-----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, B9ORvzlL0fsYX2Wp6g6E0IRyqFWuZ91a0yWU3AZkZHM/sPt5QH6D8aec+5OV2hKN AygcbOY3Vcti01NmZtTGaA== 0000810663-06-000023.txt : 20060629 0000810663-06-000023.hdr.sgml : 20060629 20060628190326 ACCESSION NUMBER: 0000810663-06-000023 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20060331 FILED AS OF DATE: 20060629 DATE AS OF CHANGE: 20060628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOSTON FINANCIAL TAX CREDIT FUND VIII LP CENTRAL INDEX KEY: 0000911568 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 043205879 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26522 FILM NUMBER: 06931321 BUSINESS ADDRESS: STREET 1: 101 ARCH ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174393911 FORMER COMPANY: FORMER CONFORMED NAME: BOSTON FINANCIAL TAX CREDIT FUND VIII DATE OF NAME CHANGE: 19930902 10KSB 1 tc8q406.txt TC8Q406 June 28, 2006 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Boston Financial Tax Credit Fund VIII, A Limited Partnership Annual Report on Form 10-KSB for the Year Ended March 31, 2006 File Number 0-26522 Dear Sir/Madam: Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of 1934, filed herewith is one copy of subject report. Very truly yours, /s/Stephen Guilmette Stephen Guilmette Assistant Controller TC810K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2006 -------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------- --------------------- Commission file number 0-26522 ------- Boston Financial Tax Credit Fund VIII, A Limited Partnership (Exact name of registrant as specified in its charter) Massachusetts 04-3205879 - -------------------------------------- ----------------------------- (State or other jurisdiction of I.R.S. Employer Identification No.) incorporation or organization) 101 Arch Street, Boston, Massachusetts 02110-1106 - --------------------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 439-3911 -------------------- Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ------------------- ----------------------------- None None Securities registered pursuant to Section 12(g) of the Act: UNITS OF LIMITED PARTNERSHIP INTEREST (Title of Class) 200,000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Subsection 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ X ] State the aggregate sales price of partnership units held by non affiliates of the registrant. $36,497,000 as of March 31, 2006 DOCUMENTS INCORPORATED BY REFERENCE: LIST THE FOLLOWING DOCUMENTS IF INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-KSB INTO WHICH THE DOCUMENT IS INCORPORATED: (1) ANY ANNUAL REPORT TO SECURITY HOLDERS: (2) ANY PROXY OR INFORMATION STATEMENT: AND (3) ANY PROSPECTUS FILED PURSUANT TO RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933.
Part of Report on Form 10-KSB into Which the Document Documents incorporated by reference is Incorporated - ----------------------------------- --------------- Report on Form 8-K dated April 8, 1994 Part I, Item 1 Report on Form 8-K dated June 14, 1994 Part I, Item 1 Acquisition Reports Part I, Item 1 Prospectus - Sections Entitled: "Investment Objectives and Policies - Principal Investment Objectives" Part I, Item 1 "Investment Risks" Part I, Item 1 "Estimated Use of Proceeds" Part III, Item 12 "Management Compensation and Fees" Part III, Item 12 "Profits and Losses for Tax Purposes, Tax Credits and Cash Distributions" Part III, Item 12
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED MARCH 31, 2006 TABLE OF CONTENTS Page No. PART I Item 1 Business K-3 Item 2 Properties K-5 Item 3 Legal Proceedings K-8 Item 4 Submission of Matters to a Vote of Security Holders K-9 PART II Item 5 Market for the Registrant's Units and Related Security Holder Matters K-8 Item 6 Management's Discussion and Analysis of Financial Condition and Results of Operations K-9 Item 7 Financial Statements and Supplementary Data K-12 Item 8 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure K-12 Item 8A Controls and Procedures K-13 Item 8B Other Information K-13 PART III Item 9 Directors and Executive Officers of the Registrant K-13 Item 10 Management Remuneration K-14 Item 11 Security Ownership of Certain Beneficial Owners and Management K-14 Item 12 Certain Relationships and Related Transactions K-15 Item 13 Exhibits, Financial Statement Schedules and Reports on Form 8-K K-16 Item 14. Principal Accountant Fees and Services K-16 SIGNATURES K-17 - ---------- CERTIFICATIONS K-18 - --------------
PART I Item 1. Business Boston Financial Tax Credit Fund VIII, A Limited Partnership (the "Fund") is a Massachusetts limited partnership formed on August 25, 1993 under the laws of the Commonwealth of Massachusetts. The Fund's partnership agreement ("Partnership Agreement") authorizes the sale of up to 200,000 units of Limited Partnership Interest ("Unit") at $1,000 per Unit in series. The first series offered 50,000 Units. On July 29, 1994, the Fund held its final investor closing. In total, the Fund raised $36,497,000 ("Gross Proceeds") through the sale of 36,497 Units. Such amounts exclude a fractional unregistered Unit previously acquired for $100 by the Initial Limited Partner. The offering of Units terminated on March 29, 1995. The Fund is engaged solely in the business of real estate investment. Accordingly, a presentation of information about industry segments is not applicable and would not be material to an understanding of the Fund's business taken as a whole. The Fund has invested as a limited partner in other limited partnerships ("Local Limited Partnerships") which own and operate residential apartment complexes ("Properties"), some of which were expected to benefit from some form of federal, state or local assistance programs and all of which qualify for low-income housing tax credits ("Tax Credits") added to the Internal Revenue Code (the "Code") by the Tax Reform Act of 1986. The investment objectives of the Fund include the following: (i) to provide investors with annual tax credits which they may use to reduce their federal income taxes; (ii) to provide limited cash distributions from the operations of apartment complexes; and (iii) to preserve and protect the Fund's capital. There cannot be any assurance that the Fund will attain any or all of these investment objectives. A more detailed discussion of these investment objectives, along with the risks in achieving them is contained in the sections of the Prospectus entitled "Investment Objectives and Policies - Principal Investment Objectives" and "Investment Risks", which are herein incorporated by this reference. Table A on the following page lists the properties originally acquired by the Local Limited Partnerships in which the Fund had invested. Item 6 of this Report contains other significant information with respect to such Local Limited Partnerships. As required by applicable rules, the terms of the acquisition of each Local Limited Partnership interest have been described in the Form 8-Ks and a supplement to the Prospectus; such descriptions are incorporated herein by this reference.
