Item 1. Business.
General - -------
Liberty Tax Credit Plus II L.P. (the "Partnership") is a limited partnership which was formed under the laws of the State of Delaware on March 25, 1988. The general partners of the Partnership are Related Credit Properties II L.P., a Delaware limited partnership (the "Related General Partner"), Liberty Associates II L.P., a Delaware limited partnership ("Liberty Associates"), and Liberty GP II Inc. (formerly Shearson Liberty GP II Inc.), a Delaware corporation (the "Liberty General Partner" and together with the Related General Partner and Liberty Associates, the "General Partners"). The general partner of the Related General Partner is Related Credit Properties II Inc., a Delaware corporation. The general partners of Liberty Associates are Related Credit Properties II Inc., and the Liberty General Partner. Liberty Associates is also the special limited partner of the Partnership. On November 17, 2003, CharterMac acquired Related Capital Company, which is the indirect parent of RCC Manager LLC, the sole shareholder of Related Credit Properties II Inc. Pursuant to the acquisition, CharterMac acquired controlling interests in the General Partners. This acquisition did not affect the Partnership or its day-to-day operations, as the majority of the General Partners' management team remained unchanged.
On July 20, 1988 the Partnership commenced a public offering (the "Offering") of Beneficial Assignment Certificates ("BACs") representing assignments of limited partnership interests in the Partnership ("Limited Partnership Interests").
As of January 9, 1989 (the date on which the Partnership held the final closing of the sale of BACs and on which the Offering was terminated), the Partnership had received $115,917,500 of gross proceeds of the Offering from 8,431 investors.
The Partnership was formed to invest, as a limited partner, in other limited partnerships (referred to herein as "Local Partnerships" or "subsidiary partnerships") each of which owns one or more leveraged low-income multifamily residential complexes ("Apartment Complexes") that are eligible for the low-income housing tax credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986, and to a lesser extent, in Local Partnerships owning properties ("Rehabilitation Projects" and together with the Apartment Complexes, the "Properties") that are eligible for the historic rehabilitation tax credit (the "Historic Rehabilitation Tax Credit" and together with the Housing Tax Credit, the "Tax Credits"). Some of the Apartment Complexes benefit from one or more other forms of federal and state housing assistance. The Partnership's investment in each Local Partnership represents from 20% to 98% of the partnership interests in the Local Partnership. As of March 31, 2004, the Partnership had acquired interests in 27 Local Partnerships and does not anticipate making any additional investments. Through the fiscal year ended March 31, 2004, the property and the related assets and liabilities of three Local Partnerships were sold. See Item 2, Properties.
Liberty Associates is the special limited partner in all remaining 24 Local Partnerships, as well as a general partner of the Partnership. Liberty Associates has certain rights and obligations in its role as special limited partner which permit it to execute control over the management and policies of the Local Partnerships.
Investment Objectives, Tax Credits - ----------------------------------
The investment objectives of the Partnership are to:
1. Entitle qualified BACs holders to Housing Tax Credits (and to a lesser extent Historic Rehabilitation Tax Credits) over the period of the Partnership's entitlement to claim Tax Credits (for each Property, ten years from the date of investment or, if later, the date the Property is placed in service.);
2. Preserve and protect the Partnership's capital;
3. Participate in any capital appreciation in the value of the Properties and provide distributions of sale or refinancing proceeds upon the disposition of the Properties;
4. Provide cash distributions when available from the operations of Properties; and
5. Allocate passive losses to individual BACs holders to offset passive income that they may realize from rental real estate investments and other passive activities, and allocate passive losses to corporate BACs holders to offset active business income.
One of the Partnership's objectives is to entitle qualified BACs holders to Tax Credits over the period of the Partnership's entitlement to claim Tax Credits (for each Property, ten years from the date of investment or, if later, the date the Property is leased to qualified tenants; referred to herein as the "Credit Period"). Each of the Local Partnerships in which the Partnership has acquired an interest has been allocated by the relevant state credit agency the authority to recognize Tax Credits during the Credit Period provided that the Local Partnership satisfies the rent restriction, minimum set-aside and other requirements for recognition of the Tax Credits at all times during the 15-year period (the "Compliance Period") commencing at the beginning of the Credit Period. Once a Local Partnership has become eligible to recognize Tax Credits, it may lose such eligibility and suffer an event of "recapture" if (i) the Local Partnership ceases to meet qualification requirements, (ii) there is a decrease in the qualified basis of Property, or (iii) there is a reduction in its interest in the Property at any time during the Compliance Period. None of the Local Partnerships in which the Partnership has acquired an interest has suffered an event of recapture.
As of March 31, 2004, the Credit Periods for all of the Properties have expired, although each Local Partnership must continue to comply with the Tax Credit requirements until the end of the Compliance Period in order to avoid recapture of a portion of the Tax Credits.
The Partnership has met its primary objective of generating Tax Credits for qualified BACs holders. The Partnership generated $14,364, $20,509 and $1,725,324 in Tax Credits during the 2003, 2002 and 2001 Fiscal Years, respectively.
The Partnership continues to meet its objective of allocating passive losses to individual BACs holders to offset passive income that they may realize from rental real estate investments and other passive activities, and allocating passive losses to corporate BACs holders to offset business income. At this time, there can be no assurance that the Partnership will continue to meet this investment objective.
The General Partners generally required, in connection with certain investments in Local Partnerships, that the general partner of the Local Partnership ("Local General Partners") undertake the funding of operating deficits (up to a stated maximum amount) of the Local Partnership during a limited period of time following the Partnership's investment ("Guarantee Period"). As of March 31, 2004, all operating deficit guarantees have expired. Generally the amounts funded pursuant to the operating deficit guarantee (the "Operating Deficit Guarantee") have been treated as Operating Loans, do not bear interest and will be repaid only out of 50% of available cash flow or out of available net sale or refinancing proceeds. See Item 8, Note 8 - Related Party Transactions.
As of March 31, 2004, the Partnership has not made any cash distributions from the operations of the Properties. The Partnership does not anticipate providing cash distributions to BACs holders other than distributions of sale or refinancing proceeds upon the disposition of Properties. Accordingly, at this time there can be no assurance that the Partnership will achieve this investment objective.
Government Regulations - ----------------------
The Partnership is subject to the risks incident to potential losses arising from the management and ownership of improved real estate. The Partnership can also be affected by poor economic conditions generally. However, no more than 38% of the properties are located in any single state.
The Partnership is the beneficiary of certain subsidy agreements pursuant to which the United States Department of Housing and Urban Development ("HUD") subsidizes the amount of rent that the Local Partnerships earn. There are substantial risks associated with owning properties receiving government assistance, such as the possibility that Congress may not appropriate funds to enable HUD to make rental assistance payments. HUD also restricts annual cash distributions to partners based on operating results and a percentage of the owner's equity contribution. The Partnership cannot sell or substantially liquidate its investments in Local Partnerships during the period that the subsidy agreements are in existence without HUD's approval. Furthermore, there
may not be market demand for apartments at full market rents when the rental assistance contracts expire.
Segments - --------
The Partnership operates in one segment, which is the investment in multi-family residential properties.
Sale of Properties - ------------------
On March 2, 2004, a letter of intent was received that constitutes a proposal from the purchaser to purchase the property and the related assets and liabilities of Goodfellow Place Limited Partnership for a purchase price of $100,000 plus the existing debt. No assurance can be given that the closing will actually occur.
On August 15, 2003, the property and the related assets and liabilities of Polynesian Apartments Associates, Ltd. ("Polynesian") were sold to an unaffiliated third party for $2,700,000, resulting in a loss of approximately $287,000.
On August 15, 2003, the property and the related assets and liabilities of Seagrape Village Associates, Ltd. ("Seagrape") were sold to an unaffiliated third party for $5,140,000, resulting in a loss of approximately $260,000.
On January 18, 2002, the property and the related assets and liabilities of Campeche Isle Apartments, Limited Partnership ("Campeche") were sold to an unaffiliated third party for $4,625,000, resulting in a loss of approximately $45,000.
Competition - -----------
The real estate business is highly competitive and substantially all of the Properties acquired by the Partnership are subject to competition from similar properties in their respective vicinities. In addition, various other limited partnerships may, in the future, be formed by the General Partners and/or their affiliates to engage in business which may compete with the Partnership.
Employees - ---------
The Partnership does not have any direct employees. All services are performed for the Partnership by its General Partners and their affiliates. The General Partners receive compensation in connection with such activities as set forth in Items 11 and 13. In addition, the Partnership reimburses the General Partners and certain of their affiliates for expenses incurred in connection with the performance by their employees of services for the Partnership in accordance with the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement").
Item 2.
Item 2. Properties.
The Partnership had acquired an interest as a limited partner in 27 Local Partnerships. During the fiscal year ended March 31, 2004, the property and the related assets and liabilities of two Local Partnerships were sold. Through the fiscal year ended March 31, 2004, the property and the related assets and liabilities of three Local Partnerships were sold. Set forth below is a schedule of these Local Partnerships including certain information concerning the Apartment Complexes (the "Local Partnership Schedule"). Further information concerning these Local Partnerships and their Properties, including any encumbrances affecting the Properties, may be found in Item 15, Schedule III.
Except for the seven Local Partnerships listed below, the following is the allocation of ownership percentage for each of the Local Partnerships:
Local General Partner 1% Special Limited Partner 1% Limited Partner - Liberty Tax Credit Plus II L.P. 98%
*Each is an affiliate of the Partnership with the same management.
Local Partnership Schedule --------------------------
Local Partnership Schedule -------------------------- (continued) -----------
(a) The property and the related assets and liabilities were sold during the fiscal year ended March 31, 2002 (see Item 7 below).
(b) The property and the related assets and liabilities were sold during the fiscal year ended March 31, 2004 (see Item 7 below).
All leases are generally for periods not exceeding one to two years and no tenant occupies more than 10% of the rentable square footage.
Rents from commercial tenants (to which average rental per square foot applies) comprise less than 5% of the rental revenues of the Partnership. Maximum rents for the residential units are determined annually by HUD and reflect increases/decreases in consumer price indices in various geographic areas. Market conditions, however, determine the amount of rent actually charged.
Management annually reviews the physical state of the Properties and suggests to the respective Local General Partners budget improvements, which are generally funded from cash flow from operations or release of replacement reserve escrows to the extent available.
Management annually reviews the insurance coverage of the Properties and subject to budget constraints recommends to the respective Local General Partners additional coverage if warranted. Management believes that coverage is presently adequate.
See Item 1, Business, above for the general competitive conditions to which the Local Partnerships and the properties described above are subject.
Real estate taxes are calculated using rates and assessed valuations determined by the township or city in which the property is located. Such taxes have approximated 1% of the aggregate cost of the properties as shown in Schedule III to the financial statements included herein.
Item 3.
Item 3. Legal Proceedings.
This information is incorporated by reference to the discussion of Alexis Park Apartments contained under the heading "Results of Operations of Certain Local Partnerships" in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Security Holder Matters.
The Partnership has issued and outstanding 115,917.5 Limited Partnership Interests, each representing a $1,000 capital contribution to the Partnership, or an aggregate capital contribution of $115,917,500. All of the issued and outstanding Limited Partnership Interests have been issued to Liberty Credit Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued 115,917.5 BACs to the purchasers thereof for an aggregate purchase price of $115,917,500. Each BAC represents all of the economic and virtually all of the ownership rights attributable to a Limited Partnership Interest held by the Assignor Limited Partner. BACs may be converted into Limited Partnership Interests at no cost to the holder (other than payment of transfer costs not to exceed $100), but Limited Partnership Interests so acquired are not thereafter convertible into BACs.
Neither the BACs nor the Limited Partnership Interests are traded on any established public trading market. Because of the provisions of the Revenue Act of 1987, unless there are further changes in such law, the Partnership does not intend to include the BACs for quotation on NASDAQ or for listing on any national or regional stock exchange or any other established securities market. The Revenue Act of 1987 contained provisions which have an adverse impact on investors in "publicly traded partnerships." Accordingly, the General Partners have imposed limited restrictions on the transferability of the BACs and the Limited Partnership Interests in secondary market transactions. Implementation of these restrictions should prevent a public trading market from developing and may adversely affect the ability of an investor to liquidate his or her investment quickly. It is expected that such procedures will remain in effect until such time, if ever, as further revision of the Revenue Act of 1987 may permit the Partnership to lessen the scope of the restrictions.
As of May 4, 2004, the Partnership had 8,515 registered holders of an aggregate of 115,917.5 BACs.
All of the Partnership's general partnership interests, representing an aggregate capital contribution of $2,000, are held by the three General Partners.
There are no material provisions in the Partnership Agreement that restrict the ability of the Partnership to make distributions.
The Partnership has not made any distributions to BACs holders as of March 31, 2004. The Partnership does not anticipate providing cash distributions to BACs holders other than distributions of sale or refinancing proceeds upon the disposition of Properties.
Item 6.
Item 6. Selected Financial Data.
The information set forth below presents selected financial data of the Partnership. Additional financial information is set forth in the audited financial statements in Item 8 hereof.
During the years ended March 31, 2000 through 2002, total assets decreased primarily due to depreciation, partially offset by net additions to property and equipment. During the years ended March 31, 2003 and 2004, total assets and liabilities decreased primarily due to the sale of Local Partnerships.
Selected Quarterly Financial Data (Unaudited) ---------------------------------------------
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Resources - ------------------------------- The Partnership's capital has been invested in twenty-seven Local Partnerships. During the fiscal year ended March 31, 2004, the property and the related assets and liabilities of two Local Partnerships were sold. Through the fiscal year ended March 31, 2004, the properties and the related assets and liabilities of three Local Partnerships were sold. For a discussion of these sales, see Sale of Properties (Note 10 in Item 8).
During the year ended March 31, 2004, the Partnership's primary sources of funds included: (i) working capital reserves; (ii) interest earned on the working capital reserves; and (iii) cash distributions from operations of the Local Partnerships. Such funds are available to meet the obligations of the Partnership but are not expected to be significant.
The Partnership is not expected to have access to additional sources of financing, and in particular will not have the ability to access BACs holders for additional capital contributions to provide capital if needed by the Partnership. There can be no assurance that additional funds will be available to the Partnership or any Local Partnership, nor that, if any Property is sold, the proceeds of the sale will be sufficient to pay outstanding balances due on mortgage loans or other outstanding indebtedness to which the Property is subject.
During the years ended March 31, 2004, 2003 and 2002, respectively, cash distributions received from operations of the Local Partnerships were approximately $42,000, $156,000 and $235,000. The General Partners believe that cash distributions received from the operations of the Local Partnerships are sufficient to fund the Partnership's ongoing operations for the foreseeable future (assuming the General Partners continue to defer payment of their management fees).
