Item 1. Business.
General Development of Business and Narrative Description of Business
American Tax Credit Properties II L.P. (the "Registrant"), a Delaware limited partnership, was formed on October 26, 1988 to invest primarily in leveraged low-income multifamily residential complexes (the "Property" or "Properties") that qualified for the low-income housing tax credit (the "Low-income Housing Tax Credit") in accordance with Section 42 of the Internal Revenue Code (the “IRC”), through the acquisition of limited partner equity interests (the “Local Partnership Interests”) in partnerships (the "Local Partnership" or "Local Partnerships") that are the owners of the Properties. The Local Partnerships hold their respective Properties in fee. Registrant initially invested in fifty such Local Partnerships, including one whose Property also qualified for the historic rehabilitation tax credit in accordance with IRC Section 47 (the “Historic Rehabilitation Tax Credit”). Registrant considers its activity to constitute a single industry segment.
Richman Tax Credit Properties II L.P. (the "General Partner"), a Delaware limited partnership, was formed on October 26, 1988 to act as the General Partner of Registrant. The general partner of the General Partner is Richman Tax Credits Inc. ("Richman Tax Credits"), a Delaware corporation that is wholly-owned by Richard Paul Richman. Richman Tax Credits is an affiliate of The Richman Group, Inc. ("Richman Group"), a Delaware corporation founded by Richard Paul Richman in 1988.
The Amendment No. 2 to the Registration Statement on Form S-11 was filed with the Securities and Exchange Commission (the "SEC") on April 21, 1989 pursuant to the Securities Act of 1933 under Registration Statement File No. 33-25337, and was declared effective on May 9, 1989. Reference is made to the prospectus dated May 10, 1989, as supplemented by Supplement No. 1 and Supplement No. 2 dated July 25, 1989 and September 18, 1989, respectively, filed with the SEC pursuant to Rule 424(b)(3) under the Securities Act of 1933 (the "Prospectus"). Pursuant to Rule 12b-23 of the SEC’s General Rules and Regulations promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the description of Registrant's business set forth under the heading "Investment Objectives and Policies" at pages 47 through 70 of the Prospectus is hereby incorporated into this Annual Report by reference.
On June 14, 1989, Registrant commenced, through Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), the offering of up to 100,000 units of limited partnership interest (the "Units") at $1,000 per Unit to investors (the “Limited Partners”). On June 28, 1989, July 31, 1989 and September 22, 1989, the closings for 13,533, 20,560 and 21,653 Units, respectively, took place, amounting to aggregate Limited Partners’ capital contributions of $55,746,000.
Registrant's primary objective, to provide Low-income Housing Tax Credits to the Limited Partners, has been completed. The relevant state tax credit agency allocated each of the Local Partnerships an amount of Low-income Housing Tax Credits, which are generally available for a ten year period from the year the Property is placed in service (the “Ten Year Credit Period”). The Ten Year Credit Period was fully exhausted with respect to all of the Properties as of December 31, 2005. The required holding period of each Property, in order to avoid Low-income Housing Tax Credit recapture, is fifteen years from the year in which the Low-income Housing Tax Credits commence on the last building of the Property (the "Compliance Period"). The Compliance Period of all of the Local Partnerships had expired as of December 31, 2006. In addition, certain of the Local Partnerships entered into agreements with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period (the “Extended Use Provisions”). Note that the existence of Extended Use Provisions does not extend the Compliance Period of the respective Local Partnerships. However, such provisions may limit the number and availability of potential purchasers of the Properties. Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted.
Disposal of Local Partnership Interests
Registrant is in the process of disposing of its remaining Local Partnership Interests. As of June 2014, Registrant owns nineteen of the fifty Local Partnership Interests initially acquired (see discussion below regarding Queen Lane Investors’ (“Queen Lane”) sale of its underlying Property). In a prior year, Registrant served a demand on the general partners of all then remaining Local Partnerships (the “Local General Partners”) to commence a sale process to dispose of the Properties. In the event a sale cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s remaining Local Partnership Interests. It is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments. Registrant intends to dissolve after the final disposition of its remaining Local Partnership Interests; there can be no assurance as to when Registrant will dispose of its remaining Local Partnership Interests.
Item 1. Business (Continued).
Financial Information About Industry Segments
Registrant is engaged solely in the business of owning a Local Partnership Interest in each of the Local Partnerships. A presentation of information regarding industry segments is not applicable and would not be material to an understanding of Registrant’s business taken as a whole. See Item 8 below - Financial Statements and Supplementary Data.
Competition
Pursuant to Rule 12b-23 of the SEC’s General Rules and Regulations promulgated under the Exchange Act, the description of Registrant's competition, general risks, tax risks and partnership risks set forth under the heading "Risk Factors" at pages 20 through 33 of the Prospectus is hereby incorporated into this Annual Report by reference.
Employees of Registrant
Registrant employs no personnel and incurs no payroll costs. All management activities of Registrant are conducted by the General Partner. Affiliates of the General Partner employ individuals who perform the management activities of Registrant. These entities also perform similar services for other affiliates of the General Partner.