TABLE A SELECTED LOCAL LIMITED PARTNERSHIP DATA Property owned by Local Date Limited Partnerships Interest Location Acquired - --------------------------- -------------------- ------------ Green Wood Apartments Gallatin, TN 03/02/94 Webster Court Apartments Kent, WA 05/13/94 Springwood Apartments Tallahassee, FL 12/15/94 Meadow Wood of Pella Pella, IA 06/03/94 Hemlock Ridge Livingston Manor, NY 04/29/94 Pike Place Fort Smith, AR 01/31/94 West End Place Springdale, AR 01/12/94 Oak Knoll Renaissance Gary, IN 11/01/94 Beaverdam Creek Mechanicsville, VA 11/16/94 Live Oaks Plantation West Palm Beach, FL 06/28/94
Although the Fund's investments in Local Limited Partnerships are not subject to seasonal fluctuations, the Fund's equity in losses of Local Limited Partnerships, to the extent it reflects the operations of individual Properties, may vary from quarter to quarter based upon changes in occupancy and operating expenses as a result of seasonal factors. Each Local Limited Partnership has, as its general partners ("Local General Partners"), one or more individuals or entities not affiliated with the Fund or its General Partners. In accordance with the partnership agreements under which such entities are organized ("Local Limited Partnership Agreements"), the Fund depends on the Local General Partners for the management of each Local Limited Partnership. As of March 31, 2006, the following Local Limited Partnerships have a common Local General Partner or affiliated group of Local General Partners accounting for the specified percentage of the total capital contributions in Local Limited Partnerships: (i) Green Wood Apartments, A Limited Partnership and Springwood Apartments, A Limited Partnership, representing 21.71%, have Flournoy Development Company as Local General Partner; (ii) Pike Place, A Limited Partnership and West End Place, A Limited Partnership, representing 12.90%, have Lindsey Management Company as Local General Partner. The Local General Partners of the remaining Local Limited Partnerships are identified in the Acquisition Reports which are herein incorporated by reference. The Properties owned by Local Limited Partnerships in which the Fund has invested are, and will continue to be, subject to competition from existing and future apartment complexes in the same areas. The success of the Fund depends on many outside factors, most of which are beyond the control of the Fund and which cannot be predicted at this time. Such factors include general economic and real estate market conditions, both on a national basis and in those areas where the Properties are located, the availability and cost of borrowed funds, real estate tax rates, operating expenses, energy costs and government regulations. In addition, other risks inherent in real estate investment may influence the ultimate success of the Fund, including: (i) possible reduction in rental income due to an inability to maintain high occupancy levels or adequate rental levels; (ii) possible adverse changes in general economic conditions and adverse local conditions, such as competitive overbuilding, a decrease in employment or adverse changes in real estate laws, including building codes; and (iii) the possible future adoption of rent control legislation which would not permit increased costs to be passed on to the tenants in the form of rent increases, or which suppress the ability of the Local Limited Partnerships to generate operating cash flow. Since most of the Properties benefit from some form of governmental assistance, the Fund is subject to the risks inherent in that area including decreased subsidies, difficulties in finding suitable tenants and obtaining permission for rent increases. In addition, any Tax Credits allocated to investors with respect to a Property are subject to recapture to the extent that the Property or any portion thereof ceases to qualify for the Tax Credits. Other future changes in federal and state income tax laws affecting real estate ownership or limited partnerships could have a material and adverse affect on the business of the Fund. The Fund is managed by Arch Street VIII Limited Partnership, the sole General Partner of the Fund. The Fund, which does not have any employees, reimburses MMA Financial, Inc. (MMA), an affiliate of the General Partner, for certain expenses and overhead costs. A complete discussion of the management of the Fund is set forth in Item 9 of this Report. Item 2. Properties The Fund owns limited partnership interests in ten Local Limited Partnerships which own and operate Properties, some of which benefit from some form of federal, state, or local assistance programs and all of which qualify for the Tax Credits added to the Code by the Tax Reform Act of 1986. The Fund's ownership interest in the Local Limited Partnerships is 99%, with the exception of Springwood which is 79.20%, Hemlock Ridge which is 77% and Pike Place and West End Place which are 90%. Each of the Local Limited Partnerships have received an allocation of Tax Credits from the relevant state tax credit agency. In general, the Tax Credits run for ten years from the date the Property is placed in service. The required holding period (the "Compliance Period") of the Properties is fifteen years. During these fifteen years, the Properties must satisfy rent restrictions, tenant income limitations and other requirements, as promulgated by the Code, in order to maintain eligibility for the Tax Credits at all times during the Compliance Period. Once a Local Limited Partnership has become eligible for the Tax Credits, it may lose such eligibility and suffer an event of recapture if its Property fails to remain in compliance with the requirements. To date, with the exception of Live Oaks Plantation, none of the Local Limited Partnerships have suffered an event of recapture of Tax Credits. In addition, some of the Local Limited Partnerships have obtained one or a combination of different types of loans such as: i) below market rate interest loans; ii) loans provided by a redevelopment agency of the town or city in which the property is located at favorable terms; or iii) loans that have repayment terms that are based on a percentage of cash flow. The schedule on the following pages provides certain key information on the Local Limited Partnership interests acquired by the Fund.
Capital Contributions Mtge. loans Occupancy Local Limited Partnership Number Total Committed Paid Through payable at at Property Name of at March 31, March 31, December 31, Type of March 31, Property Location Apt. Units 2006 2006 2005 Subsidy* 2006 - --------------------- -------------- ---------------- -------------- ----------------- ----------- --------------- Green Wood Apartments, a Limited Partnership Green Wood Apartment Gallatin, TN 164 $3,825,916 $3,825,916 $4,710,678 None 95% Webster Court Apartments a Limited Partnership Webster Court Apartments Kent, WA 92 2,318,078 2,318,078 2,604,382 None 95% Springwood Apartments a Limited Partnership (1) Springwood Apartments Tallahassee, FL 113 2,499,202 2,499,202 3,529,532 None 97% Meadow Wood Associates of Pella, a Limited Partnership Meadow Wood of Pella Pella, IA 30 893,808 893,808 923,781 Section 8 80% RMH Associates, a Limited Partnership (1) Hemlock Ridge Livingston Manor, NY 100 1,697,298 1,697,298 1,505,443 Section 8 92% Pike Place, a Limited Partnership (1) Pike Place Fort Smith, AR 144 1,915,328 1,915,328 2,908,374 None 100%
Capital Contributions Mtge. loans Occupancy Local Limited Partnership Number Total Committed Paid Through payable at at Property Name of at March 31, March 31, December 31, Type of March 31, Property Location Apt. Units 2006 2006 2005 Subsidy* 2006 - --------------------- -------------- ---------------- -------------- ----------------- ----------- --------------- West End Place, a Limited Partnership (1) West End Place Springdale, AR 120 1,843,010 1,843,010 2,566,365 None 99% Oak Knoll Renaissance, a Limited Partnership Oak Knoll Renaissance Gary, IN 256 4,922,412 4,922,412 4,411,579 Section 8 98% Beaverdam Creek Associates, a Limited Partnership (2) Beaverdam Creek Mechanicsville, VA 120 3,629,140 3,629,140 4,235,550 None 94% Schickedanz Brothers Palm Beach Limited Live Oaks Plantation West Palm Beach, FL 218 5,587,953 5,587,953 5,859,870 None 95% ------ ------------- ------------ ------------- 1,357 $29,132,145 $29,132,145 $33,255,554 ====== =========== ============= ============== (1) Boston Financial Tax Credits Fund VIII has a 79.20% interest in Springwood Apartments, L.P., a 77% interest in RMH Associates, L.P., and a 90% interest in Pike Place, L.P. and West End Place, L.P. The mortgage payable balances represent 100% of the outstanding balances. (2) The amount paid includes funds advanced under a promissory note agreement with Boston Financial Tax Credit Fund VIII, a Limited Partnership. *Section 8 This subsidy, which is authorized under Section 8 of Title II of the Housing and Community Development Act of 1974, allows qualified low-income tenants to pay 30% of their monthly income as rent with the balance paid by the federal government.