During the year ended March 31, 2004, cash and cash equivalents of the Partnership and its consolidated Local Partnerships increased approximately $261,000. This increase was due to cash provided by operating activities ($2,303,000), proceeds from sale of properties ($7,840,000), an increase in due to selling partners ($117,000) and an increase in capitalization of consolidated subsidiaries attributable to minority interest ($1,019,000) which exceeded an increase in deferred costs ($150,000), cost paid relating to sale of properties ($136,000), acquisitions of property and equipment ($933,000), an increase in cash held in escrow relating to investing activities ($32,000), repayments of mortgage notes ($8,120,000) and a net decrease in due to local general partners and affiliates ($1,647,000). In the adjustments to reconcile the net loss to cash provided by operating activities are loss on sale of properties ($547,000) and depreciation and amortization ($7,768,000).
Partnership management fees owed to the General Partners amounting to approximately $12,713,000 and $11,268,000 were accrued and unpaid as of March 31, 2004 and 2003, respectively. Without the General Partners' continued accrual without payment of these fees, the Partnership will not be in a position to meet its obligations. The General Partners have allowed for the accrual without payment of these amounts but are under no obligation to continue to do so.
For a discussion of contingencies affecting certain Local Partnerships, see Results of Operations of Certain Local Partnerships below. Since the maximum loss the Partnership would be liable for is its net investment in the respective Local Partnerships, the resolution of the existing contingencies are not anticipated to impact future results of operations, liquidity or financial condition in a material way. However, the Partnership's loss of its investment in a Local Partnership may result in recapture of Tax Credits if the investment is lost before the expiration of the 15-year period during which the Properties must comply with various rent and other restrictions.
Except as described above, management is not aware of any trends or events, commitments or uncertainties which have not otherwise been disclosed that will or are likely to impact liquidity in a material way. Management believes the only impact would be from laws that have not yet been adopted. The portfolio is diversified by the location of the Properties around the United States so that if one area of the country is experiencing downturns in the economy, the remaining properties in the portfolio may be experiencing upswings. However, the geographic diversification of the portfolio may not protect against a general downturn in the national economy.
Tabular Disclosure of Contractual Obligations
The following table summarizes the Partnership's commitments as of March 31, 2004 to make future payments under its debt agreements and other contractual obligations.
(a) The mortgage notes are payable in aggregate monthly installments of approximately $505,000 including principal and interest at rates varying from 1% to 10.75% per annum, through 2042. Each subsidiary partnership's mortgage note payable is collateralized by the land and buildings of the respective subsidiary partnership and the assignment of certain subsidiary partnership's rents and leases and is without further recourse.
(b) See Note 8(f) in Item 8. Financial Statements and Supplementary Data.
Off Balance Sheet Arrangements - ------------------------------
The Partnership has no off-balance sheet arrangements.
Critical Accounting Policies - ----------------------------
In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Set forth below is a summary of the accounting policies that management believes are critical to the preparation of the consolidated financial statements. The summary should be read in conjunction with the more complete discussion of the Partnership's accounting policies included in Note 2 to the consolidated financial statements in this annual report on Form 10-K.
Property and Equipment - ----------------------
Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, construction period interest and any other costs incurred in acquiring such property and equipment. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. The Partnership complies with Statement of Financial Accounting Standards (SFAS) No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the Property on an undiscounted basis are below depreciated cost. Property investments themselves are reduced to estimated fair value (generally using discounted cash flows) when the Property is considered to be impaired and the depreciated cost exceeds estimated fair value. During the year ended March 31, 2004, the Partnership did not record a loss on impairment of assets. Through March 31, 2004, the Partnership has recorded approximately $5,407,000 as a loss on impairment of assets.
At the time management commits to a plan to dispose of assets, said assets are adjusted to the lower of carrying amount or fair value less costs to sell. Such assets would be classified as property and equipment-held for sale and are not depreciated. There were no assets classified as property and equipment-held for sale at March 31, 2004 and 2003, respectively.
Income Taxes - ------------
The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership has a fiscal year ending December 31.
New Accounting Pronouncements - -----------------------------
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 is applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities created before February 1, 2003, the provisions of FIN 46 are applicable no later than December 15, 2003. The Partnership has not created any variable interest entities after January 31, 2003. In December 2003, the FASB redeliberated certain proposed modifications and revised FIN 46 ("FIN 46 (R)"). The revised provisions are applicable no later than the first reporting period ending after March 15, 2004. The adoption of FIN 46 (R) is not anticipated to have a material impact on the Partnership's financial reporting and disclosures.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150 requires disclosure regarding the terms of those instruments and settlement alternatives. The guidance in SFAS No. 150 generally was effective for all financial instruments entered into or modified after May 31, 2003, and was otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Partnership has evaluated SFAS No. 150 and determined that it does not have an impact on the Partnership's financial reporting and disclosures.
Results of Operations - ---------------------
The following is a summary of the results of operations of the Partnership for the years ended March 31, 2004, 2003 and 2002 (the 2003, 2002 and 2001 Fiscal Years, respectively).
The majority of the Local Partnerships' revenues continue to be in the form of rental income with the corresponding expenses divided among operations, depreciation and mortgage interest.
The net loss for the 2003, 2002 and 2001 Fiscal Years totaled $7,470,002, $7,961,377 and $6,183,026, respectively.
The Partnership no longer continues to meet its primary objective of generating Tax Credits for qualified BACs holders. The Partnership generated $14,364, $20,509 and $1,725,324 in Tax Credits during the 2003, 2002 and 2001 Fiscal Years, respectively.
2003 vs. 2002 - -------------
Rental income increased approximately 1% for the 2003 Fiscal Year as compared to the 2002 Fiscal Year. Excluding Polynesian Apartments Associates, Ltd. ("Polynesian"), Seagrape Village Associates, Ltd. ("Seagrape") and Campeche Isle Apartments, Limited Partnership ("Campeche") which sold their properties and the related assets and liabilities ("2003 Sold Assets"), rental income decreased approximately 1%.
Total expenses, excluding the 2003 Sold Assets, repairs and maintenance, operating, insurance, and depreciation and amortization, remained fairly consistent with a decrease of approximately 1% for the 2003 Fiscal Year as compared to the 2002 Fiscal Year.
Repairs and maintenance increased approximately $763,000 for the 2003 Fiscal Year as compared to the 2002 Fiscal Year. Excluding the 2003 Sold Assets, repairs and maintenance increased approximately $732,000 primarily due to
sealing the building foundation at one Local Partnership, increased security costs, painting and wall repairs at a second Local Partnership and increased security costs and fire damage related repairs at a third Local Partnership.
Operating and other increased approximately $286,000 for the 2003 Fiscal Year as compared to the 2002 Fiscal Year. Excluding the 2003 Sold Assets, operating and other increased approximately $316,000 primarily due to an increase in natural gas, water and sewer costs at several Local Partnerships.
Insurance increased approximately $208,000 for the 2003 Fiscal Year as compared to the 2002 Fiscal Year. Excluding the 2003 Sold Assets, insurance increased approximately $243,000 primarily due to an increase in premiums at the Local Partnerships.
Depreciation and amortization decreased approximately $1,027,000 for the 2003 Fiscal Year as compared to the 2002 Fiscal Year. Excluding the 2003 Sold Assets, depreciation and amortization decreased approximately $933,000 primarily due to the write-off of deferred financing fees relating to refinancings at three Local Partnerships in 2002.
Financial decreased approximately $803,000 for the 2003 Fiscal Year as compared to the 2002 Fiscal Year primarily due to decreases related to the 2003 Sold Assets.
A loss on sale of properties was recorded during the 2003 Fiscal Year (see Note 10).
2002 vs. 2001 - -------------
Rental income decreased approximately 2% for the 2002 Fiscal Year as compared to the 2001 Fiscal Year. Excluding Campeche (the "2002 Sold Asset"), rental income increased approximately 2% due to rental rate increases.
Other income decreased approximately $1,375,000 for the 2002 Fiscal Year as compared to the 2001 Fiscal Year. Excluding the 2002 Sold Asset, other income decreased approximately $764,000 primarily due to a write-off of accrued letter-of-credit fees at one Local Partnership and a decrease in grants received by another Local Partnership.
Total expenses, excluding the 2002 Sold Asset, operating, insurance, financial and depreciation and amortization remained fairly consistent with a decrease of approximately 1% for the 2002 Fiscal Year as compared to the 2001 Fiscal Year.
Operating decreased approximately $648,000 for the 2002 Fiscal Year as compared to the 2001 Fiscal Year. Excluding the 2002 Sold Asset, operating expenses decreased approximately $537,000 primarily due to two Local Partnerships changing their service providers to reduce utility costs.
Insurance increased approximately $292,000 for the 2002 Fiscal Year as compared to the 2001 Fiscal Year. Excluding the 2002 Sold Asset, insurance expense increased approximately $380,000 primarily due to increased premiums at the Local Partnerships.
Financial decreased approximately $1,054,000 for the 2002 Fiscal Year as compared to the 2001 Fiscal Year. Excluding the 2002 Sold Asset, financial expense decreased approximately $743,000 primarily due to a decrease in interest rates and refinancings at several Local Partnerships.
Depreciation and amortization increased approximately $733,000 for the 2002 Fiscal Year as compared to the 2001 Fiscal Year. Excluding the 2002 Sold Asset, depreciation and amortization increased approximately $854,000 primarily due to the write-off of deferred financing costs at several Local Partnerships in 2002.
A loss on sale of property was recorded during the 2002 Fiscal Year (see Note 10).
Results of Operations of Certain Local Partnerships - ---------------------------------------------------
(a) Subsidiary Partnerships - Going Concerns and Uncertainties
Whittier Plaza Associates - ------------------------- The financial statements for Whittier Plaza Associates Limited Partnership ("Whittier") have been prepared assuming that Whittier will continue as a going concern. Whittier has sustained continuous losses since commencement of operations in 1988. Whittier has experienced higher vacancies and lower rents than those originally projected, resulting in increased difficulty in meeting both operating and debt service obligations. The Local General Partner, pursuant to a development deficit guarantee agreement, has advanced approximately $8,000 and $12,000 in the 2003 and 2002 Fiscal Years, respectively, and approximately $469,000 since 1988 to fund operating cash shortfalls. In addition, Whittier's management company, an affiliate of the Local General Partner, has deferred receipt of various fees since 1991 totaling approximately $99,000. These items raise substantial doubt about Whittier's ability to continue as a going concern. The Partnership's investment in Whittier at March 31, 2004 and 2003 was reduced to zero as a result of prior years' losses and the minority interest balance was $0 at each date. Whittier's net loss after minority interest amounted to approximately $27,000, $29,000 and $37,000 for the 2003, 2002 and 2001 Fiscal Years.
Alexis Park Apartments - ---------------------- The financial statements for Alexis Park Apartments ("Alexis") have been prepared in conformity with U.S. generally accepted accounting principles, assuming the continuation of the Local Partnership as a going concern. However, negative performance indicators and the environmental issue raise substantial doubt about the Local Partnership's ability to continue as a going concern.
A hazardous waste issue has affected Alexis for nearly 13 years. Although this environmental issue is in many respects beyond its control, management believes that the selected remedy of the United States Environmental Protection Agency is practical and is not likely to cause significant disruption to the apartment project's operations beyond what it has experienced over the last several years. The Local Partnership's congressman, U.S. Senators and the Mayor of Bossier City have assisted Alexis in preventing this issue from escalating unnecessarily and management believes that no escalation will occur in the near term. Further, all indications are that an oil company will bear all costs of remediation and that the Local Partnership will not be called upon to share in those costs. Accordingly, management believes the Local Partnership has the opportunity to continue as a going concern during 2004.
For the year ended December 31, 2003, the Local Partnership sustained a net loss of approximately $149,000. At December 31, 2003, the Local Partnership's current liabilities exceed its current assets by approximately $4,949,000. Management expects operating income to improve for 2004 as a result of both increased occupancy and slightly reduced expenses. Current liabilities in the amount of $4,699,000 is attributable to the Partnership's first mortgage note that is expected to be refinanced on a long-term basis during 2004. In addition, included in current liabilities are obligations to the management company totaling approximately $252,000 that are not expected to require payment beyond Alexis' ability to pay. Management believes, that if necessary, it can obtain funds to supplement operating cash flows for 2004 to enable Alexis to meet its liabilities and subject to the environmental uncertainty enable Alexis to continue as a going concern for at least one year.
These items raise substantial doubt about Alexis' ability to continue as a going concern. The maximum loss for which the Partnership would be liable is its net investment in Alexis. The Partnership's investment in Alexis at March 31, 2004 and 2003 was reduced to zero as a result of prior years' losses and the minority interest balance was $0 at each date. Alexis' net loss after minority interest amounted to approximately $149,000, $172,000 and $340,000, for the 2003, 2002 and 2001 Fiscal Years, respectively.
Westminster Place II - Olive Site, L.P. - --------------------------------------- The financial statements for Westminster Place II - Olive Site, L.P. ("Westminster") have been prepared assuming that Westminster will continue as a going concern. Westminster's rental subsidy will be depleted during 2004. This subsidy represents approximately 16% of Westminster's rental revenue. Westminster has submitted a rent increase to the Missouri Housing Development Commission and is awaiting response. Without this increase or the rental subsidy, it will be increasingly difficult to meet the financial obligations of Westminster.
These items raise substantial doubt about Westminster's ability to continue as a going concern. The maximum loss for which the Partnership would be liable is its net investment in Westminster. The Partnership's investment in Westminster at March 31, 2004 and 2003 was reduced to zero as a result of prior years' losses and the minority interest balance was $0 at each date. Westminster's net loss after minority interest amounted to approximately $115,000, $95,000 and $112,000 for the 2003, 2002 and 2001 Fiscal Years, respectively.
b) Subsidiary Partnerships - Other
Property Development Associates, L.P. - ------------------------------------- Property Development Associates, L.P. ("Property Development") is involved as a defendant in a pending litigation case. This case was filed by the plaintiffs on December 18, 2002 and served on the defendants on January 6, 2003. As of the date of the Auditor's report, discovery is ongoing. The trial has been postponed to a date not yet determined by the court. The plaintiff's petition consists of claims against Property Development for assault, battery, constructive eviction, negligent hiring, negligent retention, misuse of Housing and Urban Development funds, slander, retaliatory eviction, and breach of implied warranty of habitability. The potential verdict in this case ranges from complete defense verdict up through the $2 million sought by the plaintiffs. The potential damages, other than those for the alleged intentional acts of assault and battery, are covered by insurance. Property Development denies each of these allegations and intends to contest the case vigorously.