Regulation
The following is a brief summary of certain regulations applicable to Registrant and is not, nor should it be considered, a full summary of the law or all related issues. Other than as set forth above and below, Registrant is not aware of any existing or probable federal, state or local governmental regulations, or any recent changes to such governmental regulations, which would have an effect on Registrant’s business.
Virtually all of the Properties owned by the Local Partnerships have some form of a government funded rental subsidy that affords the low-income tenants the ability to reside at the Properties. During the period that a subsidy agreement between the United States Department of Housing and Urban Development (“HUD”) and a Local Partnership is in existence, the Local Partnership Interest of such Local Partnership may not be sold, and the Property may not be transferred by the Local Partnership to another entity, without HUD’s approval, which may be subject to various conditions. In particular, the transfer of title of the Properties by the Local Partnerships is expected to be required to be closed in escrow pending HUD approval. In addition, as a condition to certain disposals, Registrant anticipates that HUD will require the Local Partnerships to dedicate resources to maintenance in order to correct deficiencies in the physical condition of the Properties. Correction of such deficiencies will probably require expenditures of significant amounts of funds, thus effectively reducing the amount of any net proceeds from the sale of the Property. There can be no assurance that the required governmental agencies will approve any of the requested transfers, that such approvals will be received in a timely manner or that other conditions will not be imposed for such approvals. The failure to obtain or a delay in obtaining any required approvals would have adverse consequences to the Limited Partners.
In the case of certain of the Local Partnerships, the local housing authority has the right, for a period of time, to find a purchaser for the Property prior to the Local General Partner beginning its own efforts to sell the Property. There can be no assurance that the local housing authorities will be successful in finding purchasers for such Properties, which may adversely impact the timing of Property sales.
Certain of the Local Partnerships are subject to restrictions on the amount of annual cash distributions to partners under the terms of such Local Partnerships’ loan, regulatory or other agreements.
Registrant is not aware of any non-compliance by the Local Partnerships with respect to federal, state and local provisions regulating the discharge of material into the environment or otherwise relating to the protection of the environment, and is not aware of any condition that would have a material effect on the capital expenditures or competitive position of Registrant.
Item 1A.
Item 1A. Risk Factors.
Risks Relating to Registrant’s Business and Industry
There is no guarantee that the remaining Properties will be sold or, if sold, that Registrant would receive any proceeds.
As noted above in Item 1 - Business, in a prior year, Registrant served a demand on the Local General Partners of all then remaining Local Partnerships to commence a sale process to dispose of the Properties. However, the market of interested buyers of the Properties is limited. Some of the factors which negatively impact the marketability of the Properties, or equivalently, the Local Partnership Interests, include:
·
the Extended Use Provisions;
·
the substantial remaining mortgage balances on the Properties, which are typically very near the initial balances as a result of the heavily subsidized debt of the Local Partnership and the lengthy (usually near 40-year) amortization period of the debt; and
·
poor economic conditions.
It is generally expected, therefore, that in the event a sale of a Property by a Local Partnership can be consummated, the net proceeds of such sale, after repayment of any outstanding debt and other liabilities, are not likely to be significant. Moreover, a portion of the net proceeds from the sale of a Property by a Local Partnership may be payable to the Local General Partner and/or affiliates thereof for prior operating advances and deferred fees. As such, there will likely not be significant proceeds, if any, upon a sale of a Property that will be available for distribution by the Local Partnership to Registrant. In the event a sale cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s remaining Local Partnership Interests. However, it is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments.
The Local Partnerships may be required to continue to maintain the low-income nature of the Properties beyond the Compliance Period under agreements with state tax credit agencies.
As noted above in Item 1 - Business, certain of the Local Partnerships entered into agreements containing Extended Use Provisions with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period. Although the Extended Use Provisions do not extend the Compliance Period of the respective Local Partnerships, such provisions may limit the number and availability of potential purchasers of the Properties. Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted.
Properties owned by the Local Partnerships are subject to certain risks relating to the real estate industry in general that are outside of the control of the Local Partnerships or Registrant and that may have an adverse effect on Registrant’s investment in such Local Partnerships.
Registrant’s investment in the Local Partnerships is subject to the risks associated with multi-family rental property and real estate in general, including retail, commercial and residential real estate. Such risks, which are subject to change and are not in the control of Registrant, include risks related to:
·
the adverse use of adjacent or neighborhood real estate;
·
regulated rents, which may adversely impact rent increases;
·
utility allowances, which may adversely impact rents charged to tenants from year to year in certain locations;
·
the inability of tenants to pay rent in light of current market conditions;
·
changes in the demand for or supply of competing properties;
·
changes in state or local tax rates and assessments;
·
increases in utility charges;
Item 1A. Risk Factors (Continued).
·
unexpected expenditures for repairs and maintenance;
·
the discovery of previously undetected environmentally hazardous conditions;
·
costs associated with complying with the Americans with Disabilities Act;
·
uninsured losses relating to real property or excessively expensive premiums for insurance coverage;
·
lawsuits from tenants or guests in connection with injuries that occur on the Properties;
·
changes in local economic conditions; and
·
changes in interest rates and the availability of financing (including changes resulting from current market conditions).
