available Cash applied to any balance of the other such item. Any unpaid amount of the Priority Portion with respect to any year after 1989 shall accrue, without interest, and be distributable to the Investor Limited Partner from Available Cash (to the extent that such Available Cash constitutes a Permissible Source) after payment of the Primary Portion of the Administration Fee and repayment of any outstanding Operating Deficit Advances, such payment to be made dollar-for-dollar with payments of the Administration Fee (other than the Primary Portion thereof) until one of such items is paid in full, with any remainder of such Available Cash (to the extent that such Available Cash constitutes a Permissible Source) applied to any balance of the other such item. Any remaining amounts of the Annual Preferred Distribution after 1989, including any unpaid amount of the Priority Portion, shall be distributable to the Investor Limited Partner, without interest, from cash available for distribution from Capital Transactions. The remaining unpaid balance at December 31, 1998 amounted to $228,785. MANAGEMENT FEE (S3100-230) The apartment project was managed by a corporation which is a general partner for the first four months of the year and received a fee of 5.55% of rents collected. Century Pacific Management Corporation, an affiliate of the general partner, took over management on May 1, 1998 and receives a fee of 5.55% of rents collected. The management fee was $47,068 in 1998 and $53,731 in 1997. Management fees payable at December 31, 1998 and 1997 are $20,744 and $5,612, respectively. S3100-210 COMPANY NAME Century Pacific Realty Corporation -------------------------------------- S3100-220 AMOUNT RECEIVED $21,379 -------------------------------------- S3100-210 COMPANY NAME Century Pacific Management Corporation -------------------------------------- S3100-220 AMOUNT RECEIVED $15,000 -------------------------------------- S3100-210 COMPANY NAME Shorebank Development Corporation -------------------------------------- S3100-220 AMOUNT RECEIVED $16,936 -------------------------------------- - ------------------------------------------------------------------------------ Page 14 53 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - ------------------------------------------------------------------------------ SUPPORTING DATA REQUIRED BY HUD DECEMBER 31, 1998 REPLACEMENT RESERVE In accordance with the provisions of the regulatory agreement, restricted cash is held by WMF/Huntoon, Paige & Assoc. to be used for replacement of property with the approval of HUD as follows: 1320P Balance at beginning of year $ 72,078 1320DT Total monthly deposits 20,093 1320ODT Other deposits 1,630 1320OD-010 Interest 1320OD-020 $1,630 1320WT Approved withdrawals (29,277) ------------- 1320 Balance at end of year, confirmed by mortgagee $ 64,524 =============
- ------------------------------------------------------------------------------ Page 15 54 COMPUTATION OF SURPLUS CASH, DISTRIBUTIONS AND RESIDUAL RECEIPTS
- ------------------------------------------------------------------------------------------------------------------------- PROJECT NAME FISCAL PERIOD ENDED: PROJECT NUMBER Washington Courts Limited Partnership 12/31/98 071-35593 - ------------------------------------------------------------------------------------------------------------------------- PART A - COMPUTE SURPLUS CASH - ------------------------------------------------------------------------------------------------------------------------- CASH - ------------------------------------------------------------------------------------------------------------------------- 1. Cash (Accounts 1120, 1170, 1191 minus Account 2105) (S1300-010) $ 35,415 - ---------------------------------------------------------------------------------------------------------- 2. Tenant subsidy due for period covered by financial statement (1135) $ - ---------------------------------------------------------------------------------------------------------- 3. Other (describe) (S1300-030) $ - ------------------------------------------------------------------------------------------------------------------------- (a) TOTAL CASH (Add Lines 1, 2, and 3) (S1300-040) $ 35,415 - ------------------------------------------------------------------------------------------------------------------------- CURRENT OBLIGATIONS - ------------------------------------------------------------------------------------------------------------------------- 4. Accrued mortgage interest payable (S1300-050) $ 38,599 - ---------------------------------------------------------------------------------------------------------- 5. Delinquent mortgage principal payments (S1300-060) $ - ---------------------------------------------------------------------------------------------------------- 6. Delinquent deposits to reserve for replacements (S1300-070) $ - ---------------------------------------------------------------------------------------------------------- 7. Accounts payable - 30 days (S1300-075) $ 25,914 - ---------------------------------------------------------------------------------------------------------- 8. Loans and notes payable (due within 30 days) (S1300-080) $ - ---------------------------------------------------------------------------------------------------------- 9. Deficient tax insurance or MIP escrow deposits (S1300-090) $ - ---------------------------------------------------------------------------------------------------------- 10. Accrued expenses (not escrowed) (S1300-100) $ 24,101 - ---------------------------------------------------------------------------------------------------------- 11. Prepaid revenue (2210) $ 767 - ---------------------------------------------------------------------------------------------------------- 12. Tenant security deposits liability (2191) $ 12,800 - ---------------------------------------------------------------------------------------------------------- 13. Other current obligations (Describe) (S1300-110) $ - ------------------------------------------------------------------------------------------------------------------------- (b) TOTAL CURRENT OBLIGATIONS (Add Lines 4 through 13) (S1300-140) $ 102,181 - ------------------------------------------------------------------------------------------------------------------------- (c) SURPLUS CASH (DEFICIENCY) [Line (a) minus Line (b)] (S1300-150) $ (66,766) - ------------------------------------------------------------------------------------------------------------------------- PART B - COMPUTE DISTRIBUTIONS TO OWNERS AND REQUIRED DEPOSIT TO RESIDUAL RECEIPTS - ------------------------------------------------------------------------------------------------------------------------- 1. Surplus Cash $ - ------------------------------------------------------------------------------------------------------------------------- LIMITED DIVIDEND PROJECTS - ------------------------------------------------------------------------------------------------------------------------- 2a. Annual distribution earned during fiscal period covered by the statement (S1300-160) $ - ---------------------------------------------------------------------------------------------------------- 2b. Distribution accrued and unpaid as of the end of the prior fiscal period (S1300-170) $ - ---------------------------------------------------------------------------------------------------------- 2c. Distributions and entity expenses paid during fiscal period covered by statement (S1300-180) $ - ---------------------------------------------------------------------------------------------------------- 3. Distribution earned but unpaid (Line 2a plus 2b minus 2c) (S1300-190) $ - ------------------------------------------------------------------------------------------------------------------------- 4. Amount available for distribution during next fiscal period (S1300-200) $ - ------------------------------------------------------------------------------------------------------------------------- 5. Deposit due residual receipts (S1300-210) $ - -------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------ Page 16 55 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - -------------------------------------------------------------------------------------------------------------------------- SUPPORTING DATA REQUIRED BY HUD (CONTINUED) DECEMBER 31, 1998
ASSETS ---------------------------------------------------------------------- BALANCE BALANCE JANUARY 1, DECEMBER 31, 1998 ADDITIONS DEDUCTIONS 1998 - -------------------------------------------------------------------------------------------------------------------------- 1410 Land $ 75,300 $ -- $ -- $ 75,300 1420 Buildings 7,048,175 18,520 -- 7,066,695 1440 Building equipment portable -- 8,061 -- 8,061 1465 Office furniture and equipment 65,585 -- -- 65,585 - -------------------------------------------------------------------------------------------------------------------------- TOTAL $7,189,060 $26,581 $ -- $7,215,641 ========================================================================================================================== ACCUMULATED DEPRECIATION ----------------------------------------------------------------- NET BALANCE BALANCE BOOK VALUE JANUARY 1, CURRENT DECEMBER 31, DECEMBER 31, 1998 PROVISIONS DEDUCTIONS 1998 1998 - -------------------------------------------------------------------------------------------------------------------------- 1410 Land $ -- $ -- $ -- $ -- $ 75,300 1420 Buildings 2,049,185 258,942 -- 2,308,127 4,758,568 1440 Building equipment portable -- 1,152 -- 1,152 6,909 1465 Office furniture and equipment 44,049 6,070 -- 50,119 15,466 - -------------------------------------------------------------------------------------------------------------------------- TOTAL $2,093,234 $266,164 $ -- $2,359,398 $4,856,243 ========================================================================================================================== - -------------------------------------------------------------------------------------------------------------------------- Page 17
56 S2200-020 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROLS To The Partners Washington Courts Limited Partnership Los Angeles, California We have audited the financial statements of Washington Courts Limited Partnership as of and for the year ended December 31, 1998, and have issued our report thereon dated January 28, 1999. We have also audited Washington Courts Limited Partnership's compliance with requirements applicable to HUD-assisted programs and have issued our reports thereon dated January 28, 1999. We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States and the Consolidated Audit Guide for Audits of HUD Programs (the "Guide") issued by the U.S. Department of Housing and Urban Development, Office of the Inspector General. Those standards and the Guide require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether Washington Courts Limited Partnership complied with laws and regulations, noncompliance with which would be material to a major HUD-assisted program. In planning and performing our audits, we obtained an understanding of the design of relevant internal controls and determined whether they had been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements of Washington Courts Limited Partnership and on its compliance with specific requirements applicable to its major HUD-assisted programs and to report on the internal control structure in accordance with the provisions of the Guide and not to provide any assurance on the internal control structure. Page 18 57 To The Partners Washington Courts Limited Partnership - ------------------------------------------------------------------------------ The management of Washington Courts Limited Partnership is responsible for establishing and maintaining internal controls. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal controls. The objectives of internal controls are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed in accordance with management authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles and that HUD-assisted programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal controls, errors, irregularities or instances of noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. We performed tests of controls, as required by the Guide, to evaluate the effectiveness of the design and operation of internal controls that we considered relevant to preventing or detecting material noncompliance with specific requirements applicable to Washington Courts Limited Partnership's major HUD-assisted programs. Our procedures were less in scope than would be necessary to render an opinion on internal control. Accordingly, we do not express such an opinion. Our consideration of internal controls would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited or that noncompliance with laws and regulations that would be material to a HUD-assisted program may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operations that we consider to be material weaknesses as defined above. This report is intended solely for the information and use of management and the Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. January 28, 1999 - ------------------------------------------------------------------------------ Page 19 58 S2300-020 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR HUD PROGRAMS To The Partners Washington Courts Limited Partnership Los Angeles, California We have audited the financial statements of Washington Courts Limited Partnership as of and for the year ended December 31, 1998 and have issued our report thereon dated January 28, 1999. In addition, we have audited Washington Courts Limited Partnership's compliance with the specific program requirements governing federal financial reports, mortgage status, replacement reserve, security deposits, cash receipts and disbursements, tenant application eligibility and recertification and management functions that are applicable to each of its major HUD-assisted programs for the year ended December 31, 1998. The management of Washington Courts Limited Partnership is responsible for compliance with those requirements. Our responsibility is to express an opinion on compliance with those requirements based on our audit. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and the Consolidated Audit Guide for Audits of HUD Programs (the "Guide") issued by the U.S. Department of Housing and Urban Development, Office of Inspector General. Those standards and the Guide require that we plan and perform the audit to obtain reasonable assurance about whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about Washington Courts Limited Partnership's compliance with those requirements. We believe that our audit provides a reasonable basis for our opinion. The results of our audit procedures disclosed immaterial instances of noncompliance with the requirements referred to above, which are described in the accompanying Schedule of Findings and Questioned Costs. We considered those instances of noncompliance in forming our opinion on compliance, which is expressed in the following paragraph. In our opinion, Washington Courts Limited Partnership complied, in all material respects, with the requirements described above that are applicable to each of its HUD-assisted programs for the year ended December 31, 1998. This report is intended solely for the information and use of management and the Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. January 28, 1999 Page 20 59 S2500-020 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH SPECIFIC REQUIREMENTS APPLICABLE TO FAIR HOUSING AND NON-DISCRIMINATION To The Partners Washington Courts Limited Partnership Los Angeles, California We have audited the financial statements of Washington Courts Limited Partnership as of and for the year ended December 31, 1998, and have issued our report thereon dated January 28, 1999. We have applied procedures to test Washington Courts Limited Partnership's compliance with Fair Housing and Non-Discrimination requirements applicable to its HUD-assisted programs, for the year ended December 31, 1998. Our procedures were limited to the applicable compliance requirements described in the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, Office of Inspector General. Our procedures were substantially less in scope than an audit, the objective of which would be the expression of an opinion on Washington Courts Limited Partnership's compliance with Fair Housing and Non-Discrimination requirements. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under the Guide. This report is intended solely for the information and use of management and the Department of Housing and Urban Development and is not intended to be and should not be used by anyone other than these specified parties. January 28, 1999 Page 21 60 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - ------------------------------------------------------------------------------ SCHEDULE OF FINDINGS AND QUESTIONED COSTS (S2700-X1X) SECURITY DEPOSIT ACCOUNT S2700-010 * STATEMENT OF CONDITION - Security Deposit account is not labeled "Security Deposits". S2700-020 * CRITERIA - Security Deposit account should be labeled "Security Deposits." S2700-030 * EFFECT - Potential for inappropriate placement or withdrawal of funds from the account. S2700-040 * CAUSE - When current management took over and set up a new account the account was not labeled "Security Deposits." S2700-050 * RECOMMENDATION - Management should have the account labeled "Security Deposits." S2700-065 * AMOUNT OF QUESTIONED COSTS - N/A ABC REPORTS S2700-010 * STATEMENT OF CONDITION - ABC monthly reports are not being filed as required by HUD. S2700-020 * CRITERIA - Monthly ABC reports are required to be filed with HUD. S2700-030 * EFFECT - Project is not in compliance with HUD and could suffer penalties as a result. S2700-040 * CAUSE - Current management is not filing reports due to information not being readily available. S2700-050 * RECOMMENDATION - Management should take necessary steps to obtain the information on a timely basis and begin filing the reports immediately. S2700-065 * AMOUNT OF QUESTIONED COSTS - N/A - ------------------------------------------------------------------------------ Page 22 61 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - ------------------------------------------------------------------------------ SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) TENANT FILES S2700-010 * STATEMENT OF CONDITIONS - Upon examination of tenant files, it was noted in one file that. a) A move-in inspection form was not located. b) Application included in file was not signed. c) Security deposit is greater that tenant deposit. S2700-020 * CRITERIA - Tenant files should include all proper information at all times. S2700-030 * EFFECTS - a) Tenant file is not complete and not in compliance with HUD requirements. b) Tenant file is not complete and not in compliance with HUD requirements. c) Security deposit account is potentially underfunded. S2700-040 * CAUSES - a) Move-in inspection form was not completed at move in. b) Tenant did not sign application. c) Full payment was not received from tenant upon tenant moving in. S2700-050 RECOMMENDATIONS - a) Management should implement procedures to ensure move-in inspection forms are filled out for each new tenant. b) Property manager should have tenant sign application immediately. c) The proper security deposit amount should be determined and collected from the tenant. S2700-065 * AMOUNT OF QUESTIONED COSTS N/A - ------------------------------------------------------------------------------ Page 23 62 WASHINGTON COURTS LIMITED PARTNERSHIP HUD PROJECT NO: 071-35593 - ------------------------------------------------------------------------------ AUDITORS' COMMENTS ON AUDIT RESOLUTION MATTERS RELATING TO THE HUD PROGRAMS (S2800-X1X) S2800-010 NARRATIVE The chart of accounts used by the project is not in accordance with the requirements of HUD. S2800-020 STATUS CLEARED S2800-030 REPORTING PERIOD December 31, 1997 S2800-010 NARRATIVE A physical inspection of the property was performed by the mortgagee in September 1997. The inspection noted certain repairs needing immediate attention. As of the date of this report, Project management has not responded to the mortgagee addressing the deficiencies. S2800-020 STATUS CLEARED S2800-030 REPORTING PERIOD December 31, 1997 - ------------------------------------------------------------------------------ Page 24 63 S2900-010 MORTGAGOR'S CERTIFICATION We hereby certify that we have examined the accompanying financial statements and supplemental data of Washington Courts Limited Partnership and, to the best of our knowledge and belief, the same is complete and accurate. S2900-020 Name of Signatory #1 Century Pacific Realty Corporation ---------------------------------------- *S2900-030 Name of Signatory #2 (if required) -------------------------- * For all owning entities other than a sole proprietor or a limited partnership, this field is required. S2900-040 Auditee Telephone Number ----------------------------------- S2900-050 Date of Certification -------------------------------------- --------------------------------------- Signature Date --------------------------------------- Signature Date - ------------------------------------------------------------------------------ Page 25 64 (S3000-010) MANAGEMENT AGENT'S CERTIFICATION We hereby certify that we have examined the accompanying financial statements and supplemental data of Washington Courts Limited Partnership and, to the best of our knowledge and belief, the same is complete and accurate. Century Pacific Management Corporation ------------------------------------------------ Name of Managing Agent (S3000-020) Date ------------------------------------------------ Name of Signatory (S3000-030) 95-4625437 ------------------------------------------------ Management Agent TIN (S3000-040) ------------------------------------------------ Name of Individual (i.e., Property Manager) (S3000-050) - ------------------------------------------------------------------------------ Page 26 65 AUDITOR'S TRANSMITTAL LETTER S3200-010 Audit Firm Rubin, Brown, Gornstein & Co. LLP ------------------------------------------------ S3200-020 Lead Auditor First Name Lawrence ----------------------------------- S3200-030 Lead Auditor Middle Name Edward ---------------------------------- S3200-040 Lead Auditor Last Name Rubin ------------------------------------ S3200-050 Auditor Street Address Line 1 230 South Bemiston Avenue ----------------------------- S3200-060 Auditor Street Address Line 2 ----------------------------- S3200-070 Auditor City St. Louis ---------------------------------------------- S3200-080 Auditor State Missouri --------------------------------------------- S3200-090 Auditor Zip Code 63105 ------------------------------------------ S3200-100 Auditor Zip Code Extension -------------------------------- S3200-110 Auditor Telephone Number (314) 727-8150 ---------------------------------- S3200-120 Auditor Firm TIN 43-0765316 ------------------------------------------ S3200-130 Date of Submission ---------------------------------------- - ------------------------------------------------------------------------------ Page 27 -----END PRIVACY-ENHANCED MESSAGE-----