Gramco Development Limited Dividend Partnership, L.P. - ----------------------------------------------------- Gramco Development Limited Dividend Partnership, L.P. ("Gramco") was granted net funds of $4,867,000 by the Municipality of Bayamon (the "Municipality") and HUD. In the event of a substantial violation to the provisions of certain agreements between Gramco and the Municipality and between the Municipality and HUD, the funds shall become immediately due and payable at the election of HUD and the Municipality. Otherwise, the principal amount of the obligation together with any interest will be forgiven. Proceeds from the loan have been deducted from fixed assets.
Williamsburg Residential, L.P. - ------------------------------ In November 1996, the Local General Partner of Williamsburg Residential, L.P. ("Williamsburg") stopped making the mortgage note payments which constituted an event of default. A Reinstatement and Modification Agreement was entered into effective March 1, 1997. The Partnership has advanced Williamsburg the necessary funds to keep the mortgage and escrows current during 2003 and is expected to continue to do so during 2004.
The Partnership's investment in Williamsburg has been written down to $0 by prior years' losses and the minority interest balance was approximately $724,000 and $726,000 at March 31, 2004 and 2003, respectively. Williamsburg's net loss after minority interest amounted to approximately $229,000, $142,000 and $128,000 for the 2003, 2002, and 2001 fiscal years, respectively. As of March 31, 2004, the Partnership has advanced Williamsburg approximately $1,155,000.
Other - ----- The Partnership's investments, as a limited partner in the Local Partnerships, are subject to the risks incident to potential losses arising from management and ownership of improved real estate. The Partnership's investments also could be adversely affected by poor economic conditions generally, which could increase vacancy levels, rental payment defaults, and increased operating expenses, any or all of which could threaten the financial viability of one or more of the Local Partnerships.
There also are substantial risks associated with the operation of Apartment Complexes receiving government assistance. These include governmental regulations concerning tenant eligibility, which may make it more difficult to rent apartments in the complexes, difficulties in obtaining government approval for rent increases, limitations on the percentage of income which low and moderate-income tenants may pay as rent, the possibility that Congress may not appropriate funds to enable HUD to make the rental assistance payments it has contracted to make, and the possibility that when the rental assistance contracts expire, there may not be market demand for apartments at full market rents in a Local Partnership's Apartment Complex.
The Local Partnerships are impacted by inflation in several ways. Inflation allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Furthermore, inflation generally does not impact the fixed long-term financing which real property investments were purchased. Inflation also affects the Local Partnerships adversely by increasing operating costs as, for example, for such items as fuel, utilities and labor.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
The Partnership does not have any market risk sensitive instruments.
Item 8.
Item 8. Financial Statements and Supplementary Data. Sequential Page (a) 1. Consolidated Financial Statements ----------
Report of Independent Registered Public Accounting Firm 19
Consolidated Balance Sheets at March 31, 2004 and 2003 79
Consolidated Statements of Operations for the Years Ended March 31, 2004, 2003 and 2002 80
Consolidated Statements of Changes in Partners'(Deficit) Capital for the Years Ended March 31, 2004, 2003 and 2002 81
Consolidated Statements of Cash Flows for the Years Ended March 31, 2004, 2003 and 2002 82
Notes to Consolidated Financial Statements 84
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------
To the Partners of Liberty Tax Credit Plus II L.P. and Subsidiaries (A Delaware Limited Partnership)
We have audited the consolidated balance sheets of Liberty Tax Credit Plus II L.P. and Subsidiaries (A Delaware Limited Partnership) as of March 31, 2004 and 2003, and the related consolidated statements of operations, changes in partners' (deficit) capital, and cash flows for the years ended March 31, 2004, 2003 and 2002 (the 2003, 2002 and 2001 Fiscal Years). 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 did not audit the financial statements for 26 (2003 Fiscal Year) and 27 (2002 and 2001 Fiscal Years) subsidiary partnerships whose losses aggregated $6,756,365, $4,342,013 and $2,587,660 for the 2003, 2002 and 2001 Fiscal Years, respectively, and whose assets constituted 98% of the Partnership's assets at March 31, 2004 and 2003, presented in the accompanying consolidated financial statements. The financial statements for 26 (2003 Fiscal Year) and 27 (2002 and 2001 Fiscal Years) of these subsidiary partnerships were audited by other auditors whose reports thereon have been furnished to us and our opinion expressed herein, insofar as it relates to the amounts included for these subsidiary partnerships, is based solely upon the reports of the other auditors.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the 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, based upon our audits, and the reports of the other auditors referred to above, the accompanying consolidated financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Liberty Tax Credit Plus II L.P. and Subsidiaries at March 31, 2004 and 2003, and the results of their operations and their cash flows for the years ended March 31, 2004, 2003 and 2002, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 11(a), the consolidated financial statements include the financial statements of three limited partnerships with significant contingencies and uncertainties. The financial statements of these subsidiary partnerships were prepared assuming that each will continue as a going concern. The three subsidiary partnerships' net losses aggregated $291,300 (Fiscal 2003), $296,077 (Fiscal 2002) and $487,648 (Fiscal 2001) and their assets aggregated $10,294,875 and $10,762,336 at March 31, 2004 and 2003, respectively. These matters raise substantial doubt about these subsidiary partnerships' abilities to continue as going concerns. Management's plans in regard to these matters are also described in Note 11(a). The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
TRIEN ROSENBERG ROSENBERG WEINBERG CIULLO & FAZZARI LLP
New York, New York June 15, 2004
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of Polynesian Apartments Associates, Ltd.
We have audited the accompanying statements of operations, changes in partners` capital and cash flows of POLYNESIAN APARTMENTS ASSOCIATES, LTD. (a limited partnership), FHA Project No. FL29-K005-015-152, for the period January 1, 2003 to December 18, 2003 (date of dissolution). 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 auditing standards generally accepted in the Untied States of America. 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 results of the operations and cash flows of POLYNESIAN APARTMENTS ASSOCIATES, LTD. for the period January 1, 2003 to December 18, 2003 (date of dissolution), in conformity with accounting principles generally accepted in the United States of America.
/s/ Friedman Alpren & Green LLP New York, New York December 18, 2003
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of Polynesian Apartments Associates, Ltd.
We have audited the accompanying balance sheet of POLYNESIAN APARTMENTS ASSOCIATES, LTD. (a limited partnership), FHA Project No. FL29-K005-015-152, as of December 31, 2002, and the related statements of operations, changes in partners' capital 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 auditing standards generally accepted in the Untied States of America. 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 POLYNESIAN APARTMENTS ASSOCIATES, LTD. as of December 31, 2002 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Friedman Alpren & Green LLP New York, New York January 27, 2003
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of Polynesian Apartments Associates, Ltd.
We have audited the accompanying balance sheet of POLYNESIAN APARTMENTS ASSOCIATES, LTD. (a limited partnership), FHA Project No. FL29-K005-015-152, as of December 31, 2001, and the related statements of operations, changes in partners' capital 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 auditing standards generally accepted in the Untied States of America. 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 POLYNESIAN APARTMENTS ASSOCIATES, LTD. as of December 31, 2001 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Friedman Alpren & Green LLP New York, New York February 4, 2002
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of Seagrape Village Associates, Ltd.
We have audited the accompanying statements of operations, changes in partners' capital deficiency and cash flows of SEAGRAPE VILLAGE ASSOCIATES, LTD. (a limited partnership), FHA Project No. FL29-K005-015-151, for the period January 1, 2003 to December 18, 2003 (date of dissolution). 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 auditing standards generally accepted in the United States of America. 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 results of the operations and the cash flows of SEAGRAPE VILLAGE ASSOCIATES, LTD. for the period January 1, 2003 to December 18, 2003 (date of dissolution), in conformity with accounting principles generally accepted in the United States of America.
/s/ Friedman Alpren & Green LLP New York, New York December 18, 2003
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of Seagrape Village Associates, Ltd.
We have audited the accompanying balance sheet of SEAGRAPE VILLAGE ASSOCIATES, LTD. (a limited partnership), FHA Project No. FL29-K005-015-151, as of December 31, 2002, and the related statements of operations, changes in partners' capital deficiency 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 auditing standards generally accepted in the United States of America. 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 SEAGRAPE VILLAGE ASSOCIATES, LTD. as of December 31, 2002 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Friedman Alpren & Green LLP New York, New York January 27, 2003
[Letterhead of FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of Seagrape Village Associates, Ltd.
We have audited the accompanying balance sheet of SEAGRAPE VILLAGE ASSOCIATES, LTD. (a limited partnership), FHA Project No. FL29-K005-015-151, as of December 31, 2001, and the related statements of operations, changes in partners' capital deficiency 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 auditing standards generally accepted in the United States of America. 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 SEAGRAPE VILLAGE ASSOCIATES, LTD. as of December 31, 2001 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Friedman Alpren & Green LLP New York, New York February 5, 2002
[Letterhead of JOSE E. ROSARIO & CO.]
INDEPENDENT AUDITOR'S REPORT
To the Partners Puerto Rico Housing Finance Corporation Metropolitan Towers Associates, LP San Juan, Puerto Rico Rio Piedras, Puerto Rico
I have audited the accompanying balance sheets of Metropolitan Towers Associates, LP, HUD Project No. RQ-46K-051-005, as of December 31, 2003 and 2002, and the related statements of loss, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with auditing standards generally accepted in the United States of America and Puerto Rico and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that I 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. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Metropolitan Towers Associates, L.P., as of December 31, 2003 and 2002 and the results of its operations, changes in partners' capital, and cash flows for the years then ended in conformity with accounting principles generally accepted in the United State of America and Puerto Rico.
In accordance with GOVERNMENT AUDITING STANDARDS, I have also issued a report dated January 30, 2004, on my consideration of Metropolitan Towers Associates, L.P.'s internal control and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report in considering the results of my audits.
My audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 13 to 19 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Metropolitan Towers Associates, L.P.. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in my opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Jose E. Rosario & Co. License No. 961 Expires December 1, 2004 San Juan, Puerto Rico January 30, 2004
Stamp No. 1931869 of the Puerto Rico College of CPA was affixed to the original.
[Letterhead of JOSE E. ROSARIO & CO.]
INDEPENDENT AUDITOR'S REPORT
To the Partners Puerto Rico Housing Finance Corporation Metropolitan Towers Associates, LP San Juan, Puerto Rico Rio Piedras, Puerto Rico
I have audited the accompanying balance sheets of Metropolitan Towers Associates, LP, HUD Project No. RQ-46-K-051005, as of December 31, 2002 and 2001, and the related statements of income (loss), changes in partner's capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with auditing standards generally accepted in the United States of America and Puerto Rico and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Metropolitan Towers Associates, LP, as of December 31, 2002 and2001, and the results of its operations and the changes in partner's capital, and cash flows for the years then ended in conformity with accounting principles generally accepted in the United State of America and Puerto Rico.
In accordance with Government Auditing Standards, I have also issued a report dated January 31, 2003, on my consideration of Metropolitan Towers Associates, LP's internal control and on my tests of its compliance with certain provisions of laws, regulations, contracts, and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of my audits.
My audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 13 to 19 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Metropolitan Towers Associates, LP. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in my opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Jose E. Rosario & Co. License No. 961 Expires December 1, 2004 San Juan, Puerto Rico January 31, 2003
Stamp No. 1780475 of the Puerto Rico College of CPA was affixed to the original.
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners Westminster Place II - Olive Site, L.P. St. Louis, Missouri
We have audited the accompanying balance sheet of Westminster Place II - Olive Site, L.P., Project No. 085-35415-PM, a limited partnership, as of December 31, 2003 and 2002, and the related statements of income, 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 auditing standards generally accepted in the United States of America and standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Westminster Place II - Olive Site, L.P. as of December 31, 2003 and 2002 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our reports dated February 2, 2004 on our consideration of Westminster Place II - Olive Site, L.P.'s internal controls and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Those reports are an integral part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report in considering the results of our audits.
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 13 to 22) 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.
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 rental subsidy will be depleted during 2004 which will raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are described in Note 6. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Rubin, Brown, Gornstein & Co. LLP February 2, 2004 St. Louis, Missouri
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners Westminster Place II - Olive Site, L.P. St. Louis, Missouri
We have audited the accompanying balance sheet of Westminster Place II - Olive Site, L.P., Project No. 085-35415-PM, a limited partnership, as of December 31, 2002 and 2001 and the related statements of income, 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 auditing standards generally accepted in the United States of America and standards applicable to financial audits contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Westminster Place II - Olive Site, L.P. as of December 31, 2002 and 2001 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our reports dated January 16, 2003 on our consideration of Westminster Place II - Olive Site, L.P.'s internal controls and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Those reports are an integral part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report in considering the results of our audit.
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 13 to 22) 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.
/s/ Rubin, Brown, Gornstein & Co. LLP January 16, 2003 St. Louis, Missouri
[Letterhead of RBG & Co.]
Independent Auditors' Report
Partners Property Development Associates, L.P. St. Louis, Missouri
We have audited the accompanying balance sheet of Property Development Associates, L.P., a limited partnership, as of December 31, 2003 and 2002, and the related statements of income, 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 auditing standards generally accepted in the United States of America. 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 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 Property Development Associates, L.P. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri February 5, 2004
[Letterhead of RBG & Co.]
Independent Auditors' Report
Partners Property Development Associates, L.P. St. Louis, Missouri
We have audited the accompanying balance sheet of Property Development Associates, L.P., a limited partnership, as of December 31, 2002 and 2001 and the related statements of income, 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 auditing standards generally accepted in the United States of America. 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 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 Property Development Associates, L.P. as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri February 8, 2003
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners Whittier Plaza Associates Limited Partnership St. Louis, Missouri
We have audited the accompanying balance sheet of Whittier Plaza Associates Limited Partnership, Project No. 085-35412-PM-SR, a limited partnership, as of December 31, 2003 and 2002, and the related statements of income, partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Whittier Plaza Associates Limited Partnership as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued our reports dated January 30, 2004 on our consideration of Whittier Plaza Associates Limited Partnership's internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Those reports are an integral part of an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should be read in conjunction with this report in considering the results of our audit.
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 24) 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.
The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 5 to the financial statements, the Partnership has sustained recurring losses from operations, excessive vacancies, and has continually required a general partner to fund deficits. These items raise substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri January 30, 2004
[Letterhead of RBG & Co.]