The occurrence of any of the above risks could have a negative impact on the operating results of such Properties and the respective Local Partnerships and, in turn, may render the sale or refinancing of the Properties difficult or unattractive, which could adversely affect Registrant’s investment in such Local Partnerships.
The modification or elimination of government rental subsidies on which the Local Partnerships rely would require the Local Partnerships to use existing funds or obtain additional funds to continue to operate the respective Properties. Because Registrant’s investments in the Local Partnerships are highly leveraged, it would be highly difficult to obtain such additional funds.
Virtually all of the Properties owned by the Local Partnerships have some form of a government funded rental subsidy, which affords the low-income tenants the ability to reside at the Properties. The Local Partnerships are extremely reliant on such subsidies. If the respective rental subsidy programs were to be materially modified or eliminated, the Local Partnerships’ rental revenue would likely be significantly reduced. To the extent that revenues are not sufficient to meet operating expenses and service the respective mortgages of the Properties, such Local Partnership would be required to use reserves and any other funds available to avoid foreclosure of the subject Property. Registrant’s investments in the Local Partnerships are highly leveraged, and there can be no assurance that additional funds would be available to any Local Partnership or Registrant, if needed. In addition, there can be no assurance that, when a Property is sold, the proceeds from a sale will be sufficient to pay the balance due on the mortgage loans or any other outstanding indebtedness to which the Local Partnership is subject.
Limited Partners may not be able to use all of the carried forward Low-income Housing Tax Credits.
While a limited exception is provided for Low-income Housing Tax Credits in the case of individuals, tax losses and credits allocated to a Limited Partner who is an individual, trust, estate or personal service corporation generally may be used to reduce the Limited Partner’s tax liability only to the extent that such liability arises from passive activities. Therefore, tax losses and credits allocated to such a Limited Partner are not expected to be available to offset tax liabilities that arise from salaries, dividends and interest and other forms of income. In addition, Low-income Housing Tax Credits cannot be used to offset alternative minimum tax. Accordingly, there is no guarantee that Limited Partners will be able to utilize all of the carried forward Low-income Housing Tax Credits.
Risks Relating to Ownership of Units of Limited Partnership Interest of Registrant
There is no existing market for the Units.
There is no trading market for Units and there are no assurances that any market will develop. In addition, the Units may be transferred only if certain requirements are satisfied, including requirements that such transfer would not impair Registrant’s tax status for federal income tax purposes and would not be a violation of federal or state securities laws. Accordingly, Limited Partners may not be able to sell their Units promptly and bear the economic risk of their investment for an indefinite period of time.
Item 1A. Risk Factors (Continued).
Under certain circumstances, Limited Partners of Registrant may incur out-of-pocket tax costs.
At some point, Registrant’s operations (including the sale or refinancing of the Properties owned by the Local Partnerships) may generate less cash flow than taxable income, and the income, as well as the income taxes payable with respect to Registrant’s taxable income, may exceed cash flow available for distribution to the Limited Partners in such years. This may result in an out-of-pocket tax cost to the Limited Partners. In addition, a Limited Partner may experience taxable gain on disposition of Units or upon a disposition of the Local Partnership Interests or of the Properties even though no cash is realized on the disposition; in such circumstances, the Limited Partners may experience an out-of-pocket tax cost.
Limited Partners of Registrant may not receive a return of any portion of their original capital investment in Registrant.
To date, the Limited Partners of Registrant have not received a return of any portion of their original capital. Accordingly, the only benefit of this investment may be the Low-income Housing Tax Credits and Historic Rehabilitation Tax Credits.
Item 1B.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2.
Item 2. Properties.
The executive offices of Registrant and the General Partner are located at 340 Pemberwick Road, Greenwich, Connecticut 06831. Registrant does not own or lease any properties. Registrant pays no rent; all charges for leased space are borne by an affiliate of the General Partner.
Registrant initially acquired Local Partnership Interests in fifty Local Partnerships. As discussed above in Item 1 - Business, the Compliance Period of all of the Local Partnerships had expired as of December 31, 2006 and, accordingly, Registrant is in the process of disposing of its remaining Local Partnership Interests. As of June 2014, Registrant owns nineteen of the fifty Local Partnership Interests initially acquired (see discussion below regarding Queen Lane’s sale of its underlying Property). In a prior year, Registrant served a demand on the Local General Partners of all then remaining Local Partnerships to commence a sale process to dispose of the Properties, which Registrant intends will result in a termination of Registrant’s remaining Local Partnership Interests and ultimately the dissolution of Registrant.
In the event a sale of the remaining Properties cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s remaining Local Partnership Interests. It is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments. In addition, certain of the Local Partnerships entered into agreements with Extended Use Provisions with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period. While the Extended Use Provisions do not extend the Compliance Period of the respective Local Partnerships, such provisions may limit the number and availability of potential purchasers of the Properties. Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted. There can be no assurance as to when the Local Partnerships will dispose of the Properties, when Registrant will dispose of the remaining Local Partnership Interests or the amount of proceeds which may be received in such dispositions. In addition to amounts that remain outstanding under the terms of the debt structure of the respective Local Partnerships, certain Local Partnerships have outstanding obligations to the Local General Partners and/or affiliates thereof for operating advances made over the years and for certain fees that were deferred.