The Fund does not guarantee any of the mortgages or other debt of the Local Limited Partnerships. Duration of leases for occupancy in the Properties described above is generally six to twelve months. The Managing General Partner believes the Properties described herein are adequately covered by insurance. Additional information required under this Item, as it pertains to the Fund, is contained in Items 1, 6 and 7 of this Report. Item 3. Legal Proceedings On August 24, 2004, the Fund, Boston Financial Qualified Housing Limited Partnership, Boston Financial Qualified Housing Tax Credits L.P. II, Boston Financial Qualified Housing Tax Credits L.P. III, Boston Financial Qualified Housing Tax Credits L.P. IV, Boston Financial Qualified Housing Tax Credits L.P. V, Boston Financial Tax Credit Fund Plus, A Limited Partnership, and Boston Financial Tax Credit Fund VII, A Limited Partnership (collectively, the "Partnerships"), and their general partners commenced litigation against Everest Housing Investors 2, LLC ("Everest 2") and several other Everest-related entities (collectively, the "Everest Entities") in Massachusetts state court, seeking a declaratory judgment that certain materials the Everest Entities sought to inspect are not "books and records" of the Partnerships and that the Everest Entities are in any case not entitled to inspect said information under applicable partnership agreements, partnership law or otherwise. On October 7, 2004, the Everest Entities filed an answer and counterclaim against the Partnerships and their purported general partners, claiming that they breached applicable partnership agreements, partnership law and their fiduciary duties to the Everest Entities by failing to make the purported "books and records" available. On January 12, 2005, the Partnerships moved to amend their complaint to, among other things, add a claim based on Everest 2's breach of a November 24, 2003 letter agreement which compelled Everest 2 to keep confidential certain information contemporaneously disseminated by four of the Partnerships to Everest 2. The Court granted this Motion. Discovery in the matter is ongoing. The Partnerships maintain that the Everest Entities are not entitled to review the materials requested and/or use the materials in secondary market transactions because, among other things: (i) they are not "books and records" of the Partnerships; (ii) the Everest Entities do not seek to review them for a proper purpose; and (iii) selective disclosure of the information to the Everest Entities would give them an unfair informational advantage in secondary market transactions and may violate federal and/or state securities laws. The Partnerships have not formed an opinion that an unfavorable outcome is either probable or remote, and their counsel refrains from expressing an opinion as to the likely outcome of the case or the range of any loss. Except as noted above, the Fund is not a party to any pending legal or administrate proceeding, and to the best of its knowledge, no legal or administrative proceeding is threatened or contemplated against it. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ None. PART II Item 5. Market for the Registrant's Units and Related Security Holder Matters There is no public market for the Units, and it is not expected that a public market will develop. If a Limited Partner desires to sell Units, the buyer of those Units will be required to comply with the minimum purchase and retention requirements and investor suitability standards imposed by applicable federal or state securities laws and the minimum purchase and retention requirements imposed by the Fund. The price to be paid for the Units, as well as the commissions to be received by any participating broker-dealers, will be subject to negotiation by the Limited Partner seeking to sell his Units. Units will not be redeemed or repurchased by the Fund. The Partnership Agreement does not impose on the Fund or its General Partner any obligation to obtain periodic appraisals of assets or to provide Limited Partners with any estimates of the current value of Units. As of March 31, 2006, there were 1,173 record holders of Units of the Fund. Cash distributions, when made, are paid annually. For the years ended March 31, 2006 and 2005, no cash distributions were made. Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations Certain matters discussed herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Fund intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements and are including this statement for purposes of complying with these safe harbor provisions. Although the Fund believes the forward-looking statements are based on reasonable assumptions, the Fund can give no assurance that their expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, general economic and real estate conditions and interest rates. Executive Level Overview The Fund is a Massachusetts limited partnership organized to invest in Local Limited Partnerships which own and operate apartment complexes which are eligible for low income housing tax credits that may be applied against the federal income tax liability of an investor. The Fund's objectives are to: (i) provide investors with annual tax credits which they may use to reduce their federal income tax liability; (ii) provide limited cash distributions from the operations of apartment complexes; and (iii) preserve and protect the Fund's capital. Arch Street VIII Limited Partnership ("Arch Street L.P."), a Massachusetts limited partnership consisting of Arch Street VIII, Inc., a Massachusetts corporation ("Arch Street, Inc.") as the sole general partner and MMA as the sole limited partner, is the sole General Partner of the Fund. Arch Street L.P. and Arch Street, Inc. are affiliates of MMA. The fiscal year of the Fund ends on March 31. The Fund's investment portfolio consists of limited partnership interests in ten Local Limited Partnerships, each of which owns and operates a multi-family apartment complex and each of which has generated Tax Credits. Since inception, the Fund has generated Tax Credits of approximately $1,431 per Limited Partner Unit. The aggregate amount of Tax Credits generated by the Fund was consistent with the objective specified in the Fund's prospectus. Properties that receive low income housing Tax Credits must remain in compliance with rent restriction and set-aside requirements for at least 15 calendar years from the date the property is placed in service (the "Compliance Period"). Failure to do so would result in the recapture of a portion of the property's Tax Credits. Between 2008 and continuing through 2009, the Compliance Period of the ten Properties in which the Fund has an interest will expire. It is unlikely that the General Partner will be able to dispose of the Fund's Local Limited Partnership interests concurrently with the expiration of each Property's Compliance Period. The Fund shall dissolve and its affairs shall be wound up upon the disposition of the final Local Limited Partnership interest and other assets of the Fund. Investors will continue to be Limited Partners, receiving K-1s and quarterly and annual reports, until the Fund is dissolved. The General Partner has negotiated an agreement that will ultimately allow the Funds to dispose of its interest in one Local Limited Partnership. Critical Accounting Policies The Fund's accounting polices include those that relate to its recognition of investments in Local Limited Partnerships using the equity method of accounting. The Fund's policy is as follows: The Local Limited Partnerships in which the Fund invests are Variable Interest Entities ("VIE"s). The Fund is involved with the VIEs as a non-controlling limited partner equity holder. Because the Fund is not the primary beneficiary of these VIEs, it accounts for its investments in the Local Limited Partnerships using the equity method of accounting. As a result of its involvement with the VIEs, the Fund exposure to economic and financial statement losses is limited to its investments in the VIEs ($6,987,428 at March 31, 2006). The Fund may be subject to additional losses to the extent of any financial support that the Fund voluntarily provides in the future. Under the equity method, a Local Limited Partnership investment will not be carried below zero. To the extent that equity in losses are incurred when the Fund's carrying value of the respective Local Limited Partnership has been reduced to a zero balance, the losses will be suspended and offset against future income. Income from Local Limited Partnerships, where cumulative equity in losses plus cumulative distributions have exceeded the total investment in Local Limited Partnerships, will not be recorded until all of the related unrecorded losses have been offset. To the extent that a Local Limited Partnership with a carrying value of zero distributes cash to the Fund, that distribution is recorded as income on the books of the Fund and is included in "other revenue" in the accompanying financial statements. The Fund has implemented policies and practices for assessing other-than-temporary declines in values of its investments in Local Limited Partnerships. Periodically, the carrying values of the investments are compared to their respective fair values. If an other-than-temporary decline in carrying value exists, a provision to reduce the asset to fair value, as calculated based primarily on remaining tax benefits, will be recorded in the Fund's financial statements. During the year ended March 31, 2006, the Fund concluded that one of the Local Limited Partnerships had experienced an other-than-temporary decline in its carrying value and impairment losses were recorded for Meadow Wood Associates of Pella, a Limited Partnership for approximately $12,000. During the year ended March 31, 2005, the Fund concluded that one of the Local Limited Partnerships had experienced an other-than-temporary decline in its carrying value and impairment losses were recorded for Meadow Wood Associates of Pella, a Limited Partnership for approximately $96,000. Generally, the carrying values of most Local Limited Partnerships will decline through losses and distributions in amounts sufficient to prevent other-than-temporary impairments. However, the Fund may record similar impairment losses in the future if the expiration of tax credits outpaces losses and distributions from any of the Local Limited Partnerships. Liquidity and Capital Resources At March 31, 2006, the Fund had cash and cash equivalents of $346,666, as compared to $332,386 at March 31, 2005. The increase is primarily attributable to cash distributions received from Local Limited Partnerships. This increase is partially offset by cash used for operations and purchases of investment securities. Cash used for operations includes $775,000 paid to the General Partner for accrued asset management fees. The General Partner initially designated 5% of the Gross Proceeds as Reserves, as defined in the Partnership Agreement. The Reserves were established to be used for working capital of the Fund and contingencies related to the ownership of Local Limited Partnership interests. The General Partner may increase or decrease such Reserves from time to time, as it deems appropriate. At March 31, 2006, $495,587 of cash, cash equivalents and investment securities has been designated as Reserves. To date, professional fees relating to various Property issues totaling approximately $62,000 have been paid from Reserves. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the Fund's management might deem it in its best interest to voluntarily provide such funds in order to protect its investment. As of March 31, 2006, the Fund has advanced approximately $1,248,000 to Local Limited Partnerships to fund operating deficits. The General Partner believes that the investment income earned on the Reserves, along with cash distributions received from Local Limited Partnerships, to the extent available, will be sufficient to fund the Fund's ongoing operations. Reserves may be used to fund operating deficits, if the General Partner deems funding appropriate. To date, the Fund has used approximately $19,000 of Reserves to fund operations. If Reserves are not adequate to cover the Fund's operations, the Fund will seek other financing sources including, but not limited to, the deferral of Asset Management Fees paid to an affiliate of the General Partner or working with Local Limited Partnerships to increase cash distributions. Since the Fund invests as a limited partner, the Fund has no contractual duty to provide additional funds to Local Limited Partnerships beyond its specified investment. Thus, as of March 31, 2006, the Fund had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for. Cash Distributions No cash distributions were made to Limited Partners during the two years ended March 31, 2006. It is expected that cash available for distribution, if any, will not be significant in fiscal year 2007. Based on results of 2005 Property operations, the Local Limited Partnerships are not expected to distribute significant amounts of cash to the Funds because such amounts will be needed to fund Property operating costs. In addition, some of the properties benefit from some type of federal or state subsidy and, as a consequence, are subject to restrictions on cash distributions. Results of Operations For the year ended March 31, 2006, the Fund's operations resulted in a net loss of $1,181,642, as compared to $1,794,522 for the year ended March 31, 2005. The decrease in net loss is primarily attributable to a decrease in equity in losses of Local Limited Partnerships, a decrease in provision for valuation allowance on investments in Local Limited Partnerships and a decrease in provision for valuation allowance on advances to Local Limited Partnerships partially offset by an increase in general and administrative expenses. The decrease in equity in losses of Local Limited Partnerships is primarily due to an increase in unrecognized losses by the Fund of Local Limited Partnerships with carrying values of zero. The decrease in provision for valuation allowance on investments in Local Limited Partnerships is due to the fund recording valuation allowance for is investments in certain Local Limited Partnerships during the year ended March 31, 2005. The decrease in provision for valuation of advances to Local Limited Partnership is the result of a decrease in advances made to the Local Limited Partnerships during the current year. The increase in general and administrative expenses is due to increased expenses associated with auditing the Fund's financial statements partially offset by a decrease in charges due to an affiliate of the Managing General for operational and administrative expense necessary for operations of the Fund Low-Income Housing Tax Credits The 2005 and 2004 tax credits were $52 and $134 per Unit, respectively. The Tax Credits per Limited Partner stabilized in 1997 at approximately $142 per Unit, as Properties reached completion and became fully leased. Since the Tax Credits had stabilized, the annual amount allocated to investors remained the same for about the first seven years. In years eight through ten, the credits are decreasing as Properties reach the end of the ten year credit period. However, because the Compliance Periods extend significantly beyond the Tax Credit periods, the Fund is expected to retain most of its interests in the Local Limited Partnerships for the foreseeable future. Property Discussions A few Properties in which the Fund has an interest have stabilized operations and operate above break-even. Several Properties generate cash flow deficits that the Local General Partners of those Properties fund through project expense loans, subordinated loans or operating escrows. However, a few Properties have had persistent operating difficulties that could either: i) have an adverse impact on the Fund's liquidity; ii) result in their foreclosure; or iii) result in the General Partner deeming it appropriate for the Fund to dispose of its interest in the Local Limited Partnership prior to the expiration of the Compliance Period. Also, the General Partner, in the normal course of the Fund's business, may arrange for the future disposition of its interest in certain Local Limited Partnerships. The following Property discussions focus only on such Properties. As previously reported, the Local General Partner of Live Oaks Plantation, located in West Palm Beach, Florida, indicated a desire to transfer its interest in the Local Limited Partnership to a replacement Local General Partner. Accordingly, the General Partner began working with the Local General Partner to identify an acceptable replacement. Negotiations to replace the Local General Partner were then delayed due to an audit by the Internal Revenue Service ("IRS"). The audit focused on the tax treatment of certain items, such as land improvements, impact fees, utility fees and developer fees. In April 2002, the Florida office of the IRS issued their report indicating an eligible basis reduction of approximately $1,000,000, which would reduce the amount of Tax Credits and losses generated by the Property. The Local General Partner filed an appeal of the report to the Washington D.C. office of the IRS. The appeal was successful, and during April 2004 a settlement was reached whereby the eligible basis was reduced by approximately $93,000. Subsequent to reaching a settlement with the IRS, negotiations to replace the Local General Partner resumed. Effective June 28, 2004, an affiliate of the General Partner replaced the Local General Partner. In June 2005, the Local General Partner interest was transferred from the affiliate of the General Partner to a replacement Local General Partner. While occupancy and working capital levels at the Property have consistently remained adequate, the Property generated significant operating deficits in 2001 and 2002. The Fund funded slightly more than $1,000,000 of deficits from Fund Reserves. The General Partner anticipates that cash from operations will continue to fund the monthly debt service. Occupancy at the Property averaged 90% for the three months ended December 31, 2005, while debt service coverage and working capital remained above appropriate levels during the same period. As previously reported, turnover at Green Wood Apartments, located in Gallatin, Tennessee, as a result of few employment opportunities in the immediate area, continues to cause a decline in Property operations. Rental concessions, in an effort to alleviate the turnover issue, along with higher utility and administrative expenses, continue to hinder the Property's ability to operate at above breakeven. Despite an overall improvement in occupancy levels since 2004; (occupancy was 99% as of December 31, 2005) debt service coverage remained below an appropriate level as of December 31, 2005. The Local General Partner continues to fund the operating deficits, enabling the Property to remain current on its loan obligations. The General Partner will continue to closely monitor Property operations. The Managing General Partner and Local General Partner have reached an agreement that may result in a 2006 sale of this Property. Under the current terms, a sale would result in net proceeds to the Fund of approximately $830,000 or $23 per Unit and taxable income of approximately $500,000 or $14 per Unit. As previously reported, Meadow Wood of Pella, located in Pella, Iowa, had experienced operating deficits due to reduced revenues resulting from low occupancy and high expenses. However, consistently acceptable levels of occupancy over the nine months ended December 31, 2005 have alleviated revenue issues and caused the return to above breakeven status of this Property as of December 31, 2005. The Local General Partner has fulfilled its working capital obligation and will no longer fund operating deficits, when applicable. A recent modification to the Property's HOME loan resulting in a reduction to the required annual debt service payment beginning in 2006 is expected to lead to an improvement in operations. The Property remains current on its debt service. The General Partner will continue to closely monitor Property operations. In 2004 the Local General Partner of Beaverdam Creek located in Mechanicsville, Virginia, requested approval for a refinancing on the Property's first mortgage. As part of the agreement to provide the General Partner's approval of the refinancing, a put agreement was entered into whereby the Fund has the right to transfer its interest