S2100-020
Independent Auditors' Report
To The Partners Whittier Plaza Associates Limited Partnership St. Louis, Missouri
We have audited the accompanying balance sheet of Whittier Plaza Associates Limited Partnership, Project No. 085-35412-PM-SR, a limited partnership, as of December 31, 2002 and 2001, and the related statements of income, partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Whittier Plaza Associates Limited Partnership as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted.
In accordance with Government Auditing Standards, we have also issued our reports dated January 13, 2003 on our consideration of Whittier Plaza Associates Limited Partnership's internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
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 24) 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.
The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 5 to the financial statements, the Partnership has sustained recurring losses from operations, excessive vacancies, and has continually required a general partner to fund deficits. These items raise substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri January 13, 2003
[Letterhead of Habif, Arogeti & Wynne, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners United - Glenarden I Limited Partnership
We have audited the accompanying balance sheet of United - Glenarden I Limited Partnership as of December 31, 2003, and the related statements of operations, changes in partners' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 United - Glenarden I Limited Partnership as of December 31, 2003, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles in the United States of America.
/s/ Habif, Arogeti & Wynne, P.C. Atlanta, Georgia January 28, 2004
[Letterhead of Habif, Arogeti & Wynne, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners United - Glenarden I Limited Partnership
We have audited the accompanying balance sheet of United - Glenarden I Limited Partnership as of December 31, 2002, and the related statements of operations, changes in partners' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 United - Glenarden I Limited Partnership as of December 31, 2002, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles in the United States of America.
/s/ Habif, Arogeti & Wynne, P.C. Atlanta, Georgia February 6, 2003
[Letterhead of Habif, Arogeti & Wynne, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners United - Glenarden I Limited Partnership
We have audited the accompanying balance sheet of United - Glenarden I Limited Partnership as of December 31, 2001, and the related statements of operations, changes in partners' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 United - Glenarden I Limited Partnership as of December 31, 2001, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles in the United States of America.
/s/ Habif, Arogeti & Wynne, P.C. Atlanta, Georgia February 15, 2002
[Letterhead of Habif, Arogeti & Wynne, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners of United - Glenarden II Limited Partnership
We have audited the accompanying balance of UNITED - GLENARDEN II LIMITED PARTNERSHIP as of December 31, 2003, 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 conducted our audit in accordance with standards generally accepted in the United States of America. 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 UNITED - GLENARDEN II LIMITED PARTNERSHIP as of December 31, 2003, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles in the United States of America.
/s/ Habif, Arogeti & Wynne, P.C. Atlanta, Georgia January 28, 2004
[Letterhead of Habif, Arogeti & Wynne, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners of United - Glenarden II Limited Partnership
We have audited the accompanying balance of UNITED - GLENARDEN II LIMITED PARTNERSHIP as of December 31, 2002, 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 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 UNITED - GLENARDEN II LIMITED PARTNERSHIP as of December 31, 2002, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Habif, Arogeti & Wynne, P.C. Atlanta, Georgia February 6, 2003
[Letterhead of Habif, Arogeti & Wynne, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners of United - Glenarden II Limited Partnership
We have audited the accompanying balance of UNITED - GLENARDEN II LIMITED PARTNERSHIP as of December 31, 2001, 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 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 UNITED - GLENARDEN II LIMITED PARTNERSHIP as of December 31, 2001, 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 Project will continue as a going concern. As discussed in Note O to the financial statements, as shown in the financial statements, the Project is in default of its loan agreement at December 31, 2001 primarily as a result of non-payment of the required mortgage payments. These conditions raise substantial doubt about the Project's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Habif, Arogeti & Wynne, P.C. Atlanta, Georgia February 13, 2002
[Letterhead of SOLOMON & ASSOCIATES LLC]
INDEPENDENT AUDITOR'S REPORT
To the Partners ROLLING GREEN LIMITED PARTNERSHIP D/B/A Prairie View Apartments Libertyville, IL
We have audited the accompanying balance sheets of ROLLING GREEN LIMITED PARTNERSHIP as of December 31, 2003 and 2002, and the related statements of income, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 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 ROLLING GREEN LIMITED PARTNERSHIP as of December 31, 2003 and 2002, and the results of its operations, changes in partners' equity (deficit) and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Solomon & Associates LLC Chicago, IL January 23, 2004
[Letterhead of SOLOMON, BAERSON, WITONSKI, PATEL & KASKEL, LTD.]
INDEPENDENT AUDITOR'S REPORT
To the Partners ROLLING GREEN LIMITED PARTNERSHIP D/B/A Prairie View Apartments Libertyville, IL
We have audited the accompanying balance sheets of ROLLING GREEN LIMITED PARTNERSHIP as of December 31, 2002 and 2001, and the related statements of income, changes in partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 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 ROLLING GREEN LIMITED PARTNERSHIP as of December 31, 2002 and 2001, and the results of its operations, changes in partners' equity (deficit) and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Solomon, Baerson, Witonski, Patel & Kaskel, Ltd. Chicago, IL January 30, 2003
[Letterhead of ZAYAS, MORAZZANI & CO.]
Independent Auditors' Report
To the Partners Santa Juanita II Limited Partnership:
We have audited the accompanying balance sheet of Santa Juanita II Limited Partnership, as of December 31, 2003, and the related statements of profit and loss, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Santa Juanita II Limited Partnership as of December 31, 2003, and the results of its operations, changes in partners' equity, and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, we have also issued a report dated February 6, 2004, on our consideration of Santa Juanita II Limited Partnership's internal control, a report dated February 6, 2004, on its compliance with specific requirements applicable to major HUD programs and specific requirements applicable to major HUD programs, and a report dated February 6, 2004 on its compliance with specific requirements applicable to Affirmative Fair Housing and Non-Discrimination. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 24 through 33 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 basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
/s/ Zayas, Morazzani & Co.
February 6, 2004
Stamp No. 1935132 of the Puerto Rico Society of Certified Public Accountants was affixed to original.
Federal Employer Identification Number: 66-0365844
- -
[Letterhead of ZAYAS, MORAZZANI & CO.]
Independent Auditors' Report
To the Partners Santa Juanita II Limited Partnership:
We have audited the accompanying balance sheet of Santa Juanita II Limited Partnership, as of December 31, 2002, and the related statements of profit and loss, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Santa Juanita II Limited Partnership as of December 31, 2002, and the results of its operations, changes in partners' equity, and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, we have also issued a report dated February 10, 2003, on our consideration of Santa Juanita II Limited Partnership's internal control, a report dated February 10, 2003, on its compliance with specific requirements applicable to major HUD programs and specific requirements applicable to major HUD programs, and a report dated February 10, 2003 on its compliance with specific requirements applicable to Affirmative Fair Housing and Non-Discrimination. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 24 through 33 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 basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
/s/ Zayas, Morazzani & Co.
February 10, 2003
Stamp No. 1843230 of the Puerto Rico Society of Certified Public Accountants was affixed to original.
Federal Employer Identification Number: 66-0365844
[Letterhead of ZAYAS, MORAZZANI & CO.]
Independent Auditors' Report
To the Partners Santa Juanita II Limited Partnership:
We have audited the accompanying balance sheet of Santa Juanita II Limited Partnership, as of December 31, 2001, and the related statements of profit and loss, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Santa Juanita II Limited Partnership as of December 31, 2001, and the results of its operations, changes in partners' equity, and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, we have also issued a report dated February 11, 2002, on our consideration of Santa Juanita II Limited Partnership's internal control, a report dated February 11, 2002, on its compliance with specific requirements applicable to major HUD programs and specific requirements applicable to major HUD programs, and a report dated February 11, 2002 on its compliance with specific requirements applicable to Affirmative Fair Housing and Non-Discrimination. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 23 through 32 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 basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
/s/ Zayas, Morazzani & Co.
February 11, 2002
Stamp No. 1781861 of the Puerto Rico Society of Certified Public Accountants was affixed to original.
Federal Employer Identification Number: 66-0365844
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of Spring Creek Associates, L.P. New York, New York
We have audited the accompanying balance sheets of Spring Creek Associates, L.P. (a Delaware Limited Partnership) as of December 31, 2003 and 2002, and the related statements of operations changes in partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 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 Spring Creek Associates, L.P. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Berdon, LLP Certified Public Accountants
New York, N.Y. January 21, 2004
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of Spring Creek Associates, L.P. New York, New York
We have audited the accompanying balance sheets of Spring Creek Associates, L.P. (a Delaware Limited Partnership) as of December 31, 2002 and 2001, and the related statements of operations changes in partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 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 Spring Creek Associates, L.P. as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Berdon, LLP Certified Public Accountants
New York, N.Y. February 3, 2003
[Letterhead of Sunil J. Shah]
INDEPENDENT AUDITORS' REPORT
To the Partners of East Two Thirty-Five Associates, L.P.
I have audited the accompanying consolidated balance sheet of East Two Thirty-Five Associates, L.P. and subsidiary as (Delaware limited partnerships) as of December 31, 2003, and the related consolidated statements of operations, changes in partners' capitaln (deficit), and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these consolidated financial statements based on my audit. The consolidated financial statements of East Two Thirty-Five Associates, L.P. and subsidiary as of December 31, 2002 were audited by other auditors whose report dated February 10, 2003 expressed an unqualified opinion on those statements.
I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the December 31, 2003 consolidated financial statements referred to above present fairly, in all material respects, the financial position of East Two Thirty-Five Associates, L.P. and subsidiary as of December 31, 2003, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Sunil J. Shah CPA, PC New York, N.Y. February 10, 2004
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of East Two Thirty-Five Associates, L.P. New York, New York
We have audited the accompanying consolidated balance sheets of East Two Thirty-Five Associates, L.P. and subsidiary as (Delaware limited partnership) as of December 31, 2002 and 2001, and the related consolidated statements of operations, changes in partners' capital, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of East Two Thirty-Five Associates, L.P. and subsidiary as of December 31, 2002 and 2001, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Berdon, LLP New York, N.Y. February 10, 2003
[Letterhead of Sunil J. Shah]
INDEPENDENT AUDITORS' REPORT
To the Partners of Upper Fifth Avenue Residential Associates, L.P. New York, New York
I have audited the accompanying balance sheet of Upper Fifth Avenue Residential Associates, L.P. (a Delaware limited partnership) as of December 31, 2003, and the related statement of operations, changes in partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on our audit. The Financial statements of Upper Fifth Avenue Residential Associates, L.P. as of December 31, 2002, we audited by other auditors whose report dated January 28, 2003 expressed an unqualified opinion on those statements.
I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I 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. I believe that my audit provide a reasonable basis for my opinion.
In my opinion, the 2003 financial statements referred to above present fairly, in all material respects, the financial position of Upper Fifth Avenue Residential Associates, L.P. as of December 31, 2003 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Sunil J. Shah CPA, P.C. Certified Public Accountants
Iselin, New Jersey February 6, 2004
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of Upper Fifth Avenue Residential Associates, L.P. New York, New York
We have audited the accompanying balance sheets of Upper Fifth Avenue Residential Associates, L.P. (a Delaware limited partnership) as of December 31, 2002 and 2001, and the related statements of operations, changes in partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 audits 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 Upper Fifth Avenue Residential Associates, L.P. as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Berdon, LLP Certified Public Accountants
New York, N.Y. January 28, 2003
[Letterhead of Sunil J. Shah]
INDEPENDENT AUDITORS' REPORT
To the Partners of West 107th Street Associates, L.P.
I have audited the accompanying balance sheet of West 107th Street Associates, L.P. (a Delaware Limited Partnership) as of December 31, 2003, and the related statements of operations, changes in partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. The financial statements of West 107th Street Associates, L.P. as of December 31, 2002 were audited by other auditors whose report dated January 9, 2003 expressed an unqualified opinion on those statements.
I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the December 31, 2003 financial statements referred to above present fairly, in all material respects, the financial position of West 107th Street Associates, L.P. as of December 31, 2003 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Sunil J. Shah CPA, PC Certified Public Accountants
New York, N.Y. January 19, 2004
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of West 107th Street Associates, L.P. New York, New York
We have audited the accompanying balance sheets of West 107th Street Associates, L.P. (a Delaware Limited Partnership) as of December 31, 2002 and 2001, and the related statements of operations, changes in partners' capital, 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 auditing standards generally accepted in the United States of America. 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 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 West 107th Street Associates, L.P. as of December 31, 2002 and 2001 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Berdon, LLP Certified Public Accountants
New York, N.Y. January 9, 2003
[Letterhead of Sunil J. Shah]
INDEPENDENT AUDITORS' REPORT
To the Partners of General Atlantic Second Avenue Associates, L.P.
I have audited the accompanying consolidated balance sheet of General Atlantic Second Avenue Associates, L.P. and subsidiary (a Delaware Limited Partnership) as of December 31, 2003, and the related consolidated statements of operations, changes in partners' capital (deficit) and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these consolidated financial statements based on my audit. The consolidated financial statements of General Atlantic Second Avenue Associates, L.P. and subsidiary as of December 31, 2002 were audited by other auditors whose report dated January 31, 2003 expressed an unqualified opinion on those statements.
I conducted my audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the December 31, 2003 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of General Atlantic Second Avenue Associates, L.P. and subsidiary as of December 31, 2003 and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Berdon, LLP Certified Public Accountants
New York, N.Y. February 3, 2004
[Letterhead of Berdon, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners of General Atlantic Second Avenue Associates, L.P. New York, New York
We have audited the accompanying consolidated balance sheets of General Atlantic Second Avenue Associates, L.P. and subsidiary (a Delaware Limited Partnership) as of December 31, 2002 and 2001, and the related consolidated statements of operations, changes in partners' capital (deficit), and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The consolidated financial statements of General Atlantic Second Avenue Associates, L.P. as of
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of General Atlantic Second Avenue Associates, L.P. and subsidiary as of December 31, 2002 and 2001 and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Berdon, LLP Certified Public Accountants
New York, N.Y. January 31, 2003
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners Church Lane Associates
We have audited the accompanying balance sheets of Church Lane Associates as of December 31, 2003 and 2002, and the related statements of profit and loss, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Church Lane Associates as of December 31, 2003 and 2002, and the results of its operations, the changes in partners' equity (deficit) and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report for the year ended December 31, 2003, dated January 23, 2004, on our consideration of Church Lane Associates' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 27 through 30 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 basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman Baltimore, Maryland January 23, 2004
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners Church Lane Associates
We have audited the accompanying balance sheets of Church Lane Associates as of December 31, 2002 and 2001, and the related statements of profit and loss, changes in partners' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Church Lane Associates as of December 31, 2002 and 2001, and the results of its operations, the changes in partners' equity (deficit) and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report for the year ended December 31, 2002, dated January 24, 2003, on our consideration of Church Lane Associates' internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental information on pages 26 through 29 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 basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Reznick Fedder & Silverman Baltimore, Maryland January 24, 2003
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners Campeche Isle Apartments Limited Partnership
We have audited the accompanying statement of changes in net assets in liquidation of Campeche Isle Apartments Limited Partnership for the period January 1, 2002 through January 18, 2002. This financial statement is the responsibility of the partnership's management. Our responsibility is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 statement referred to above present fairly, in all material respects, the changes in net assets in liquidation of for the period January 1, 2002 through January 18, 2002, in conformity with accounting principles generally accepted in the United States of America.