The initial Local Partnership Interests were acquired by Registrant in 1989 and 1990. Although Registrant generally owns a 99% Local Partnership Interest in the remaining Local Partnerships, Registrant owns only 50% of Lakeside Housing Limited Partnership. In addition, Registrant acquired along with American Tax Credit Properties III L.P. ("ATCP III"), an investment partnership whose general partner is an affiliate of the General Partner, a 99% Local Partnership Interest in the following Local Partnerships:
Item 2. Properties (Continued).
Many of the Local Partnerships receive rental subsidy payments, five of which include payments under Section 8 of Title II of the Housing and Community Development Act of 1974 (“Section 8”) (see descriptions of the subsidies below). The subsidy agreements expire at various times. Since October 1997, HUD has issued a series of directives related to project based Section 8 contracts that define owners’ notification responsibilities, advise owners of project based Section 8 properties of what their options are regarding the renewal of Section 8 contracts, provide guidance and procedures to owners, management agents, contract administrators and HUD staff concerning renewal of Section 8 contracts, provide policies and procedures on setting renewal rents and handling renewal rent adjustments and provide the requirements and procedures for opting-out of a Section 8 project based contract. Registrant cannot predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income before debt service (“NOI”) and debt structure of any or all Local Partnerships currently receiving such subsidy or similar subsidies. The five Local Partnerships’ Section 8 contracts, certain of which cover only certain rental units, are currently subject to renewal under applicable HUD guidelines. Of the five Local Partnerships noted above, two entered into restructuring agreements in a prior year, resulting in changes to both rent subsidy and mandatory debt service.
Item 2. Properties (Continued).
Item 2. Properties (Continued).
Item 2. Properties (Continued).
Item 2. Properties (Continued).
(1)
Description of Subsidies:
(a)
Section 8 of Title II of the Housing and Community Development Act of 1974 allows qualified low-income tenants to pay thirty percent of their monthly income as rent with the balance paid by the federal government.
(b)
The Local Partnership's debt structure includes a principal or interest payment subsidy.
(c)
The Rural Housing Service/Rural Development (formerly the Farmers Home Administration) of the United States Department of Agriculture Rental Assistance Program allows qualified low-income tenants to receive rental subsidies.
(d)
The Local Partnership’s Section 8 contracts, certain of which cover only certain rental units, are subject to renewal under applicable HUD guidelines.
Item 2. Properties (Continued).
(e)
The Local Partnership entered into a restructuring agreement of its Section 8 contracts and debt structure under applicable HUD guidelines in 2001.
(2)
Reflects amount attributable to Registrant only.
(3)
The Local Partnership Interest is no longer owned by Registrant; there are no assets or liabilities related to such Local Partnership included in the combined balance sheets of the Local Partnerships as of December 31, 2013 and 2012 in Note 5 to the accompanying financial statements.
(4)
The Local Partnership Interest is no longer owned by Registrant; there are no assets or liabilities related to such Local Partnership included in the combined balance sheet of the Local Partnerships as of December 31, 2013 in Note 5 to the accompanying financial statements.
(5)
The underlying Property was sold in November 2009 and the Local Partnership was dissolved in 2012. The combined statement of operations of the Local Partnerships for the year ended December 31, 2012 included in Note 5 to the accompanying financial statements includes results of operations for such Local Partnership. There are no assets or liabilities related to such Local Partnership included in the combined balance sheets of the Local Partnerships as of December 31, 2013 and 2012 in Note 5 to the accompanying financial statements.
(6)
Registrant assigned its Local Partnership Interest to an affiliate of one of the Local General Partners in March 2012. The combined statement of operations of the Local Partnerships for the year ended December 31, 2012 included in Note 5 to the accompanying financial statements includes results of operations for such Local Partnership through the date of assignment.
(7)
Registrant sold its Local Partnership Interest to an affiliate of the Local General Partner in October 2012. The combined statement of operations of the Local Partnerships for the year ended December 31, 2012 included in Note 5 to the accompanying financial statements includes results of operations for such Local Partnership through the date of sale.
(8)
Registrant sold its Local Partnership Interest to affiliates of the Local General Partners in December 2012. The combined statement of operations of the Local Partnerships for the year ended December 31, 2012 included in Note 5 to the accompanying financial statements includes results of operations for such Local Partnership for all of 2012 (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).
(9)
Registrant sold its Local Partnership Interest to an affiliate of the Local General Partners in March 2013; such Local Partnerships have the same Local General Partner. The combined statement of operations of the Local Partnerships for the year ended December 31, 2013 included in Note 5 to the accompanying financial statements includes results of operations for such Local Partnerships through the date of sale.
(10)
The Local Partnership sold its underlying Property in June 2013 and the Local Partnership continues in existence. The combined statement of operations of the Local Partnerships for the year ended December 31, 2013 included in Note 5 to the accompanying financial statements includes results of operations for such Local Partnership through the date of sale (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).