in the Local Limited Partnership for a nominal price at any time after December 31, 2009, the end of the Property's Compliance Period. As a result of the refinancing, which closed on May 4, 2005, the Fund received Sale or Refinancing Proceeds, as defined in the Local Limited Partnership Agreement, of $890,727. The General Partner, in accordance with and as permitted by the Partnership Agreement, retained the entire amount of net proceeds in Reserves. Inflation and Other Economic Factors Inflation had no material impact on the operations or financial condition of the Fund for the years ended March 31, 2006 and 2005. Since most Properties benefit from some form of governmental assistance, the Fund is subject to the risks inherent in that area including decreased subsidies, difficulties in finding suitable tenants and obtaining permission for rent increases. In addition, any Tax Credits allocated to investors with respect to a Property are subject to recapture to the extent that the Property or any portion thereof ceases to qualify for the Tax Credits. Certain Properties in which the Fund has invested are located in areas suffering from poor economic conditions. Such conditions could have an adverse effect on the rent or occupancy levels at such properties. Nevertheless, the General Partner believes that the generally high demand for below market rate housing will tend to negate such factors. However, no assurance can be given in this regard. Item 7. Financial Statements and Supplementary Data Amount Information required under this Item is submitted as a separate section of this Report. See Index on page F-1 hereof. Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 8A. Controls and Procedures Based on the Fund's evaluation within 120 days prior to filing this Form 10-KSB, the Fund's Principal Executive Officer has concluded that the Fund's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Fund files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. There have been no significant changes in the Fund's internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation. Item 8B. Other Information No reports on Form 8-K were filed during the fourth quarter of the year ended March 31, 2006. PART III Item 9. Directors and Executive Officers of the Registrant The General Partner of the Fund is Arch Street VIII Limited Partnership, a Massachusetts limited partnership (the "General Partner"), an affiliate of MMA. The General Partner was formed in August 1993. The Investment Committee of the General Partner approves all investments. The names and positions of the principal officers and directors of the General Partner are set forth below. Name Position Jenny Netzer Executive Vice President Michael H. Gladstone Principal, Member The General Partner provides day-to-day management of the Fund. Compensation is discussed in Item 10 of this report. Such day-to-day management does not include the management of the properties. The business experience of each of the persons listed above is described below. There is no family relationship between any of the persons listed in this section. Jenny Netzer, age 50, Executive Vice President - Ms. Netzer joined MMA as a result of the Boston Financial and subsequent Lend Lease HCI acquisitions, starting with Boston Financial in 1987 and leading Boston Financial's new business initiatives and managing the firm's Asset Management division. Prior to joining Boston Financial, Ms. Netzer served as Deputy Budget Director for the Commonwealth of Massachusetts where she was responsible for the Commonwealth's health care and public pension program's budgets. Ms. Netzer also served as Assistant Controller at Yale University, as a former member of Watertown Zoning Board of Appeals, as the Officer of Affordable Housing Tax Credit Coalition and is a frequent speaker on affordable housing and tax credit industry issues. Ms. Netzer is a graduate of Harvard University (BA) and Harvard's Kennedy School of Government (MPP). Michael H. Gladstone, age 49, Principal, Member - Mr. Gladstone is responsible for capital transactions work in the Asset Management group of MMA. He joined MMA as a result of the Boston Financial and Lend Lease HCI acquisitions, starting with Boston Financial in 1985 as the firm's General Counsel. Prior to joining Boston Financial, Mr. Gladstone was associated with the law firm of Herrick & Smith and served on the advisory board of the Housing and Development Reporter. Mr. Gladstone has lectured at Harvard University on affordable housing matters and is a member of the National Realty Committee, Cornell Real Estate Council, National Association of Real Estate Investment Managers and Massachusetts Bar. Mr. Gladstone is a graduate of Emory University (BA) and Cornell University (J.D. & MBA). The Fund is organized as a limited partnership solely for the purpose of real estate investment and does not have any employees. Therefore the Fund has not adopted a Code of Ethics. The Fund is structured as a limited partnership that was formed principally for real estate investment and is not a "listed" issuer as defined by Rule 10A-3 of the Securities Exchange Act of 1934. Accordingly, neither an audit committee nor a financial expert to serve on such a committee has been established by the Fund. Item 10. Management Remuneration Neither the partners of Arch Street VIII Limited Partnership nor any other individual with significant involvement in the business of the Fund receives any current or proposed remuneration from the Fund. Item 11. Security Ownership of Certain Beneficial Owners and Management As of March 31, 2006, the following entities are the only entities known to the Fund to be the beneficial owners of more than 5% of the Units outstanding:
Title of Name and Address of Beneficially Class Beneficial Owner Owned Percent of Class --------------- ------------------------------------- --------------- ---------------- Limited Oldham Institutional Tax Credits LLC 2,476 Units 6.78% Partner 101 Arch Street Boston, MA Limited Oldham Institutional Tax Credits LLC 5,220 Units 14.30% Partner VI LLC 101 Arch Street Boston, MA Limited Liberty Corporation 2,079 Units 5.70% Partner PO Box 789 Greenville, SC Limited Everest Housing Investors 2, LLC 2,458 Units 6.73% Partner 155 North Lake Avenue Suite 1000 Pasadena, CA 91101
Oldham Institutional Tax Credits LLC and Oldham Institutional Tax Credits VI LLC are affiliates of Arch Street VIII Limited Partnership, the General Partner. The equity securities registered by the Fund under Section 12(g) of the Act of 1934 consist of 200,000 Units, 36,497 of which have been sold to the public. Holders of Units are permitted to vote on matters affecting the Fund only in certain unusual circumstances and do not generally have the right to vote on the operation or management of the Fund. Arch Street VIII, Inc. owns a fractional (unregistered) Unit not included in the Units sold to the public. Except as described in the preceding paragraphs, neither Arch Street VIII, Inc., Arch Street VIII Limited Partnership, MMA, nor any of their executive officers, directors, partners or affiliates is the beneficial owner of any Units. None of the foregoing persons possesses a right to acquire beneficial ownership of Units. The Fund does not know of any existing arrangement that might at a later date result in a change in control of the Fund. Item 12. Certain Relationships and Related Transactions The Fund is required to pay certain fees to and reimburse certain expenses of the General Partner or its affiliates (including MMA) in connection with the organization of the Fund and the offering of Units. The Fund is also required to pay certain fees to and reimburse certain expenses of the General Partner or its affiliates (including MMA) in connection with the administration of the Fund and its acquisition and disposition of investments in Local Limited Partnerships. In addition, the General Partner is entitled to certain Fund distributions under the terms of the Partnership Agreement. Also, an affiliate of the General Partner will receive up to $10,000 from the sale or refinancing proceeds of each Local Limited Partnership, if it is still a limited partner at the time of such transaction. All such fees, expenses and distributions paid in the years ended March 31, 2006 and 2005 are described below and in the sections of the Prospectus entitled "Estimated Use of Proceeds", "Management Compensation and Fees" and "Profits and Losses for Tax Purposes, Tax Credits and Cash Distributions". Such sections are incorporated herein by reference. The Fund is permitted to enter into transactions involving affiliates of the General Partner, subject to certain limitations established in the Partnership Agreement. Information regarding the Fees paid and expense reimbursements made in the two years ended March 31, 2006 is as follows: Organizational Fees and Expenses and Selling Expenses In accordance with the Partnership Agreement, the Fund was required to pay certain fees to and reimburse expenses of the General Partner and others in connection with the organization of the Fund and the offering of its Limited Partnership Units. Selling commissions, fees and accountable expenses related to the sale of the Units totaling $4,664,369 have been charged directly to Limited Partners' equity. In connection therewith, $2,828,918 of selling expenses and $1,835,451 of offering expenses incurred on behalf of the Fund have been paid to an affiliate of the General Partner. The Fund was also required to pay a non-accountable expense allowance for marketing expense equal to a maximum of 1% of Gross Proceeds. The Fund has capitalized an additional $50,000 which was reimbursed to an affiliate of the General Partner. Total organization and offering expenses exclusive of selling commissions and underwriting advisory fees did not exceed 5.5% of the Gross Proceeds and organizational and offering expenses, inclusive of selling commissions and underwriting advisory fees, did not exceed 15.0% of the Gross Proceeds. There were no organizational fees and expenses paid for the two years ended March 31, 2006. Acquisition Fees and Expenses In accordance with the Partnership Agreement, the Fund was required to pay acquisition fees to and reimburse acquisition expenses of the General Partner or its affiliates for selecting, evaluating, structuring, negotiating and closing the Fund's investments in Local Limited Partnerships. Acquisition fees totaled 6% of the Gross Proceeds. Acquisition expenses, which include such expenses as legal fees and expenses, travel and communications expenses, costs of appraisals, accounting fees and expenses, were expected to total 1.5% of the Gross Proceeds. Acquisition fees totaling $2,189,820 for the closing of the Fund's Local Limited Partnership Investments were paid to an affiliate of the General Partner. Acquisition expenses totaling $335,196 were reimbursed to an affiliate of the General Partner. There were no acquisition fees and expenses paid for the two years ended March 31, 2006. Asset Management Fees In accordance with the Partnership Agreement, an affiliate of the General Partner currently receives 0.50% (annually adjusted by the CPI factor) of Gross Proceeds annually as an Asset Management Fee for administering the affairs of the Fund. Asset Management Fees incurred in the years ended March 31, 2006 and 2005 are as follows:
2006 2005 -------------- ----------------- Asset management fees $ 238,505 $ 233,865
Salaries and Benefits Expense Reimbursement An affiliate of the General Partner is reimbursed for the cost of certain salaries and benefits expenses which are incurred by an affiliate of the General Partner on behalf of the Fund. The reimbursements are based upon the size and complexity of the Fund's operations. Reimbursements paid or payable in the years ended March 31, 2005 and 2004 are as follows:
2006 2005 -------------- ---------- Salaries and benefits expense reimbursements $ 64,572 $ 103,838 Cash Distributions Paid to the General Partners
In accordance with the Partnership Agreement, the General Partner of the Fund, Arch Street VIII Limited Partnership, receives 1% of cash distributions made to partners. As of March 31, 2006, the Fund has not paid any cash distributions to partners. Additional information concerning cash distributions and other fees paid or payable to the General Partner and its affiliates and the reimbursement of expenses paid or payable to MMA and its affiliates during each of the two years ended March 31, 2006 is presented in Note 5 to the Financial Statements. Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Documents filed as a part of this Report In response to this portion of Item 13, the financial statements and the auditors' reports relating thereto are submitted as a separate section of this Report. See Index to the Financial Statements on page F-1 hereof. All other financial statement schedules and exhibits for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under related instructions or are inapplicable and therefore have been omitted. (b) Exhibits 31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 Item 14. Principal Accountant Fees and Services The Fund paid or accrued fees for services rendered by the principal accountant for the two years ended March 31, 2005 as follows:
2006 2005 -------------- ---------- Audit fees $ 64,401 $ 16,750 Tax fees $ 2,400 $ 1,950
No other fees were paid or accrued to the principal accountants during the two years ended March 31, 2006 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP By: Arch Street VIII Limited Partnership its General Partner By:/s/Jenny Netzer Date: June 28, 2006 --------------------------------------- ---------------- Jenny Netzer Executive Vice President MMA Financial, Inc. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Managing General Partner of the Fund and in the capacities and on the dates indicated: By: /s/Jenny Netzer Date: June 28, 2006 --------------------------------------- ------------- Jenny Netzer Executive Vice President MMA Financial, Inc. By: /s/Michael H. Gladstone Date: June 28, 2006 ----------------------------- ------------- Michael H. Gladstone Principal MMA Financial, Inc. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED MARCH 31, 2006 INDEX
Page No. Report of Independent Registered Public Accounting Firm for the years ended March 31, 2006 and 2005 F-2 Financial Statements Balance Sheet - March 31, 2006 F-3 Statements of Operations - For the years ended March 31, 2006 and 2005 F-4 Statements of Changes in Partners' Equity (Deficiency) - For the years ended March 31, 2006 and 2005 F-5 Statements of Cash Flows - For the years ended March 31, 2006 and 2005 F-6 Notes to the Financial Statements F-7
Report of Independent Registered Public Accounting Firm To the Partners of Boston Financial Tax Credit Fund VIII, A Limited Partnership In our opinion, the financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Boston Financial Tax Credit Fund VIII, A Limited Partnership ("the Partnership") at March 31, 2006, and the results of its operations and its cash flows for each of the two years in the period ended March 31, 2006 in conformity with accounting principles generally accepted in the United States of America. 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 of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Boston, Massachusetts June 28, 2006 BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP BALANCE SHEET March 31, 2006
Assets Cash and cash equivalents $ 346,666 Investment securities, at fair value (Note 3) 148,921 Investment in Local Limited Partnerships (Note 4) 6,987,428 Other assets 1,794 --------------- Total Assets $ 7,484,809 =============== Liabilities and Partners' Equity Due to affiliate (Note 5) $ 754,969 Accrued expenses 55,004 --------------- Total Liabilities 809,973 --------------- General, Initial and Investor Limited Partners' Equity 6,675,915 Net unrealized losses on investment securities (1,079) --------------- Total Partners' Equity 6,674,836 --------------- Total Liabilities and Partners' Equity $ 7,484,809 =============== The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS For the Years Ended March 31, 2006 and 2005
2006 2005 ---------------- --------------- Revenue: Investment $ 33,523 $ 5,896 ---------------- --------------- Total Revenue 33,523 5,896 ---------------- --------------- Expense: Asset management fees, affiliate (Note 5) 238,505 233,865 Provision for valuation allowance on advances to Local Limited Partnerships (Note 4) - 73,076 Provision for valuation allowance on investments in Local Limited Partnerships (Note 4) 11,633 96,000 General and administrative (includes reimbursements to an affiliate in the amount of $64,572 and $103,838 in 2006 and 2005, respectively) 188,925 178,022 Amortization 20,938 28,126 ---------------- -------------- Total Expense 460,001 609,089 ---------------- --------------- Loss before equity in losses of Local Limited Partnerships (426,478) (603,193) Equity in losses of Local Limited Partnerships (Note 4) (755,164) (1,191,329) ---------------- --------------- Net Loss $ (1,181,642) $ (1,794,522) ================ =============== Net Loss allocated: General Partners $ (11,816) $ (17,945) Limited Partners (1,169,826) (1,776,577) ---------------- --------------- $ (1,181,642) $ (1,794,522) ================ =============== Net Loss per Limited Partner Unit (36,497 Units) $ (32.05) $ (48.68) ================ ================ The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY) For the Years Ended March 31, 2006 and 2005
Net Initial Investor Unrealized General Limited Limited Gains Partners Partners Partners (Losses) Total Balance at March 31, 2004 $ (219,826) $ 100 $ 9,871,805 $ 520 $ 9,652,599 ------------- -------------- -------------- ------------- ------------ Comprehensive Loss: Change in net unrealized gains on investment securities available for sale - - - (476) (476) Net Loss (17,945) - (1,776,577) - (1,794,522) ------------- -------------- -------------- ------------- ------------ Comprehensive Loss (17,945) - (1,776,577) (476) (1,794,998) ------------- -------------- -------------- ------------- ------------ Balance at March 31, 2005 (237,771) 100 8,095,228 44 7,857,601 ------------- -------------- -------------- ------------- ------------ Comprehensive Loss: Change in net unrealized gains on investment securities available for sale - - - (1,123) (1,123) Net Loss (11,816) - (1,169,826) - (1,181,642) ------------- -------------- -------------- ------------- ------------ Comprehensive Loss (11,816) - (1,169,826) (1,123) (1,182,765) ------------- -------------- -------------- ------------- ------------ Balance at March 31, 2006 $ (249,587) $ 100 $ 6,925,402 $ (1,079) $ 6,674,836 ============= ============== ============== ============= ============ The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Years Ended March 31, 2006 and 2005
2006 2005 ---------------- ---------- Cash flows from operating activities: Net Loss $ (1,181,642) $ (1,794,522) Adjustments to reconcile net loss to net cash used for operating activities: Equity in losses of Local Limited Partnerships 755,164 1,191,329 Provision for valuation allowance on advances to Local Limited Partnerships - 73,076 Provision for valuation allowance on investments in Local Limited Partnerships 11,633 96,000 Amortization 20,938 28,126 Accretion 1,616 - Other non-cash items (17) (177) Increase (decrease) in cash arising from changes in operating assets and liabilities: Other assets (1,590) (62) Due to affiliate (471,923) 337,703 Accrued expenses 10,181 14,811 ---------------- --------------- Net cash used for operating activities (855,640) (53,716) ---------------- --------------- Cash flows from investing activities: Purchase of investment securities (276,616) - Proceeds from maturities of investment securities 130,945 12,441 Advances to Local Limited Partnerships - (73,076) Cash distributions received from Local Limited Partnerships 1,015,591 105,304 ---------------- --------------- Net cash provided by investing activities 869,920 44,669 ---------------- ---------------- Net increase (decrease) in cash and cash equivalents 14,280 (9,047) Cash and cash equivalents, beginning 332,386 341,433 ---------------- --------------- Cash and cash equivalents, ending $ 346,666 $ 332,386 ================ =============== The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS 1. Organization Boston Financial Tax Credit Fund VIII, A Limited Partnership (the "Fund") is a Massachusetts limited partnership organized to invest in other limited partnerships ("Local Limited