As described in note A to the financial statements during 2001, the partnership adopted a plan to sell the rental property and liquidate the partnership in lieu of continuing the business. On January 18, 2002, the partnership sold the rental property. As a result, the partnership's financial statement is presented on the liquidation basis of accounting.
Our audit was made for the purpose of forming an opinion on the basic financial statement taken as a whole. The supplemental information on page 7 is presented for purposes of additional analysis and is not a required part of the basic financial statement. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statement taken as a whole.
/s/ Reznick Fedder & Silverman Bethesda, Maryland August 14, 2002
[Letterhead of Reznick Fedder & Silverman]
INDEPENDENT AUDITORS' REPORT
To the Partners Campeche Isle Apartments Limited Partnership
We have audited the accompanying statement of net assets in liquidation of Campeche Isle Apartments Limited Partnership as of December 31, 2001, and the related statement of changes in net assets in liquidation for the period January 1, 2001 through December 31, 2001. 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 auditing standards generally accepted in the United States of America. 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.
As described in note A to the financial statements, during 2001, the partnership adopted a plan to sell the rental property and liquidate the partnership in lieu of continuing the business. On April 18, 2002, the partnership sold the rental property. As a result, the partnership's financial statements are presented on the liquidation basis of accounting.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets in liquidation of Campeche Isle Apartments Limited Partnership as of December 31, 2001, and the changes in net assets in liquidation for the period January 1, 2001 through December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.
/s/ Reznick Fedder & Silverman Bethesda, Maryland March 6, 2002
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners Robin Housing Associates 3743-A White Plains Road Bronx, New York 10467
We have audited the accompanying balance sheets of Robin Housing Associates (a limited partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' capital (deficiency), 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 auditing standards generally accepted in the United States of America. 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 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 Robin Housing Associates as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information 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 audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C.
White Plains, New York January 23, 2004
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners Robin Housing Associates 3743-A White Plains Road Bronx, New York 10467
We have audited the accompanying balance sheets of Robin Housing Associates (a limited partnership) as of December 31, 2002 and 2001, and the related statements of operations, partners' capital (deficiency), 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 auditing standards generally accepted in the United States of America. 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 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 Robin Housing Associates as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C.
White Plains, New York January 31, 2003
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners Concourse Artists Housing Associates 3743-A White Plains Road Bronx, New York 10467
We have audited the accompanying balance sheets of Concourse Artists Housing Associates (a limited partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' capital (deficiency), 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 auditing standards generally accepted in the United States of America. 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 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 Concourse Artists Housing Associates as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information 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 audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C.
White Plains, New York January 23, 2004
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners Concourse Artists Housing Associates 3743-A White Plains Road Bronx, New York 10467
We have audited the accompanying balance sheets of Concourse Artists Housing Associates (a limited partnership) as of December 31, 2002 and 2001, and the related statements of operations, partners' capital (deficiency), 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 auditing standards generally accepted in the United States of America. 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 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 Concourse Artists Housing Associates as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C.
White Plains, New York January 31, 2003
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners 2051 Grand Concourse Housing Associates 3743-A White Plains Road Bronx, New York 10467
We have audited the accompanying balance sheets of 2051 Grand Concourse Housing Associates (a limited partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' capital (deficiency), 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 auditing standards generally accepted in the United States of America. 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 2051 Grand Concourse Housing Associates as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information 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 audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C.
White Plains, New York January 23, 2004
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners 2051 Grand Concourse Housing Associates 3743-A White Plains Road Bronx, New York 10467
We have audited the accompanying balance sheets of 2051 Grand Concourse Housing Associates (a limited partnership) as of December 31, 2002 and 2001, and the related statements of operations, partners' capital (deficiency), 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 auditing standards generally accepted in the United States of America. 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 2051 Grand Concourse Housing Associates as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C.
White Plains, New York January 31, 2003
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners Willoughby-Wyckoff Housing Associates 3743-A White Plains Road Bronx, New York 10467
We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing Associates (a limited partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' capital (deficiency), 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 auditing standards generally accepted in the United States of America. 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 Willoughby-Wyckoff Housing Associates as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with conformity with accounting principles generally accepted in the United States of America.
Our audits were made for the purpose of forming an opinion on the basic financial statements take as a whole. The accompanying information 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 audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C.
White Plains, New York January 23, 2004
[Letterhead of MARDEN, HARRISON & KREUTER]
INDEPENDENT AUDITORS' REPORT
To the Partners Willoughby-Wyckoff Housing Associates 3743-A White Plains Road Bronx, New York 10467
We have audited the accompanying balance sheets of Willoughby-Wyckoff Housing Associates (a limited partnership) as of December 31, 2002 and 2001, and the related statements of operations, partners' capital (deficiency), 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 auditing standards generally accepted in the United States of America. 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 Willoughby-Wyckoff Housing Associates as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with conformity with accounting principles generally accepted in the United States of America.
/s/ Marden, Harrison & Kreuter Certified Public Accountants, P.C.
White Plains, New York January 31, 2003
[Letterhead of WOLFE NILGES NAHORSKI]
INDEPENDENT AUDITORS' REPORT
To the Partners Goodfellow Place Limited Partnership St. Louis, Missouri
We have audited the accompanying balance sheets of Goodfellow Place Limited Partnership as of December 31, 2003 and 2002, and the related statements of Income (loss), partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 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 Goodfellow Place Limited Partnership as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Wolfe Nilges Nahorski A Professional Corporation
January 22, 2004 St. Louis, Missouri
[Letterhead of WOLFE NILGES NAHORSKI]
INDEPENDENT AUDITORS' REPORT
To the Partners Goodfellow Place Limited Partnership St. Louis, Missouri
We have audited the accompanying balance sheets of Goodfellow Place Limited Partnership as of December 31, 2002 and 2001, and the related statements of Income (loss), partners' equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 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 Goodfellow Place Limited Partnership as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/ Wolfe Nilges Nahorski A Professional Corporation
January 23, 2003 St. Louis, Missouri
[Letterhead of HAMILTON & MUSSER, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners of Penn Alto Associates, Limited Partnership Altoona, Pennsylvania 16601
We have audited the accompanying balance sheets of Penn Alto Associates, Limited Partnership as of December 31, 2003 and 2002 and the related statements of income, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 the opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Penn Alto Associates, Limited Partnership, as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 9 and 10 is presented for the purpose 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 basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Hamilton & Musser Certified Public Accountants Mechanicsburg, Pennsylvania February 19, 2004
[Letterhead of HAMILTON & MUSSER, P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners of Penn Alto Associates, Limited Partnership Altoona, Pennsylvania 16601
We have audited the accompanying balance sheets of Penn Alto Associates, Limited Partnership as of December 31, 2002 and 2001 and the related statements of income, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 the opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Penn Alto Associates, Limited Partnership, as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information on pages 9 and 10 is presented for the purpose 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 basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Hamilton & Musser Certified Public Accountants Mechanicsburg, Pennsylvania February 14, 2003
[Letterhead of Torres Llompart, Sanchez Ruiz & Co.]
Partners Gramco Development Limited Dividend Partnership, L.P. San Juan, Puerto Rico
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
We have audited the accompanying balance sheets of Gramco Development Limited Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December 31, 2003 and 2002, and the related statements of profit and loss, partners' capital, 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 auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements 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 Gramco Development Limited Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December 31, 2003 and 2002, and the results of its operations, changes in partners' capital and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit Guide for audits of HUD Programs, issued by the US Department of Housing and Urban Development, we have also issued a report dated January 21, 2004, on our consideration of the Partnership's internal control and on our tests on its compliance with specific requirements applicable to major HUD programs; and compliance with specific requirements applicable to Fair Housing and Non-Discrimination. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of the audits.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements, taken as a whole. The accompanying supplementary information included in the report on pages 24 to 27 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Gramco Development Limited Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG). Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements for the year ended December 31, 2003, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements for the year ended December 31, 2003, taken as a whole.
/s/ Torres Llompart, Sanchez Ruiz & Co. January 21, 2004 License No. 169 San Juan, Puerto Rico Stamp number 1943068 was affixed to the original of this report.
[Letterhead of Torres Llompart, Sanchez Ruiz & Co.]
Partners Gramco Development Limited Dividend Partnership, L.P. San Juan, Puerto Rico
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS
We have audited the accompanying balance sheets of Gramco Development Limited Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December 31, 2002 and 2001, and the related statements of profit and loss, partners' capital, 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 auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements 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 Gramco Development Limited Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG), as of December 31, 2002 and 2001, and the results of its operations, changes in partners' capital and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards and the Consolidated Audit Guide for audits of HUD Programs, issued by the US Department of Housing and Urban Development, we have also issued a report dated February 14, 2003, on our consideration of the Partnership's internal control structure and reports dated January 22, 2002, on its compliance with specific requirements applicable to major HUD programs; compliance with laws, regulations, contracts, loan covenants and agreements; and compliance with specific requirements applicable to Fair Housing and Non-Discrimination. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of the audits.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements, taken as a whole. The accompanying supplementary information included in the report on pages 24 to 27 is presented for purposes of additional analysis and is not a required part of the basic financial statements of Gramco Development Limited Dividend Partnership, L.P., HUD Project No. 056-35140-LD (HODAG). Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements for the year ended December 31, 2002, and in our opinion, is fairly stated in all material respects in relation to the basic financial statements for the year ended December 31, 2002, taken as a whole.
/s/ Torres Llompart, Sanchez Ruiz & Co. February 14, 2003 License No. 169 San Juan, Puerto Rico Stamp number 1780551 was affixed to the original of this report.
[Letterhead of COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT
To the Partners Alexis Park Apartments, A Louisiana Partnership In Commendam Bossier City, Louisiana
We have audited the accompanying balance sheets of Alexis Park Apartments, A Louisiana Partnership In Commendam at December 31, 2003 and December 31, 2002 and the related statements of income, partners' capital 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 U.S. generally accepted standards. 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 in the first paragraph above present fairly, in all material respects, the financial position of Alexis Park Apartments, A Louisiana Partnership In Commendam at December 31, 2003 and December 31, 2002, and the results of its operations and its cash flows for the years 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 at Note 11 to the financial statements, there are uncertainties that affect the Partnership concerning the existence of hazardous waste and negative performance indicators that raise substantial doubt about the Partnership's ability to continue as a going concern. Management's position in regard to these matters is also discussed at Note 11. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Our audit was made primarily for the purpose of forming an opinion on the basic financial statements for the years ended December 31, 2003 and December 31, 2002 taken as a whole. The supplementary Schedule 1 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Cole, Evans & Peterson Shreveport, Louisiana February 2, 2004
[Letterhead of COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT
To the Partners Alexis Park Apartments, A Louisiana Partnership In Commendam Bossier City, Louisiana
We have audited the accompanying balance sheets of Alexis Park Apartments, A Louisiana Partnership In Commendam at December 31, 2002 and December 31, 2001 and the related statements of income, partners' capital 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. 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 in the first paragraph above present fairly, in all material respects, the financial position of Alexis Park Apartments, A Louisiana Partnership In Commendam at December 31, 2002 and December 31, 2001, and the results of its operations and its cash flows for the years 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 at Note 11 to the financial statements, there are uncertainties that affect the Partnership concerning the existence of hazardous waste and negative performance indicators that raise substantial doubt about the Partnership's ability to continue as a going concern. Management's position in regard to these matters is also discussed at Note 11. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Our audit was made primarily for the purpose of forming an opinion on the basic financial statements for the years ended December 31, 2002 and December 31, 2001 taken as a whole. The supplementary Schedule 1 is presented for the purpose of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Cole, Evans & Peterson Shreveport, Louisiana February 12, 2003
[Letterhead of Dickey, Wolf & Humbard, LLC]
INDEPENDENT AUDITOR'S REPORT
To the Partners Williamsburg Residential, L.P.
We have audited the balance sheets of Williamsburg Residential, L.P. (a Kansas Limited Partnership) as of December 31, 2003 and 2002, and the related statements of operations, partners' equity/(deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 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 Williamsburg Residential, L.P. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Dickey, Wolf & Humbard, LLC Certified Public Accountants
Harrisonville, MO January 9, 2004
[Letterhead of Dickey, Wolf & Humbard, LLC]
INDEPENDENT AUDITOR'S REPORT
To the Partners Williamsburg Residential, L.P.
We have audited the balance sheets of Williamsburg Residential, L.P. (a Kansas Limited Partnership) as of December 31, 2002 and 2001, and the related statements of operations, partners' equity/(deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 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 Williamsburg Residential, L.P. as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Dickey, Wolf & Humbard, LLC Certified Public Accountants
Harrisonville, MO January 9, 2003
[Letterhead of MAYER HOFFMAN MCCANN P.C.]
INDEPENDENT AUDITOR'S REPORT
To the Partners Victory Apartments
We have audited the balance sheet of Victory Apartments - F.H.A. Project No. 071-35701 as of December 31, 2003, and the related statements of income, changes in partners' capital, 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 audits. The financial statements as of December 31, 2002, were audited by other auditors whose report dated January 21, 2003, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with U.S. generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Victory Apartments, F.H.A. Project No. 071-35701 as of December 31, 2003, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report dated January 29, 2004, on our consideration of the Partnership's internal control and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audits.
/s/ Mayer Hoffman McCann P.C. Chicago, Illinois January 29, 2004
[Letterhead of PHILIP ROOTBERG & COMPANY, LLP]
INDEPENDENT AUDITOR'S REPORT
To the Partners Victory Apartments
We have audited the accompanying balance sheet of Victory Apartments (a limited partnership) - F.H.A. Project No. 071-35701 as of December 31, 2002 and 2001, and the related statements of profit and loss, partners' capital, 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 U.S. generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Victory Apartments, F.H.A. Project No. 071-35701 as of December 31, 2002 and 2001, and the results of its operations, changes in its partners' capital and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report dated January 21, 2003, on our consideration of the Partnership's internal control and on our test of its compliance with certain provisions of laws, regulations, contracts and grants. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audits.