(11)
Registrant sold its Local Partnership Interest to an affiliate of the Local General Partner in November 2013. The combined statement of operations of the Local Partnerships for the year ended December 31, 2013 included in Note 5 to the accompanying financial statements includes results of operations for such Local Partnership through the date of sale (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).
(12)
Registrant sold its Local Partnership Interest to an affiliate of the Local General Partner in January 2014; such Local Partnerships have the same Local General Partner (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).
(13)
Registrant sold its Local Partnership Interest to an affiliate of the Local General Partner in January 2014 (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).
Item 2. Properties (Continued).
(14)
Registrant sold its Local Partnership Interest to the Local General Partners or affiliates thereof in March 2014; the Local General Partners of such Local Partnerships are affiliates of each other (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).
(15)
Registrant sold its Local Partnership Interest to an affiliate of the Local General Partner in March 2014 (see Part II, Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations, herein).
(16)
Capital contribution includes voluntary advances made to the Local Partnership.
Item 3.
Item 3. Legal Proceedings.
None.
Item 4.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information and Holders
There is no established public trading market for the Units. Accordingly, accurate information as to the market value of a Unit at any given date is not available. The number of record holders of Units as of June 17, 2014 was approximately 2,287, holding an aggregate of 55,746 Units.
Registrant may provide an estimate of value to Unit holders from time to time in Registrant's reports to Limited Partners. Estimated values for limited partnership interests may also be provided by independent valuation services, whose estimated values are based on financial and other information available to them. The estimated values provided by the independent services and Registrant, which may differ, are not market values and Unit holders may not be able to sell their Units or realize either amount upon a sale of their Units. Unit holders may not realize such estimated values upon the liquidation of Registrant.
Distributions
Registrant owns a Local Partnership Interest in Local Partnerships that are the owners of Properties that are leveraged and receive government assistance in various forms of rental and debt service subsidies. The distribution of cash flow generated by the Local Partnerships may be restricted, as determined by each Local Partnership's financing and subsidy agreements. Although Registrant does not anticipate that it will provide significant cash distributions to its Limited Partners in the future, Registrant was required to pay nonresident state withholding taxes of $31,810 on behalf of certain of the Limited Partners in April 2014 in connection with gains recognized by a Local Partnership for the year ended December 31, 2013. Registrant intends to make a distribution to the Limited Partners in the amount of $50 per Unit in July 2014 to Unit holders of record as of June 27, 2014, which amount will be reduced by the nonresident state withholding taxes referred to above. Registrant holds reserves as of March 30, 2014 of approximately $6,525,000. After deducting future expenses, reserves and the anticipated distribution described above, the balance is expected to be distributed to the Limited Partners in the future. There can be no assurance as to the amount and timing of such distribution, if any. There were no cash distributions to the Limited Partners during the years ended March 30, 2014 and 2013.
Low-income Housing Tax Credits and Historic Rehabilitation Tax Credits (collectively, the “Tax Credits”), which are subject to various limitations, may be used by the Limited Partners to offset federal income tax liabilities. Registrant generated total Tax Credits from investments in Local Partnerships of approximately $1,499 per Unit, net of circumstances which have given rise to recapture. The Ten Year Credit Period with respect to all of the Properties was fully exhausted as of December 31, 2005 and the Compliance Periods of the Local Partnerships had expired as of December 31, 2006. In a prior year, Registrant served a demand on the Local General Partners of all then remaining Local Partnerships to commence a sale process to dispose of the Properties. In the event a sale cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s remaining Local Partnership Interests. It is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments.
Recent Sales of Unregistered Securities
None.
Item 6.
Item 6. Selected Financial Data.
Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Capital Resources and Liquidity
Registrant admitted limited partners (the “Limited Partners”) in three closings with aggregate Limited Partners’ capital contributions of $55,746,000. In connection with the offering of the sale of units (the “Units”), Registrant incurred organization and offering costs of approximately $6,534,000 and established a working capital reserve of approximately $3,345,000. The remaining net proceeds of approximately $45,867,000 (the “Net Proceeds”) were available to be applied to the acquisition of limited partner interests (the “Local Partnership Interests”) in partnerships (the “Local Partnerships”) that own low-income multifamily residential complexes (the “Property” or “Properties”) that qualified for the low-income housing tax credit (the “Low-income Housing Tax Credit”) in accordance with Section 42 of the Internal Revenue Code (the “IRC”); one Local Partnership owns a Property that also qualified for the historic rehabilitation tax credit in accordance with IRC Section 47. The Net Proceeds were utilized in acquiring a Local Partnership Interest in fifty Local Partnerships.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).
As of March 30, 2014, Registrant has cash and cash equivalents and investment in Pemberwick Fund, a short duration bond fund (“Pemberwick”) totaling $6,525,142, which is available for operating expenses of Registrant and circumstances that may arise in connection with the Local Partnerships. Future sources of Registrant funds are expected to be primarily from interest earned on working capital and limited cash distributions from Local Partnerships. In addition, although it is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Local Partnership, Registrant may be entitled to sales proceeds of certain Local Partnerships’ Properties and may receive proceeds in the event of a sale of its remaining Local Partnership Interests.