Partnerships") which own and operate apartment complexes which are eligible for low income housing tax credits that may be applied against the federal income tax liability of an investor. The Fund's objectives are to: (i) provide investors with annual tax credits which they may use to reduce their federal income tax liability; (ii) provide limited cash distributions from the operations of apartment complexes; and (iii) preserve and protect the Fund's capital. Arch Street VIII Limited Partnership ("Arch Street L.P."), a Massachusetts limited partnership consisting of Arch Street VIII, Inc., a Massachusetts corporation ("Arch Street, Inc.") as the sole general partner and MMA Financial, Inc. ("MMA") as the sole limited partner, is the sole General Partner of the Fund. Arch Street L.P. and Arch Street, Inc. are affiliates of MMA. The fiscal year of the Fund ends on March 31. The Partnership Agreement authorizes the sale of up to 200,000 units of limited partnership interest ("Units") at $1,000 per Unit in series. The first series offered 50,000 Units. On July 29, 1994, the Fund held its final investor closing. In total, the Fund received $36,497,000 of capital contributions from investors admitted as Limited Partners, for a total of 36,497 Units. Under the terms of the Partnership Agreement, the Fund originally designated 5% of the Gross Proceeds from the sale of Units as a reserve for working capital of the Fund and contingencies related to ownership of Local Limited Partnership interests. The General Partner may increase or decrease such amounts from time to time, as it deems appropriate. At March 31, 2006, the General Partner has designated $495,587 of cash, cash equivalents and investment securities as such Reserve. Generally, profits, losses, tax credits and cash flows from operations are allocated 99% to the Limited Partners and 1% to the General Partner. Net proceeds from a sale or refinancing will be allocated 95% to the Limited Partners and 5% to the General Partner, after certain priority payments. The General Partners may have an obligation to fund deficits in their capital accounts, subject to limits set forth in the Partnership Agreement. However, to the extent that the General Partners' capital accounts are in a deficit position, certain items of net income may be allocated to the General Partners in accordance with the Partnership Agreement. 2. Significant Accounting Policies Cash Equivalents Cash equivalents represent short-term, highly liquid instruments with original maturities of 90 days or less. Concentration of Credit Risk The Fund invests its cash primarily in money market funds with commercial banks. At times, cash balances at a limited number of banks and financial institutions may exceed federally insured amounts. Management believes it mitigates its credit risk by investing in major financial institutions. Investment Securities The Fund's investment securities are classified as "Available for Sale" securities and reported at fair value as reported by the brokerage firm at which the securities are held. All investment securities have fixed maturities. Realized gains and losses from the sales of securities are based on the specific identification method. Unrealized gains and losses are excluded from earnings and reported as a separate component of partners' equity. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) Investments in Local Limited Partnerships The Local Limited Partnerships in which the Fund invests are Variable Interest Entities ("VIE"s). The Fund is involved with the VIEs as a non-controlling limited partner equity holder. Because the Fund is not the primary beneficiary of these VIEs, it accounts for its investments in the Local Limited Partnerships using the equity method of accounting. As a result of its involvement with the VIEs, the Fund's exposure to economic and financial statement losses is limited to its investments in the VIEs ($6,987,428 at March 31, 2006). The Fund may be subject to additional losses to the extent of any financial support that the Fund voluntarily provides in the future. Under the equity method, a Local Limited Partnership investment will not be carried below zero. To the extent that equity in losses are incurred when the Fund's carrying value of the respective Local Limited Partnership has been reduced to a zero balance, the losses will be suspended and offset against future income. Income from Local Limited Partnerships, where cumulative equity in losses plus cumulative distributions have exceeded the total investment in Local Limited Partnerships, will not be recorded until all of the related unrecorded losses have been offset. To the extent that a Local Limited Partnership with a carrying value of zero distributes cash to the Fund, that distribution is recorded as income on the books of the Fund and is included in "other revenue" in the accompanying financial statements. The Tax Credits generated by Local Limited Partnerships are not reflected on the books of the Fund as such credits are allocated to partners for use in offsetting their Federal income tax liability. Excess investment costs over the underlying net assets acquired have arisen from acquisition fees paid and expenses reimbursed to an affiliate of the Fund. These fees and expenses are included in the Fund's investments in Local Limited Partnerships and are being amortized on a straight-line basis over 35 years until a Local Limited Partnership's respective investment balance has been reduced to zero. The Fund provides advances to the Local Limited Partnerships to finance operations or to make debt service payments. The Fund assesses the collectibility of these advances at the time the advance is made and records a reserve if collectibility is not reasonably assured. The Fund does not guarantee any of the mortgages or other debt of the Local Limited Partnerships. The Fund, as a limited partner in the Local Limited Partnerships, is subject to risks inherent in the ownership of property which are beyond its control, such as fluctuations in occupancy rates and operating expenses, variations in rental schedules, proper maintenance of facilities and continued eligibility of tax credits. If the cost of operating a property exceeds the rental income earned thereon, the Fund may deem it in its best interest to voluntarily provide funds in order to protect its investment. The General Partners have decided to report results of the Local Limited Partnerships on a 90-day lag basis because the Local Limited Partnerships report their results on a calendar year basis. Accordingly, the financial information about the Local Limited Partnerships that is included in the accompanying financial statements is as of December 31, 2005 and 2004 and for the years then ended. The Fund has implemented policies and practices for assessing other-than-temporary declines in values of its investments in Local Limited Partnerships. Periodically, the carrying values of the investments are compared to their respective fair values. If an other-than-temporary decline in carrying value exists, a provision to reduce the asset to fair value, as calculated based primarily on remaining tax benefits, will be recorded in the Fund's financial statements. NOTES TO THE FINANCIAL STATEMENTS (continued) 2. Significant Accounting Policies (continued) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair Value of Financial Instruments Statements of Financial Accounting Standards No. 107 ("SFAS No. 107"), Disclosures About Fair Value of Financial Instruments, requires disclosure for the fair value of most on- and off-balance sheet financial instruments for which it is practicable to estimate that value. The scope of SFAS No. 107 excludes certain financial instruments, such as trade receivables and payables when the carrying value approximates the fair value and investments accounted for under the equity method, and all nonfinancial assets, such as real property. Unless otherwise described, the fair values of the Fund's assets and liabilities, which qualify as financial instruments under SFAS No. 107, approximate their carrying amounts in the accompanying balance sheet. Income Taxes No provision for income taxes has been made, as the liability for such taxes is an obligation of the partners of the Fund. 3. Investment Securities A summary of investment securities is as follows:
Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value Debt securities issued by the US Treasury and other US Government Agencies $ 150,000 $ - $ (1,079) $ 148,921 -------------- -------------- --------------- -------------- Investment securities At March 31, 2006 $ 150,000 $ - $ (1,079) $ 148,921 ============== ============== ============== ============== The contractual maturities at March 31, 2006 are as follows: Fair Cost Value Due in less than one year $ 150,000 $ 148,921 ------------- ------------- $ 150,000 $ 148,921 ============= ============= Proceeds from the maturities of investment securities were approximately $131,000 and $12,000 during the years ended March 31, 2006 and 2005, respectively.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 4. Investments in Local Limited Partnerships The Fund has limited partnership interests in ten Local Limited Partnerships, which were organized for the purpose of owning and operating multi-family housing complexes, all of which are government assisted. The Fund's ownership interest in the Local Limited Partnerships is 99%, with the exception of Springwood, which is 79.20%, Hemlock Ridge, which is 77% and Pike Place and West End Place, which are 90%. The Fund may have negotiated or may negotiate options with the Local General Partners to purchase or sell the Fund's interests in the Local Limited Partnerships at the end of the Compliance Period at nominal prices. In the event that Local Limited Partnerships are sold to third parties, or upon dissolution of the Local Limited Partnerships, proceeds will be distributed according to the terms of each Local Limited Partnership agreement. The following is a summary of investments in Local Limited Partnerships at March 31, 2006:
Capital contributions and advances paid to Local Limited Partnerships $ 30,513,168 Cumulative equity in losses of Local Limited Partnerships (excluding cumulative unrecognized losses of $2,652,229) (19,353,954) Cumulative cash distributions received from Local Limited Partnerships (2,127,316) --------------- Investments in Local Limited Partnerships before adjustments 9,031,898 Excess investment costs over the underlying assets acquired: Acquisition fees and expenses 1,048,010 Cumulative amortization of acquisition fees and expenses (308,412) --------------- Investments in Local Limited Partnerships before valuation allowance 9,771,496 Valuation allowance on investments in Local Limited Partnerships (2,784,068) --------------- Investments in Local Limited Partnerships $ 6,987,428 ===============
The Fund has recorded a valuation allowance for its investments in certain Local Limited Partnerships in order to appropriately reflect the estimated net realizable value of these investments. During the year ended March 31, 2006, the Fund concluded that one of the Local Limited Partnerships had experienced an other-than-temporary decline in its carrying value and impairment losses were recorded for Meadow Wood Associates of Pella, a Limited Partnership for approximately $12,000. During the year ended March 31, 2005, the Fund concluded that one of the Local Limited Partnerships had experienced an other-than-temporary decline in its carrying value and impairment losses were recorded for Meadow Wood Associates of Pella, a Limited Partnership for approximately $96,000. Summarized combined financial information of the Local Limited Partnerships in which the Fund has invested as of December 31, 2005 and 2004 (due to the Fund's policy of reporting the financial information of its Local Limited Partnership interests on a 90 day lag basis) is as follows: BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 4. Investments in Local Limited Partnerships (continued) Summarized Balance Sheets - as of December 31,
2005 2004 ---------------- ---------------- Assets: Investment property, net $ 46,288,383 $ 48,126,113 Other assets 3,490,130 3,609,728 ---------------- ---------------- Total Assets $ 49,778,513 $ 51,735,841 ================ ================ Liabilities and Partners' Equity (Deficiency): Mortgage notes payable $ 33,255,554 $ 32,885,531 Other liabilities 11,426,271 11,028,487 ---------------- ---------------- Total Liabilities 44,681,825 43,914,018 ---------------- ---------------- Fund's Equity 6,584,831 8,893,788 Other partners' deficiency (1,488,143) (1,071,965) ---------------- ---------------- Total Partners' Equity 5,096,688 7,821,823 ---------------- ---------------- Total Liabilities and Partners' Equity (Deficiency) $ 49,778,513 $ 51,735,841 ================ ================ Summarized Statements of Operations - for the year ended December 31, 2005 2004 ---------------- ---------------- Rental and other income $ 9,466,412 $ 9,157,494 Expenses: Operating 5,757,502 5,730,458 Interest 2,871,932 2,836,555 Depreciation and amortization 2,217,862 2,284,398 ---------------- ---------------- Total Expenses 10,847,296 10,851,411 ---------------- ---------------- Net Loss $ (1,380,884) $ (1,693,917) ================ ================ Fund's share of net loss (includes adjustment from previous year) $ (1,293,035) $ (1,601,766) ================ ================ Other partners' share of net loss $ (73,218) $ (92,151) ================ ================
For the years ended March 31, 2006 and 2005, the Fund has not recognized $537,871 and $410,437, respectively, of equity in losses relating to certain Local Limited Partnerships in which cumulative equity in losses and distributions exceeded its total investment in the Local Limited Partnership. The Fund's equity as reflected by the Local Limited Partnerships of $6,584,830 differs from the Fund's investments in Local Limited Partnerships before adjustments of $9,031,898 primarily due to cumulative unrecognized losses as described above and differences in the accounting treatment of miscellaneous items. BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 5. Transactions with Affiliates An affiliate of the General Partner receives a base amount of 0.50% (annually adjusted by the CPI factor) of the Gross Proceeds as the annual Asset Management Fee for administering the affairs of the Fund. Asset Management Fees of $238,505 and $233,865 have been included in expenses for the years ended March 31, 2006 and 2005, respectively. Included in due to affiliate at March 31, 2006 is $464,554 of Asset Management Fees. During the years ended March 31, 2006 and 2005, $775,000 and $0, respectively, were paid out of available cash flow for Asset Management Fees. An affiliate of the General Partner is reimbursed for the cost of the Fund's salaries and benefits expenses. Included in general and administrative expenses for the years ended March 31, 2006 and 2005 is $64,572 and $103,838, respectively that the Fund incurred for these expenses. During the years ended March 31, 2006 and 2005, no salaries and benefits were paid to the affiliate of the General Partner. As of March 31, 2006, $290,415 is payable to an affiliate of the General Partner. 6. Federal Income Taxes The following schedule reconciles the reported financial statement net loss for the fiscal years ended March 31, 2006 and 2005 to the net loss reported on the Form 1065, U.S. Partnership Return of Income for the years ended December 31, 2005 and 2004:
2006 2005 -------------- -------------- Net loss per financial statements $ (1,181,642) $ (1,794,522) Equity in losses of Local Limited Partnerships for tax purposes in excess of equity in losses for financial reporting purposes (126,160) (108,986) Equity in losses of Local Limited Partnerships not recognized for financial reporting purposes (537,871) (410,437) Adjustment to reflect March 31 fiscal year end to December 31 taxable year end 23,694 (4,011) Amortization for tax purposes in excess of amortization for financial reporting purposes (17,171) (9,983) Provision for valuation of advances allowance on Local Limited Partnerships, net of recovery not deductible for tax purposes - 73,076 Provision for valuation allowance on investments in Local Limited Partnerships, not deductible for tax purposes 11,633 96,000 -------------- ------------- Net Loss per tax return $ (1,827,517) $ (2,158,863) ============== =============
The differences in the assets and liabilities of the Fund for financial reporting purposes and tax purposes as of March 31, 2006 and December 31, 2005, respectively are as follows:
Financial Reporting Tax Purposes Purposes Differences Investments in Local Limited Partnerships $ 6,987,428 $ 7,397,952 $ (410,524) ============== ============== ============== Other assets $ 497,381 $ 5,206,053 $ (4,708,672) ============== ============== ============== Liabilities $ 809,973 $ 733,765 $ 76,208 ============== ============== ==============
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP NOTES TO THE FINANCIAL STATEMENTS (continued) 6. Federal Income Taxes (continued) The differences in assets and liabilities of the Fund for financial reporting and tax purposes are primarily attributable to: (i) the cumulative equity in losses from Local Limited Partnerships for tax reporting purposes is approximately $2,283,000 more than for financial reporting purposes, including approximately $2,652,000 of losses the Fund has not recognized relating to three Local Limited Partnerships whose cumulative equity in losses exceeded the total investment; (ii) the cumulative amortization of acquisition fees for tax purposes exceeds financial reporting purposes by approximately $91,000; (iii) the Fund has provided an impairment allowance of approximately $2,784,000 against its investments in Local Limited Partnerships for financial reporting purposes; and (iv) organizational and offering costs of approximately $4,664,000 that have been capitalized for tax purposes are charged to Limited Partners' equity for financial reporting purposes. 7. Significant Subsidiaries The following Local Limited Partnerships invested in by the Fund represent more than 20% of the Fund's total assets or equity as of March 31, 2006 or 2005 or net losses for the years ended either March 31, 2006 or 2005. The following financial information represents the performance of these Local Limited Partnerships for the years ended December 31, 2005 and 2004:
Beaverdam Creek Associates, a Limited Partnership 2005 2004 - ------------------------------------------------- --------------- ------------- Total Assets $ 5,705,378 $ 5,879,403 Total Liabilities $ 4,303,527 $ 3,156,683 Revenue $ 1,017,681 $ 953,633 Net Loss $ (5,240) $ (14,707) Oak Knoll Renaissance, Limited Partnership - ------------------------------------------ Total Assets $ 8,021,938 $ 8,430,008 Total Liabilities $ 5,150,319 $ 5,401,207 Revenue $ 1,991,970 $ 1,975,487 Net Loss $ (109,750) $ (389,223) Schickedanz Brothers Palm Beach Limited - --------------------------------------- Total Assets $ 10,602,655 $ 10,955,205 Total Liabilities $ 9,940,024 $ 9,966,707 Revenue $ 1,807,672 $ 1,798,639 Net Loss $ (438,207) $ (337,700)
EX-31 2 tc8exh31.txt TC8EXH31 BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP EXHIBIT 31.1 I, Jenny Netzer, certify that: 1. I have reviewed this annual report on Form 10-KSB of Boston Financial Tax Credit Fund VIII; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalents functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: June 28, 2006 /s/Jenny Netzer ------------------------------------ Jenny Netzer Principal Executive Officer and Principal Financial Officer Arch Street VIII, LP, as Managing General Partner of Boston Financial Tax Credit Fund VIII EX-32 3 tc8exh32.txt TC8EXH32 BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Boston Financial Tax Credit Fund VIII (the "Fund") on Form 10-KSB for the year ended March 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the Principal Executive Officer and Principal Financial Officer, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. /s/Jenny Netzer ------------------------------------ Jenny Netzer Principal Executive Officer and Principal Financial Officer Arch Street VIII, LP, as Managing General Partner of Boston Financial Tax Credit Fund VIII Date: June 28, 2006 A signed original of this written statement required by section 906 has been provided to the Fund and will be retained by the Fund and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----