Our 2002 audit was conducted for the purpose of forming an opinion on the basic 2002 financial statements taken as a whole. The accompanying supplemental schedules listed on the preceding contents page are presented for purposes of additional analysis to comply with HUD reporting requirements and are not a required part of the basic 2002 financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic 2002 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic 2002 financial statements taken as a whole.
/s/ Philip Rootberg & Company, LLP Chicago, Illinois January 21, 2003
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
See accompanying notes to consolidated financial statements.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
See accompanying notes to consolidated financial statements.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
See accompanying notes to consolidated financial statements.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (continued)
See accompanying notes to consolidated financial statements.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
NOTE 1 - General
Liberty Tax Credit Plus II L.P., a Delaware limited partnership (the "Partnership"), was organized on March 25, 1988, but had no activity until July 1, 1988 (which date is considered to be inception for financial accounting purposes). The Partnership had no operations until commencement of the public offering on July 20, 1988.
The general partners of the Partnership are Related Credit Properties II L.P., a Delaware limited partnership (the "Related General Partner"), Liberty Associates II L.P., a Delaware limited partnership ("Liberty Associates"), and Liberty GP II Inc. (formerly Shearson Liberty GP II Inc.), a Delaware corporation (the "Liberty General Partner" and together with the Related General Partner and Liberty Associates, the "General Partners"). The general partner of the Related General Partner is Related Credit Properties II Inc., a Delaware corporation. The general partners of Liberty Associates are Related Credit Properties II Inc., and the Liberty General Partner. Liberty Associates is also the special limited partner of the Partnership. On November 17, 2003, CharterMac acquired Related Capital Company, which is the indirect parent of RCC Manager LLC, the sole shareholder of Related Credit Properties II Inc. Pursuant to the acquisition, CharterMac acquired controlling interests in the General Partners. This acquisition did not affect the Partnership or its day-to-day operations, as the majority of the General Partners' management team remained unchanged.
The Partnership's business is to invest in other limited partnerships ("Local Partnerships", "subsidiaries" or "subsidiary partnerships") owning leveraged low-income multifamily residential complexes ("Apartment Complexes") that are eligible for the low-income housing tax credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986, and to a lesser extent in Local Partnerships owning properties ("Rehabilitation Projects" and together with the Apartment Complexes, the "Properties") that are eligible for the historic rehabilitation tax credit. The Partnership's investment in each Local Partnership represents a 20% to 98% interest in that Local Partnership. The Partnership had originally invested in 27 Local Partnerships. During the year ended March 31, 2004, the Partnership sold the properties and the related assets and liabilities of two Local Partnerships. Through the year ended March 31, 2004, the Partnership has sold the properties and the related assets and liabilities of three Local Partnerships (see Note 10).
The Partnership was authorized to issue a total of 200,000 Beneficial Assignment Certificates ("BACs"), of which 120,000 have been registered with the Securities and Exchange Commission for sale to the public. The public offering was completed on January 9, 1989 with a total of 115,917.5 BACs sold and $115,917,500 of proceeds received by the Partnership.
The terms of the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement") provide, among other things, that net profits or losses and distributions of cash flow are, in general, allocated 99% to the limited partners and BACs holders and 1% to the general partners.
NOTE 2 - Summary of Significant Accounting Policies
a) Basis of Consolidation
The consolidated financial statements include the accounts of the Partnership and 26, 27 and 27 subsidiary partnerships in which the Partnership is a limited partner for the years ended March 31, 2004, 2003 and 2002 (the 2003, 2002 and 2001 "Fiscal Years"), respectively. Through the rights of the Partnership and/or a General Partner (which has a contractual obligation to act on behalf of the Partnership) to remove the general partner of the subsidiary local partnerships and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the subsidiary local partnerships.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
For financial reporting purposes, the Partnership's fiscal year ends on March 31, in order to allow adequate time for the subsidiaries' financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with U.S. generally accepted accounting principles ("GAAP"). All subsidiaries have fiscal years ending December 31. Accounts of the subsidiaries have been adjusted for intercompany transactions from January 1 through March 31. All intercompany accounts and transactions with the subsidiary partnerships have been eliminated in consolidation.
Increases (decreases) in the capitalization of consolidated subsidiaries attributable to minority interest arise from cash contributions and cash distributions to the minority interest partners.
The Partnership's investment in each subsidiary partnership is equal to the respective subsidiary partners' equity less minority interest capital, if any. Losses attributable to minority interests which exceed the minority interest's investment in a subsidiary partnership have been charged to the Partnership. Such losses aggregated approximately $0, $564,000 and $625,000 for the years ended March 31, 2004, 2003 and 2002 (the 2003, 2002 and 2001 Fiscal Years), respectively. In consolidation, all subsidiary partnership losses are included in the Partnership's capital account except for losses allocated to minority interest capital.
b) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and investments in short-term highly liquid instruments purchased with original maturities of three months or less.
c) Property and Equipment
Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, construction period interest and any other costs incurred in acquiring such property and equipment. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the Property on an undiscounted basis are below depreciated cost. Property investments themselves are reduced to estimated fair value (generally using discounted cash flows) when the Property is considered to be impaired and the depreciated cost exceeds estimated fair value. During the year ended March 31, 2004, the Partnership did not record a loss on impairment of assets. Through March 31, 2004, the Partnership has recorded approximately $5,407,000 as a loss on impairment of assets.
At the time management commits to a plan to dispose of assets, said assets are adjusted to the lower of carrying amount or fair value less costs to sell. Such assets would be classified as property and equipment-held for sale and are not depreciated. There were no assets classified as property and equipment-held for sale at March 31, 2004 and 2003, respectively.
d) Offering Costs
Costs incurred to sell BACs, including brokerage and the nonaccountable expense allowance, are considered selling and offering expenses. These costs are charged directly to limited partners' capital.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
e) Income Taxes
The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership has a fiscal year ending December 31 (Note 9).
f) Loss Contingencies
The Partnership records loss contingencies as a charge to income when information becomes available which indicates that it is probable that an asset has been impaired or a liability has been incurred as of the date of the financial statements and the amount of loss can be reasonably estimated. In addition, the Partnership evaluates a potential environmental liability independently from any potential claim for recovery.
g) Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
NOTE 3 - Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instruments (all of which are held for nontrading purposes) for which it is practicable to estimate that value:
Cash and Cash Equivalents, and Cash Held in Escrow - --------------------------------------------------------- The carrying amount approximates fair value.
Mortgage Notes Payable - ---------------------- The fair value of mortgage notes payable is estimated, where practicable, based on the borrowing rate currently available for similar loans.
The estimated fair values of the Partnership's mortgage notes payable are as follows:
*Management believes it is not practicable to estimate the fair value of the mortgage notes payable because mortgage programs with similar characteristics are not currently available to the Local Partnerships.
The carrying amount of other financial instruments that require such disclosure approximates fair value.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
NOTE 4 - Property and Equipment
The components of property and equipment and their estimated useful lives are as follows:
Included in property and equipment are $6,955,050 of acquisition fees paid or accrued to the General Partners and $1,606,014 of acquisition expenses as of March 31, 2004 and 2003. In addition, as of March 31, 2004 and 2003, buildings and improvements include $7,015,991 of capitalized interest.
Depreciation expense for the years ended March 31, 2004, 2003 and 2002 amounted to $7,433,688, $7,517,957 and $7,545,850, respectively.
In connection with the rehabilitation of the Properties, the subsidiary partnerships have incurred developer's fees of $20,563,695 to the local general partners and affiliates. Such fees have been included in the cost of property and equipment.
During the 2003 and 2002 Fiscal Years, there was a decrease in accumulated depreciation in the amounts of $218,940 and $53,335, respectively, due to write-offs on dispositions.
During the 2003 Fiscal Year, a decrease in accumulated depreciation in the amount of $4,423,005 resulted from the sales of Polynesian Apartments Associates, Limited Partnership and Seagrape Village Associates, Limited Partnership.
During the 2002 Fiscal Year, a decrease in accumulated depreciation of property and equipment held for sale in the amount of $3,147,094 resulted from the sale of Campeche Isle Apartments, Limited Partnership (see Note 10).
NOTE 5 - Cash Held in Escrow
Cash held in escrow is restricted and consists of the following:
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
NOTE 6 - Deferred Costs
The components of other deferred costs and their periods of amortization are as follows:
*Over the life of the respective related mortgages.
Amortization expense for the years ended March 31, 2004, 2003 and 2002 amounted to $334,126, $1,276,505 and $515,748, respectively. During the years ended March 31, 2004 and 2003, respectively, $168,721 and $2,255,620 of fully amortized deferred costs were written off.
NOTE 7 - Mortgage Notes Payable
The mortgage notes are payable in aggregate monthly installments of approximately $505,000 including principal and interest at rates varying from 1% to 10.75% per annum, through 2042. Each subsidiary partnership's mortgage note payable is collateralized by the land and buildings of the respective subsidiary partnership and the assignment of certain subsidiary partnership's rents and leases and is without further recourse.
Annual principal payment requirements for each of the next five fiscal years and thereafter are as follows:
Property Development Associates, L.P. - ------------------------------------- During 2002, Property Development Associates L.P. ("Property Development") was notified that certain defaults had occurred with the mortgage note payable. As of December 31, 2002, the Mortgagee was pursuing all of its rights and remedies for default, including, without limitation, acceleration of the maturity date of the Loan and demand for payment of the entire outstanding balance of the Loan. On March 5, 2003, the mortgage note payable was purchased by an affiliate of the management company (which is not affiliated with the Local General Partner or the General Partners). The purchase of this note remedied the defaults and the note terms were modified. The Maturity Date was extended from May 1, 2004 to August 1, 2004, and the interest rate was changed from 6% to 7%. The borrower has the option to extend the maturity date to February 1, 2005. Additionally, commencing on April 1, 2003 and continuing through the Maturity Date, the subsidiary partnership will not be obligated to make the monthly principal payments.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
United-Glen Arden I Limited Partnership - --------------------------------------- On September 3, 2002, United-Glen Arden I Limited Partnership ("Glen Arden I") completed a mortgage restructuring through the Mark to Market program with the Office of Multifamily Housing Assistance Restructuring ("OMHAR"). The original mortgages were paid in full. In connection with the restructuring, two mortgages were incurred as follows:
Effective September 3, 2002, the mortgage with the original amount of $7,333,600 is held by Greystone Servicing Corporation Inc. and is insured by HUD. The mortgage is payable in monthly installments of $48,710, including interest at 7.0% per annum, through September 1, 2032 and is collateralized by the apartment project.
The Mortgage Restructuring Note to OMHAR/HUD totaling $3,222,109 is collateralized by the property. The mortgage note bears simple interest at the rate of 5% to be paid annually on the unpaid principal balance until paid in full. The maturity date of the mortgage note shall be September 1, 2032. Until maturity, payments due under the Mortgage Restructuring Note shall be payable in an amount equal to 85% of the "Surplus Cash" as defined. Upon maturity, the entire outstanding indebtedness under the Mortgage Restructuring Note shall be due and payable. Additionally, the note shall become immediately due and payable, at the option of the holder in the event of a sale or default under the note agreement.
Glen Arden I's prior indebtedness of approximately $10,326,000 was repaid from the proceeds of the two new loans.
United-Glen Arden II Apartments Limited Partnership - --------------------------------------------------- Effective July 31, 2002, United-Glen Arden II Apartments Limited Partnership ("Glen Arden II") completed a mortgage restructuring through the Mark to Market program with the Office of Multifamily Housing Assistance Restructuring. The original mortgages were paid in full. In connection with the restructuring, two mortgages were incurred as follows:
Effective July 31, 2002, the mortgage with the original amount of $6,960,400 is held by Capstone Realty Advisors, LLC. The loan bears interest of 7% per annum and matures on August 1, 2027.
The second restructuring note totaling $1,466,636 is collateralized by the property and bears interest of 5% per annum and matures on September 1, 2027. This note shall become immediately due and payable, at the option of the holder in the event of a sale or default under the note agreement.
Glen Arden II's prior indebtedness of approximately $8,035,000 was repaid from the proceeds of the two new loans.
Victory Apartments - ------------------ On June 27, 2002, Victory Apartments ("Victory") refinanced its existing indebtedness by borrowing $6,491,500 from Reinlein/Leiser/McGee. The loan bears interest at 6.61% per annum and matures in July 2042. Victory Apartments' prior indebtedness of approximately $6,201,622 was repaid from the proceeds of the new loan.
Metropolitan Towers Associates L.P. - ----------------------------------- On February 22, 2002, Metropolitan Towers Associates L.P. ("Metropolitan Towers") refinanced its existing indebtedness by borrowing $5,364,000 from the Puerto Rico Housing Finance Corporation ("PRHFC"). The loan bears interest at the rate of 7% per annum and matures on February 1, 2032. Metropolitan Tower's prior indebtedness of approximately $4,625,000 was repaid, and a Capital Improvement Account of approximately $387,000 was established from the proceeds of the new loan.
Goodfellow Place Limited Partnership - ------------------------------------ During the year ended December 31, 2000, Goodfellow Place Limited Partnership ("Goodfellow") began negotiations with the St. Louis Community Development
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
Agency (CDA) to modify its non-interest bearing promissory note payable to CDA in the amount of $1,827,622. The note was secured by a second deed of trust on the property and principal was to be paid in an amount equal to 20% of surplus cash. Any unpaid principal was due upon the earliest of September 2030, the vacancy or abandonment of the property, full repayment of any note secured by a deed of trust on the property or the transfer of the property or change in ownership interest without CDA consent. As a part of its negotiation offer, Goodfellow made a prepayment of $25,000 on the note in 2000. During 2001, CDA agreed to accept the $25,000 prepayment in exchange for its forgiveness of the remaining note balance of $1,802,622, resulting in cancellation of indebtedness income of the same amount. Such amount was recognized during the year ended March 31, 2002.
NOTE 8 - Related Party Transactions
Related Party Fees
One of the General Partners has a 1% interest as a special limited partner in each of the Local Partnerships. An affiliate of the General Partners also has a minority interest in certain Local Partnerships.