During the year ended March 30, 2014, Registrant received cash from interest revenue, distributions from Local Partnerships and proceeds in connection with the sale of certain Local Partnership Interests (see discussion below under Local Partnership Matters), and utilized cash for operating expenses and investments in Pemberwick. Cash and cash equivalents and investment in Pemberwick decreased, in the aggregate, by approximately $23,000 during the year ended March 30, 2014 (which includes an unrealized loss on investment in Pemberwick of approximately $11,000).
Payable to general partner and affiliates represents accrued administration and management fees in the accompanying balance sheet as of March 30, 2014.
Results of Operations
Registrant’s operating results are dependent, in part, upon the operating results of the Local Partnerships and are impacted by the Local Partnerships’ policies. In addition, the operating results herein are not necessarily the same for tax reporting. Registrant accounts for its investment in local partnerships in accordance with the equity method of accounting. Accordingly, the investment is carried at cost and is adjusted for Registrant's share of each Local Partnership's results of operations and by cash distributions received. In the event the operations of a Local Partnership result in a loss, equity in loss of each investment in Local Partnership allocated to Registrant is recognized to the extent of Registrant’s investment balance in each Local Partnership. Equity in loss in excess of Registrant’s investment balance in a Local Partnership is allocated to other partners’ capital in any such Local Partnership. However, the combined statements of operations of the Local Partnerships reflected in Note 5 to Registrant’s financial statements include the operating results of all remaining Local Partnerships, irrespective of Registrant’s investment balances. As a result of cumulative equity losses and distributions and the sale of certain Local Partnerships’ Properties and/or Registrant’s Local Partnership Interests, Registrant’s investment in local partnerships reached a zero balance during the year ended March 30, 2013.
Cumulative losses and cash distributions in excess of investment in local partnerships may result from a variety of circumstances, including a Local Partnership's accounting policies, subsidy structure, debt structure and operating deficits, among other things. Accordingly, cumulative losses and cash distributions in excess of the investment are not necessarily indicative of adverse operating results of a Local Partnership.
Registrant’s operations for the years ended March 30, 2014 and 2013 resulted in net income of $177,493 and $2,156,636, respectively. The decrease in net income from fiscal 2013 to fiscal 2014 is primarily attributable to (i) a decrease in gain on sale of limited partner interests/local partnership properties of approximately $2,241,000 and (ii) a decrease in equity in income of investment in local partnerships of approximately $206,000, which decrease is attributable to Registrant’s investment in local partnerships reaching a zero balance as of March 30, 2013, all partially offset by (i) an increase in other income from local partnerships of approximately $365,000 and (ii) a net decrease in operating expenses of approximately $91,000, resulting primarily from a decrease in administration and management fees in the aggregate of approximately $67,000. Other comprehensive loss for the year ended March 30, 2013 resulted from an unrealized loss on investment in Pemberwick of $10,930.
The Local Partnerships’ net income of approximately $1,036,000 for the year ended December 31, 2013 includes gain on sale of property of approximately $2,043,000, depreciation and amortization expense of approximately $1,851,000 and interest on non-mandatory debt of approximately $310,000, and does not include principal payments on permanent mortgages of approximately $648,000. The Local Partnerships’ net loss of approximately $294,000 for the year ended December 31, 2012 includes depreciation and amortization expense of approximately $2,584,000 and interest on non-mandatory debt of approximately $203,000, and does not include principal payments on permanent mortgages of approximately $572,000. The results of operations of the Local Partnerships for the year ended December 31, 2013 are not necessarily indicative of results that may be expected in future periods. Revenue and expense fluctuations from 2012 to 2013 have resulted primarily from Registrant’s sales of Local Partnership Interests and certain Local Partnerships’ Property sales.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).
Local Partnership Matters
Registrant's primary objective, to provide Low-income Housing Tax Credits to the Limited Partners, has been completed. The relevant state tax credit agency allocated each of the Local Partnerships an amount of Low-income Housing Tax Credits, which are generally available for a ten year period from the year the Property is placed in service (the “Ten Year Credit Period”). The Ten Year Credit Period was fully exhausted with respect to all of the Properties as of December 31, 2005. The required holding period of each Property, in order to avoid Low-income Housing Tax Credit recapture, is fifteen years from the year in which the Low-income Housing Tax Credits commence on the last building of the Property (the "Compliance Period"). The Compliance Period of all of the Local Partnerships had expired as of December 31, 2006. In addition, certain of the Local Partnerships entered into agreements with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period (the “Extended Use Provisions”). Although the Extended Use Provisions do not extend the Compliance Period of the respective Local Partnerships, such provisions may limit the number and availability of potential purchasers of the Properties. Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted. Registrant is in the process of disposing of its remaining Local Partnership Interests. As of June 2014, Registrant owns nineteen of the fifty Local Partnership Interests initially acquired (see discussion below regarding Queen Lane Investors’ (“Queen Lane”) sale of its underlying Property). In a prior year, Registrant served a demand on the general partners of all then remaining Local Partnerships (the “Local General Partners”) to commence a sale process to dispose of the Properties. In the event a sale cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s remaining Local Partnership Interests. It is uncertain as to the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments. Registrant intends to dissolve after the final disposition of its remaining Local Partnership Interests; there can be no assurance as to when Registrant will dispose of its remaining Local Partnership Interests.