The General Partners and their affiliates perform services for the Partnership. The costs incurred for the years ended March 31, 2004, 2003 and 2002 are as follows:
(a) The General Partners are entitled to receive a partnership management fee, after payment of all Partnership expenses, which together with the local annual administrative fees will not exceed a maximum of 0.5% per annum of invested assets (as defined in the Partnership Agreement), for administering the affairs of the Partnership. The partnership management fee, subject to the foregoing limitation, will be determined by the General Partners in their sole discretion based upon their review of the Partnership's investments. Partnership management fees owed to the General Partners amounting to approximately $12,713,000 and $11,268,000 were accrued and unpaid as of March 31, 2004 and March 31, 2003. Without the General Partner's continued accrual without payment, the Partnership will not be in a position to meet its obligations. The General Partners have allowed for the accrual without payment of these amounts but are under no obligation to do so.
(b) The Partnership reimburses the General Partners and their affiliates for actual Partnership operating expenses incurred by the General Partners and their affiliates on the Partnership's behalf. The amount of reimbursement from the Partnership is limited by the provisions of the Partnership Agreement. Another affiliate of the General Partners performs asset monitoring for the Partnership. These services include site visits and evaluations of the subsidiary partnerships' performance.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
(c) Property management fees incurred by subsidiary partnerships amounted to $1,552,819, $1,570,624 and $1,636,460 for the 2003, 2002 and 2001 Fiscal Years, respectively. Of these fees $895,196, $883,606 and $887,000 were incurred to affiliates of the Local General Partners. Included in amounts incurred to affiliates of the Local General Partners are $370,181, $362,942 and $355,825, respectively, which were also incurred to affiliates of the Partnership.
(d) Liberty Associates, a special limited partner of the subsidiary partnerships, is entitled to receive a local administrative fee of up to $2,500 per year from each subsidiary partnership.
Liberty Associates has a 1% interest as the special limited partner in each of the subsidiary partnerships. Liberty Associates received cash distributions of approximately $1,000, $4,000 and $5,900 during the 2003, 2002 and 2001 Fiscal Years, respectively.
Pursuant to the Partnership Agreement and the Local Partnership Agreements, the General Partners and Liberty Associates received their allocable share of profits, losses and tax credits allocated by the Partnership and the Local Partnerships, respectively.
(e) Due to Local General Partners and affiliates at March 31, 2004 and 2003 consists of the following:
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
NOTE 9 - Income Taxes
A reconciliation of the financial statement net loss to the income tax loss for the Partnership and its consolidated subsidiaries is as follows:
NOTE 10 - Sale of Properties
On March 2, 2004, a letter of intent was received that constitutes a proposal from the purchaser to purchase the property and the related assets and liabilities of Goodfellow Place Limited Partnership for a purchase price of $100,000 plus the existing debt. No assurance can be given that the closing will actually occur.
On August 15, 2003, the property and the related assets and liabilities of Polynesian Apartments Associates, Limited Partnership ("Polynesian") were sold to an unaffiliated third party for $2,700,000, resulting in a loss of approximately $287,000.
On August 15, 2003, the property and the related assets and liabilities of Seagrape Village Associates, Limited Partnership ("Seagrape") were sold to an unaffiliated third party for $5,140,000, resulting in a loss of approximately $260,000.
On January 18, 2002, the property and the related assets and liabilities of Campeche Isle Apartments, Limited Partnership ("Campeche") were sold to an unaffiliated third party for $4,625,000, resulting in a loss of approximately $45,000.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
NOTE 11 - Commitments and Contingencies
a) Subsidiary Partnerships - Going Concerns and Uncertainties
The auditors for three subsidiary partnerships, Whittier Plaza Associates Limited Partnership, Alexis Park Apartments and Westminster Place II - Olive Site, L.P. modified their reports on the 2003 Fiscal Year financial statements due to the uncertainty of each subsidiary partnership's ability to continue as a going concern. The financial statements do not include any adjustments that would be necessary in the event the subsidiary partnerships are unable to continue as going concerns.
Whittier Plaza Associates - ------------------------- The financial statements for Whittier Plaza Associates Limited Partnership ("Whittier") have been prepared assuming that Whittier will continue as a going concern. Whittier has sustained continuous losses since commencement of operations in 1988. Whittier has experienced higher vacancies and lower rents than those originally projected, resulting in increased difficulty in meeting both operating and debt service obligations. The Local General Partner, pursuant to a development deficit guarantee agreement, has advanced approximately $8,000 and $12,000 in the 2003 and 2002 Fiscal Years, respectively, and approximately $469,000 since 1988 to fund operating cash shortfalls. In addition, Whittier's management company, an affiliate of the Local General Partner, has deferred receipt of various fees since 1991 totaling approximately $99,000. These items raise substantial doubt about Whittier's ability to continue as a going concern. The Partnership's investment in Whittier at March 31, 2004 and 2003 was reduced to zero as a result of prior years' losses and the minority interest balance was $0 at each date. Whittier's net loss after minority interest amounted to approximately $27,000, $29,000 and $37,000 for the 2003, 2002 and 2001 Fiscal Years.
Alexis Park Apartments - ---------------------- The financial statements for Alexis Park Apartments ("Alexis") have been prepared in conformity with U.S. generally accepted accounting principles, assuming the continuation of the Local Partnership as a going concern. However, negative performance indicators and the environmental issue raise substantial doubt about the Local Partnership's ability to continue as a going concern.
A hazardous waste issue has affected Alexis for nearly 13 years. Although this environmental issue is in many respects beyond its control, management believes that the selected remedy of the United States Environmental Protection Agency is practical and is not likely to cause significant disruption to the apartment project's operations beyond what it has experienced over the last several years. The Local Partnership's congressman, U.S. Senators and the Mayor of Bossier City have assisted Alexis in preventing this issue from escalating unnecessarily and management believes that no escalation will occur in the near term. Further, all indications are that an oil company will bear all costs of remediation and that the Local Partnership will not be called upon to share in those costs. Accordingly, management believes the Local Partnership has the opportunity to continue as a going concern during 2004.
For the year ended December 31, 2003, the Local Partnership sustained a net loss of approximately $149,000. At December 31, 2003, the Local Partnership's current liabilities exceed its current assets by approximately $4,949,000. Management expects operating income to improve for 2004 as a result of both increased occupancy and slightly reduced expenses. Current liabilities in the amount of $4,699,000 is attributable to the Partnership's first mortgage note that is expected to be refinanced on a long-term basis during 2004. In addition, included in current liabilities are obligations to the management company totaling approximately $252,000 that are not expected to require payment beyond Alexis' ability to pay. Management believes, that if necessary, it can obtain funds to supplement operating cash flows for 2004 to enable Alexis to meet its liabilities and subject to the environmental uncertainty enable Alexis to continue as a going concern for at least one year.
These items raise substantial doubt about Alexis' ability to continue as a going concern. The maximum loss for which the Partnership would be liable is its net
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
investment in Alexis. The Partnership's investment in Alexis at March 31, 2004 and 2003 was reduced to zero as a result of prior years' losses and the minority interest balance was $0 at each date. Alexis' net loss after minority interest amounted to approximately $149,000, $172,000 and $340,000, for the 2003, 2002 and 2001 Fiscal Years, respectively.
Westminster Place II - Olive Site, L.P. - --------------------------------------- The financial statements for Westminster Place II - Olive Site, L.P. ("Westminster") have been prepared assuming that Westminster will continue as a going concern. Westminster's rental subsidy will be depleted during 2004. This subsidy represents approximately 16% of Westminster's rental revenue. Westminster has submitted a rent increase to the Missouri Housing Development Commission and is awaiting response. Without this increase or the rental subsidy, it will be increasingly difficult to meet the financial obligations of Westminster.
These items raise substantial doubt about Westminster's ability to continue as a going concern. The maximum loss for which the Partnership would be liable is its net investment in Westminster. The Partnership's investment in Westminster at March 31, 2004 and 2003 was reduced to zero as a result of prior years' losses and the minority interest balance was $0 at each date. Westminster's net loss after minority interest amounted to approximately $115,000, $95,000 and $112,000 for the 2003, 2002 and 2001 Fiscal Years, respectively.
b) Subsidiary Partnerships - Other
Property Development Associates, L.P. - ------------------------------------- Property Development Associates, L.P. ("Property Development") is involved as a defendant in a pending litigation case. This case was filed by the plaintiffs on December 18, 2002 and served on the defendants on January 6, 2003. As of the date of the Auditor's Report, discovery is ongoing. The trial has been postponed to a date not yet determined by the court. The plaintiff's petition consists of claims against Property Development for assault, battery, constructive eviction, negligent hiring, negligent retention, misuse of Housing and Urban Development funds, slander, retaliatory eviction, and breach of implied warranty of habitability. The potential verdict in this case ranges from complete defense verdict up through the $2 million sought by the plaintiffs. The potential damages, other than those for the alleged intentional acts of assault and battery, are covered by insurance. Property Development denies each of these allegations and intends to contest the case vigorously.
Gramco Development Limited Dividend Partnership, L.P. - ----------------------------------------------------- Gramco Development Limited Dividend Partnership, L.P. ("Gramco") was granted net funds of $4,867,000 by the Municipality of Bayamon (the "Municipality") and HUD. In the event of a substantial violation to the provisions of certain agreements between Gramco and the Municipality and between the Municipality and HUD, the funds shall become immediately due and payable at the election of HUD and the Municipality. Otherwise, the principal amount of the obligation together with any interest will be forgiven. Proceeds from the loan have been deducted from fixed assets.
Williamsburg Residential, L.P. - ------------------------------ In November 1996, the Local General Partner of Williamsburg Residential, L.P. ("Williamsburg") stopped making the mortgage note payments which constituted an event of default. A Reinstatement and Modification Agreement was entered into effective March 1, 1997. The Partnership has advanced Williamsburg the necessary funds to keep the mortgage and escrows current during 2003 and is expected to continue to do so during 2004.
The Partnership's investment in Williamsburg has been written down to $0 by prior years' losses and the minority interest balance was approximately $724,000 and $726,000 at March 31, 2004 and 2003, respectively. Williamsburg's net loss after minority interest amounted to approximately $229,000, $142,000 and $128,000 for the 2003, 2002, and 2001 fiscal years, respectively. As of March 31, 2004, the Partnership has advanced Williamsburg approximately $1,155,000.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2004
c) Uninsured Cash and Cash Equivalents
The Partnership maintains its cash and cash equivalents in various banks. Accounts at each bank are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. As of March 31, 2004, uninsured cash and cash equivalents approximated $1,281,000.
d) Other
The Partnership is subject to the risks incident to potential losses arising from the management and ownership of improved real estate. The Partnership can also be affected by poor economic conditions generally. However, no more than 38% of the Properties are located in any single state. There are also substantial risks associated with owning Properties receiving government assistance, such as the possibility that Congress may not appropriate funds to enable HUD to make rental assistance payments. HUD also restricts annual cash distributions to partners based on operating results and a percentage of the owner's equity contribution. The Partnership cannot sell or substantially liquidate its investments in subsidiary partnerships during the period that the subsidy agreements are in existence without HUD's approval. Furthermore, there may not be market demand for apartments at market rents when the rental assistance contracts expire.
e) Tax Credits
As of December 31, 2003, the Tax Credit Period for each Local Partnership has expired. A portion of the Housing Tax Credits are subject still to recapture in future years if (i) a Local Partnership ceases to meet qualification requirements, or (ii) if there is a decrease in the qualified basis of the Local Partnership's Property, or (iii) if there is a reduction in the Local Partnership interest in the Property at any time during the 15-year Compliance Period that began with the first tax year of the Credit Period.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None
Item 9A.
Item 9A. Controls and Procedures
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Chief Executive Officer and Chief Financial Officer of Related Credit Properties II, Inc., the general partner of Related General Partner, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act") as of the end of the period covered by this report. Based on such evaluation, such officer has concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective.
(b) INTERNAL CONTROL OVER FINANCIAL REPORTING. There have not been any changes in the Partnership's internal control over financial reporting during the fiscal year to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant.
The Partnership has no directors or executive officers. The general partners of the Partnership are Related Credit Properties II L.P., a Delaware limited partnership (the "Related General Partner"), Liberty Associates II L.P., a Delaware limited partnership ("Liberty Associates"), and Liberty GP II Inc. (formerly Shearson Liberty GP II Inc.), a Delaware corporation (the "Liberty General Partner" and together with the Related General Partner and Liberty Associates, the "General Partners"). The general partner of the Related General Partner is Related Credit Properties II Inc., a Delaware corporation. The general partners of Liberty Associates are Related Credit Properties II Inc., and the Liberty General Partner. Liberty Associates is also the special limited partner of the Partnership. The Partnership's affairs are managed and controlled by the General Partners. The Partnership has not adopted a separate code of ethics because the Partnership has no directors or executive officers. However, the parent company of Related Capital Company, which controls our General Partners, has adopted a code of ethics. See http://www.chartermac.com. -------------------------
On November 17, 2003, CharterMac acquired Related Capital Company, which is the indirect parent of RCC Manager LLC, the sole shareholder of Related Credit Properties II Inc. Pursuant to the acquisition, CharterMac acquired controlling interests in the General Partners. Alan P. Hirmes replaced Stephen M. Ross as Director of Related Credit Properties II Inc. effective April 1, 2004 as a result of this acquisition. This acquisition did not affect the Partnership or its day-to-day operations, as the majority of the General Partners' management team remained unchanged.
Certain information concerning the directors and executive officers of the Liberty General Partner and of Related Credit Properties II, Inc., is set forth below.
Related Credit Properties II, Inc. - ----------------------------------
Name Position - ---- ----------------------
Alan P. Hirmes Director and President
Stuart J. Boesky Senior Vice President
Marc D. Schnitzer Vice President
Denise L. Kiley Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
ALAN P. HIRMES, 49, has been a Certified Public Accountant in New York since 1978. Prior to joining Related Capital Company ("Capital") in October 1983, Mr. Hirmes was employed by Weiner & Co., certified public accountants. Mr. Hirmes is also a Vice President of Capital. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts degree. Mr. Hirmes also serves on the Board of Trustees of CharterMac and American Mortgage Acceptance Company ("AMAC").
STUART J. BOESKY, 48, practiced real estate and tax law in New York City with the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined Capital. From 1983 to 1984 Mr. Boesky practiced law with the Boston law firm of Kaye, Fialkow, Richard & Rothstein (which subsequently merged with Strook & Strook & Lavan), and from 1978 to 1980 was a consultant specializing in real estate at the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from Michigan State University with a Bachelor of Arts degree and from Wayne State School of Law with a Juris Doctor degree. He then received a Master of Laws degree in Taxation from Boston University School of Law. Mr. Boesky also serves on the Board of Trustees of CharterMac and AMAC.