The remaining Properties are principally comprised of subsidized and leveraged low-income multifamily residential complexes located throughout the United States. Many of the remaining Local Partnerships receive rental subsidy payments, five of which include payments under Section 8 of Title II of the Housing and Community Development Act of 1974 ("Section 8”). The subsidy agreements expire at various times. Since October 1997, the United States Department of Housing and Urban Development (“HUD”) has issued a series of directives related to project based Section 8 contracts that define owners’ notification responsibilities, advise owners of project based Section 8 properties of what their options are regarding the renewal of Section 8 contracts, provide guidance and procedures to owners, management agents, contract administrators and HUD staff concerning renewal of Section 8 contracts, provide policies and procedures on setting renewal rents and handling renewal rent adjustments and provide the requirements and procedures for opting-out of a Section 8 project based contract. Registrant cannot predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program. Such changes could adversely affect the future net operating income before debt service (“NOI”) and debt structure of any or all Local Partnerships currently receiving such subsidy or similar subsidies. The five Local Partnerships’ Section 8 contracts, certain of which cover only certain rental units, are currently subject to renewal under applicable HUD guidelines. Of the five Local Partnerships noted above, two entered into restructuring agreements in a prior year, resulting in changes to both rent subsidy and mandatory debt service.
The remaining Local Partnerships have various financing structures which include (i) required debt service payments (“Mandatory Debt Service”) and (ii) debt service payments which are payable only from available cash flow subject to the terms and conditions of the notes, which may be subject to specific laws, regulations and agreements with appropriate federal and state agencies (“Non-Mandatory Debt Service or Interest"). Registrant has no legal obligation to fund any operating deficits of the Local Partnerships.
During the year ended March 30, 2014, Registrant sold its Local Partnership Interest in Trenton Heights Apartments, L.P. (“Trenton Heights”) to an affiliate of the Local General Partner of Trenton Heights; Registrant received $20,000 in connection with the sale. Such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) for the year ended March 30, 2014.
During the year ended March 30, 2014, Queen Lane sold its underlying Property to its first mortgage lender under the terms of an Option to Purchase and Right of First Offer; Registrant received no proceeds in connection with the sale. The Local General Partner of Queen Lane intends to dissolve Queen Lane as soon as possible. The 99% Local Partnership Interest in Queen Lane was acquired along with American Tax Credit Properties III L.P. (“ATCP III”), an investment partnership whose general partner is an affiliate of the General Partner, whereby Registrant owns 50.5%.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).
During the year ended March 30, 2014, Registrant sold its Local Partnership Interests in Bruce Housing Associates, L.P. (“Bruce Housing”), Ivy Family, L.P. (“Ivy Family”), Plantersville Family, L.P., Renova Properties, L.P., Simpson County Family, L.P. and Twin Pine Family, L.P. to an affiliate of the Local General Partner of such Local Partnerships for a total of $28,416; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) for the year ended March 30, 2014. In addition, Registrant received $32,938 for distributions that were due to Registrant under the terms of the partnership agreements of such Local Partnerships; such amount is included in other income from local partnerships in the accompanying statement of operations and comprehensive income (loss) for the year ended March 30, 2014. Such Local Partnerships have the same Local General Partner. The 99% Local Partnership Interests in Bruce Housing and Ivy Family were acquired along with ATCP III (see discussion above regarding Queen Lane), whereby Registrant owned 37.25%. ATCP III sold its interest in Bruce Housing and Ivy Family as part of the same transaction.
During the year ended March 30, 2014, Registrant sold its Local Partnership Interest in Auburn Hills Apartments Limited Partnership (“Auburn Hills”) to an affiliate of the Local General Partner of Auburn Hills. Although Registrant received no proceeds in connection with the sale, Registrant received $1,500 in April 2014 for distributions that were due to Registrant under the terms of the partnership agreement of Auburn Hills. Such amount is included in due from local partnerships in the accompanying balance sheet as of March 30, 2014 and in other income from local partnerships in the accompanying statement of operations and comprehensive income (loss) for the year then ended.
During the year ended March 30, 2014, Registrant sold its Local Partnership Interests in Eagle View, Ltd. and Summers Village Limited Partnership to the Local General Partner of such Local Partnerships or affiliates thereof for a total of $20,767; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) for the year ended March 30, 2014. In addition, Registrant received $14,233 for distributions that were due to Registrant under the terms of the partnership agreements of such Local Partnerships; such amount is included in other income from local partnerships in the accompanying statement of operations and comprehensive income (loss) for the year ended March 20, 2014. The total proceeds of $35,000 were received in April 2014 and are included in due from local partnerships in the accompanying balance sheet as of March 30, 2014. The Local General Partners of such Local Partnerships are affiliates of each other.