MARC D. SCHNITZER, 43, joined Capital in January 1988 after receiving his Master of Business Administration degree from The Wharton School of The University of Pennsylvania in December 1987. From 1983 to 1986, Mr. Schnitzer was a Financial Analyst with The First Boston Corporation in New York, an international investment banking firm. Mr. Schnitzer received a Bachelor of Science degree, summa cum laude, in Business Administration, from the School of Management at Boston University in May 1983. Mr. Schnitzer also serves on the Board of Trustees of CharterMac.
DENISE L. KILEY, 44, is responsible for overseeing the due diligence and asset management of all multifamily residential properties invested in Capital sponsored corporate, public and private equity and debt funds. Prior to joining Capital in 1990, Ms. Kiley had experience acquiring, financing and asset managing multifamily residential properties. From 1981 through 1985, she was an auditor with Price Waterhouse. Ms. Kiley holds a Bachelor of Science degree in Accounting from Boston College. Ms. Kiley also serves on the Board of Trustees of CharterMac.
GLENN F. HOPPS, 41, joined Capital in December 1990, and prior to that date, was employed by Marks Shron & Company and Weissbarth, Altman and Michaelson, certified public accountants. Mr. Hopps graduated from New York State University at Albany with a Bachelor of Science degree in Accounting.
TERESA WICELINSKI, 38, joined Capital in June 1992, and prior to that date was employed by Friedman, Alpren & Green, certified public accountants. Ms. Wicelinski graduated from Pace University with a Bachelor of Arts degree in Accounting.
Liberty GP II Inc. - ------------------
Name Position - ---- --------
Alan P. Hirmes Director and President
Stuart J. Boesky Executive Vice President
Marc D. Schnitzer Vice President
Denise L. Kiley Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
Biographical information with respect to Messrs. Hirmes, Boesky, Schnitzer, Ms. Kiley, Hopps and Ms. Wicelinski is set forth above.
Item 11.
Item 11. Executive Compensation.
The Partnership has no officers or directors. The Partnership does not pay or accrue any fees, salaries or other forms of compensation to directors or officers of the Liberty General Partner or the general partner of the Related General Partner for their services. Certain directors and executive officers of the Liberty General Partner and the general partner of the Related General Partner receive compensation from the General Partners and their affiliates for services performed for various affiliated entities which may include services performed for the Partnership.
Under the terms of the Partnership Agreement, the General Partners and their affiliates are entitled to receive compensation from the Partnership in consideration of certain services rendered to the Partnership by such parties. Such arrangements include, but are not limited to, the payment of an accountable operating expense reimbursement, an annual partnership management fee not to exceed 0.5% of invested assets and subordinated disposition fees. In addition, the General Partners are entitled to 1% of all cash distributions and Housing Tax Credit allocations and a subordinated 15% interest in net sales or refinancing proceeds. Also see Note 8 to the Financial Statements in Item 8 for a presentation of the types and amounts of compensation paid to the General Partners and their affiliates, which is incorporated by reference thereto.
Tabular information concerning salaries, bonuses and other types of compensation payable to executive officers has not been included in this annual report. As noted above, the Partnership has no executive officers. The level of compensation payable to the General Partners and/or their affiliates is limited by the terms of the Partnership Agreement and may not be increased therefrom on a discretionary basis.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The general partnership interests and BACs in the Partnership are owned in the manner indicated on the chart below.
Liberty Associates II L.P. holds a 1% limited partnership interest in each Local Partnership.
No person is known by the Partnership to be the beneficial owner of more than 5% percent of the Limited Partnership Interests and/or the BACs; and none of the General Partners nor any director or executive officer of the Liberty General Partner or of the general partner of the Related General Partner owns any Limited Partnership Interests or BACs, except as noted in the chart below.
(1) All such BACs represent BACs owned directly by Lehigh Tax Credit Partners L.L.C. ("Lehigh I") and Lehigh Tax Credit Partners II L.L.C. ("Lehigh II") for which Lehigh Tax Credit Partners, Inc. (the "Managing Member") serves as managing member. As of May 4, 2004, Lehigh I held 1,080.5 BACs and Lehigh II held 1,161.5 BACs.
(2) Each such party serves as a director and executive officer of the Managing Member, and owns an equity interest therein.
Item 13.
Item 13. Certain Relationships and Related Transactions.
The Partnership has and will continue to have certain relationships with the General Partners and their affiliates, as discussed in Item 11 and also Note 8 to the Financial Statements in Item 8 above, which are incorporated herein by reference thereto. However, there have been no direct financial transactions between the Partnership, on the one hand, and the directors or executive officers of the Liberty General Partner or the general partner of the Related General Partner, on the other.
Item 14.
Item 14. Principal Accountant Fees and Services.
Audit Fees - ---------- The aggregate fees billed by Trien Rosenberg Rosenberg Weinberg Ciullo and Fazzari LLP and their respective affiliates (collectively, "Trien") for professional services rendered for the audit of our annual financial statements for the years ended March 31, 2004 and 2003 and for the reviews of the financial statements included in the Partnership's Quarterly Reports on Form 10-Q for those years were $54,800 and $54,800, respectively.
Audit Related Fees - ------------------ None.
Tax Fees - -------- The aggregate fees billed by Weiser LLP (formerly, Rubin and Katz LLP) and their respective affiliates (collectively, "Weiser") for professional services rendered for the preparation of our annual tax returns for the years ended December 31, 2003 and 2002 were $9,800 and $9,500, respectively.
All Other Fees - -------------- None.
The Partnership is not required to have, and does not have, a stand-alone audit committee.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Sequential Page ---------- (a) 1. Financial Statements --------------------
Report of Independent Registered Public Accounting Firm 19
Consolidated Balance Sheets at March 31, 2004 and 2003 79
Consolidated Statements of Operations for the Years Ended March 31, 2004, 2003 and 2002 80
Consolidated Statements of Changes in Partners'(Deficit) Capital for the Years Ended March 31, 2004, 2003 and 2002 81
Consolidated Statements of Cash Flows for the Years Ended March 31, 2004, 2003 and 2002 82
Notes to Consolidated Financial Statements 84
(a) 2. Financial Statement Schedules -----------------------------
Report of Independent Registered Public Accounting Firm 108
Schedule I - Condensed Financial Information of Registrant 109
Schedule III - Real Estate and Accumulated Depreciation 112
All other schedules have been omitted because they are not required or because the required information is contained in the financial statements and notes thereto.
(a) 3. Exhibits --------
(3B) Form of Amended and Restated Agreement of Limited Partnership of Liberty Tax Credit Plus II L.P.(incorporated by reference to exhibits filed with Amendment No. 1 to Liberty Tax Credit Plus II L.P.'s Registration Statement on Form S-11 Registration No. 33-21429)
(21) Subsidiaries of the Registrant 102
(31.1) Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a). 105
(32.1) Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Title 18 of the United States Code (18 U.S.C. 1350). 107
(b) Reports on Form 8-K -------------------
No reports on Form 8-K were filed during the quarter.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (continued)
Jurisdiction (c) Subsidiaries of the Registrant (Exhibit 21) of Organization ------------------------------ ---------------
Metropolitan Towers Associates, L.P. PR Westminster Place II - Olive Site, L.P. MO Property Development Associates, L.P. (Bridgeport) MO Whittier Plaza Associates Limited Partnership MO United-Glen Arden I Limited Partnership MD United-Glen Arden II Limited Partnership MD Rolling Green Limited Partnership IL Santa Juanita II Limited Partnership NY Spring Creek Associates, L.P. (a Delaware Limited Partnership) DE East Two Thirty-Five Associates L.P. (a Delaware Limited Partnership) (14th Street) DE Upper Fifth Avenue Residential Associates, L.P. DE West 107th Street Associates, L.P. (a Delaware Limited Partnership) DE General Atlantic Second Avenue Associates, L.P. (a Delaware Limited Partnership) (96th Street) NY Church Lane Associates PA Robin Housing Associates (a Limited Partnership) NY Concourse Artists Housing Associates (a Limited Partnership) NY 2051 Grand Concourse Housing Associates (a Limited Partnership) NY Willoughby-Wyckoff Housing Associates (a Limited Partnership) NY Goodfellow Place Limited Partnership MO Penn Alto Associates Limited Partnership PA Gramco Development Limited Dividend Partnership, L.P. (Bayamon) PR Alexis Park Apartments, a Louisiana Partnership in Commendam LA Williamsburg Residential, L.P. KS Victory Apartments IL
(d) Not applicable
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.
LIBERTY TAX CREDIT PLUS II L.P. (Registrant)
By: RELATED CREDIT PROPERTIES II L.P., a General Partner
By: Related Credit Properties II Inc., its general partner
Date: June 15, 2004 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes President and Chief Executive Officer (Principal Executive Officer)
and
By: LIBERTY GP II, INC., a General Partner
Date: June 15, 2004 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes President
and
By: LIBERTY ASSOCIATES II, L.P., a General Partner
By: Related Credit Properties II, Inc., its General Partner
Date: June 15, 2004 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes President
By: Liberty GP II, Inc., its General Partner
By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature Title Date - ------------------ -------------------------------------- -------------
President and Chief Executive Officer (Principal Executive and Financial Officer) of Related Credit Properties II Inc., (general partner of each of Related Credit Properties II L.P. and Liberty Associates II, L.P., General Partners of Registrant) and Liberty GP II, Inc. (general partner of Liberty Associates II, L.P, a General Partner of Registrant)
Director of Related Credit Properties II Inc., (general partner of each /s/ Alan P. Hirmes of Related Credit Properties II L.P. - ------------------ and Liberty Associates II, L.P., each Alan P. Hirmes a General Partner of Registrant) June 15, 2004
Treasurer (Principal Accounting Officer) of Related Credit Properties II Inc., (general partner of each of Related Credit Properties II L.P. and Liberty Associates II, L.P., General Partners of Registrant) /s/ Glenn F. Hopps and Liberty GP II, Inc. (general - ------------------ partner of Liberty Associates II, L.P., Glenn F. Hopps a General Partner of Registrant) June 15, 2004
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) OR RULE 15d-14(a)
I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of Related Credit Properties II Inc. the general partner of Related Credit Properties II L.P. and of Liberty GP II Inc., each of which is a General Partner of Liberty Tax Credit Plus II L.P. (the "Partnership"), hereby certify that:
1. I have reviewed this annual report on Form 10-K for the period ending March 31, 2004 of the Partnership;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order 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 annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Partnership as of, and for, the periods presented in this annual 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and I have:
a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Partnership including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report was being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and
c) evaluated the effectiveness of the Partnership'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 annual report based on such evaluation; and
d) disclosed in this annual report any change in the Partnership's internal control over financial reporting that occurred during the period ending March 31, 2004 that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Partnership's auditors and to the boards of directors of the General Partners:
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 Partnership'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 Partnership's internal control over financial reporting.
Date: June 15, 2004 ------------- By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Chief Executive Officer and Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO RULE 13a-14(b) OR RULE 15d-14(b) AND SECTION 1350 OF TITLE 18 OF THE UNITED STATES CODE (18 U.S.C. 1350)
In connection with the Annual Report of Liberty Tax Credit Plus II L.P. (the "Partnership") on Form 10-K for the year ending March 31, 2004 as filed with the Securities and Exchange Commission ("SEC") on the date hereof (the "Report"), I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of Related Credit Properties II Inc. (general partner of each of Related Credit Properties II L.P. and Liberty Associates II, L.P., General Partners of Registrant) and Liberty GP II, Inc. (general partner of Liberty Associates II, L.P.), certify, 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 result of operations of the Partnership.
A signed original of this written statement required by Section 906 has been provided to the Partnership and will be retained by the Partnership and furnished to the SEC or its staff upon request.
By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Chief Executive Officer and Chief Financial Officer June 15, 2004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------
To the Partners of Liberty Tax Credit Plus II L.P. and Subsidiaries (A Delaware Limited Partnership)
In connection with our audits of the consolidated financial statements of Liberty Tax Credit Plus II L.P. and Subsidiaries (A Delaware Limited Partnership) included in this Form 10-K as presented in our opinion dated June 15, 2004 on page 19, and based on the reports of other auditors, we have also audited supporting Schedule I for the 2003, 2002 and 2001 Fiscal Years and Schedule III at March 31, 2004. In our opinion, and based on the reports of the other auditors, these consolidated schedules present fairly, when read in conjunction with the related consolidated financial statements, the financial data required to be set forth therein.
As discussed in Note 11(a), the consolidated financial statements include the financial statements of three limited partnerships with significant contingencies and uncertainties. The financial statements of these subsidiary partnerships were prepared assuming that each will continue as a going concern. The three subsidiary partnerships' net losses aggregated $291,300 (Fiscal 2003), $296,077 (Fiscal 2002) and $487,648 (Fiscal 2001) and their assets aggregated $10,294,875 and $10,762,336 at March 31, 2004 and 2003, respectively. These matters raise substantial doubt about these subsidiary partnerships' abilities to continue as going concerns. Management's plans in regard to these matters are also described in Note 11(a). The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
TRIEN ROSENBERG ROSENBERG WEINBERG CIULLO & FAZZARI LLP
New York, New York June 15, 2004
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Summarized condensed financial information of registrant (not including consolidated subsidiary partnerships)
CONDENSED BALANCE SHEETS
ASSETS
Investments in subsidiary partnerships are recorded in accordance with the equity method of accounting, wherein the investments are not reduced below zero. Accordingly, partners' equity on the consolidated balance sheet will differ from partners' equity shown above.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
(*) Includes suspended prior year losses in excess of investment in accordance with the equity method of accounting amounting to $(162,783), $0 and $(811,399) for 2004, 2003, and 2002, respectively.
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Partnership Property Pledged as Collateral MARCH 31, 2004
LIBERTY TAX CREDIT PLUS II L.P. AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Partnership Property Pledged as Collateral MARCH 31, 2004 (continued)
(a) Since all properties were acquired as operating properties, depreciation is computed using primarily the straight-line method over the estimated useful lives determined by the partnership date of acquisition.
(b) Furniture and fixtures, included in building improvements, are depreciated primarily by the straight-line method over the estimated useful lives ranging from 5 to 15 years.
(c) The property and the related assets and liabilities of this Local Partnership was sold during the fiscal year ended March 31, 2002.
(d) The property and the related assets and liabilities of these Local Partnerships were sold during the fiscal year ended March 31, 2004.
At the time the local partnerships were acquired by Liberty Tax Credit Plus II Limited Partnership, the entire purchase price paid by Liberty Tax Credit Plus II Limited Partnership was pushed down to the local partnerships as property and equipment with an offsetting credit to capital. Since the projects were in the construction phase at the time of acquisition, the capital accounts were insignificant at the time of purchase. Therefore, there are no material differences between the original cost basis for tax and GAAP.