During the year ended March 30, 2014, Registrant sold its Local Partnership Interest in Santa Juanita Limited Dividend Partnership (“Santa Juanita”) to an affiliate of the Local General Partner of Santa Juanita; there were no proceeds in connection with the sale. The 99% Local Partnership Interest in Santa Juanita was acquired along with American Tax Credit Properties L.P. (“ATCP”), another investment partnership whose general partner is an affiliate of the General Partner, whereby Registrant owned 64.36%. ATCP sold its interest in Santa Juanita as part of the same transaction.
During the year ended March 30, 2013, Registrant sold its Local Partnership Interest in North Hills Farms Limited Partnership (“North Hills Farms”) to affiliates of the Local General Partners of North Hills Farms for $3,586,431 under the terms of a purchase agreement (the “North Hills Farms Purchase Agreement”). After further resolution of North Hills Farms’ accounts under the terms of the North Hills Farms Purchase Agreement, the sale price was increased by $28,364; such amount is included in due from local partnerships in the accompanying balance sheet as of March 30, 2014 and in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) for the year then ended.
The non-mandatory mortgages of Littleton Avenue Community Village, L.P. (“Littleton”) matured in October 2006 but have not been repaid or formally extended. In May 2014, the first mortgage holder issued a declaration of default demanding Littleton’s immediate payment of an amount in excess of $6.5 million. Such amount includes all unpaid principal and accrued interest to date and amounts for real estate tax liens that had been sold to third parties and were redeemed by the lender. Unpaid principal and accrued interest on the second mortgage as of June 2014 is in excess of $3.1 million. Littleton’s Local General Partner reports that a refinancing of the mortgages is unlikely.
Inflation
Inflation is not expected to have a material adverse impact on Registrant's operations.
Contractual Obligations
Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).
Off - Balance Sheet Arrangements
Registrant does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on Registrant’s financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies and Estimates
The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which requires Registrant to make certain estimates and assumptions. A summary of significant accounting policies is provided in Note 1 to the accompanying financial statements. The following section is a summary of certain aspects of those accounting policies that may require subjective or complex judgments and are most important to the portrayal of Registrant’s financial condition and results of operations. Registrant believes that there is a low probability that the use of different estimates or assumptions in making these judgments would result in materially different amounts being reported in the accompanying financial statements.
·
Registrant accounts for its investment in local partnerships in accordance with the equity method of accounting.
·
Registrant does not consolidate the accounts and activities of the Local Partnerships, which are considered Variable Interest Entities as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810; Subtopic 10 because Registrant is not considered the primary beneficiary. Registrant’s balance in investment in local partnerships represents the maximum exposure to loss in connection with such investments. Registrant’s exposure to loss on the Local Partnerships is mitigated by the condition and financial performance of the underlying Properties as well as the financial strength of the Local General Partners. In addition, the Local Partnerships’ partnership agreements grant the Local General Partners the power to direct the activities that most significantly impact the Local Partnerships’ economic success. As a result of cumulative equity losses and distributions and the sale of certain Local Partnerships’ Properties and/or Registrant’s Local Partnership Interests, Registrant’s investment in local partnerships reached a zero balance during the year ended March 30, 2013.
Forward-Looking Information
As a cautionary note, with the exception of historical facts, the matters discussed in this Annual Report on Form 10-K are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Forward-looking statements may relate to, among other things, current expectations, forecasts of future events, future actions, future performance generally, business development activities, capital expenditures, strategies, the outcome of contingencies, future financial results, financing sources and availability and the effects of regulation and competition. Words such as “anticipate,” “expect,” “intend,” “plan,” “seek,” “estimate” and other words and terms of similar meaning in connection with discussions of future operating or financial performance signify forward-looking statements. Registrant may also provide written forward-looking statements in other materials released to the public. Such statements are made in good faith by Registrant pursuant to the “Safe Harbor” provisions of the Reform Act. Registrant undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Such forward-looking statements involve known risks, uncertainties and other factors that may cause Registrant’s actual results of operations or actions to be materially different from future results of operations or actions expressed or implied by the forward-looking statements.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
Registrant is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this Item.
AMERICAN TAX CREDIT PROPERTIES II L.P.
Item 8.
Item 8. Financial Statements and Supplementary Data.
No financial statement schedules are included because of the absence of the conditions under which they are required or because the information is included in the financial statements or the notes thereto.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
American Tax Credit Properties II L.P.
We have audited the accompanying balance sheet of American Tax Credit Properties II L.P. (the “Partnership”) as of March 30, 2014, and the related statements of operations and comprehensive income (loss), changes in partners' equity (deficit) and cash flows for the year then ended. The Partnership’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, 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 American Tax Credit Properties II L.P. as of March 30, 2014 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/Marks Paneth LLP
New York, New York
June 26, 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
American Tax Credit Properties II L.P.
We have audited the accompanying balance sheet of American Tax Credit Properties II L.P. (the “Partnership”) as of March 30, 2013, and the related statements of operations and comprehensive income (loss), changes in partners' equity (deficit) and cash flows for the year then ended. The Partnership’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, 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 American Tax Credit Properties II L.P. as of March 30, 2013 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/CohnReznick LLP
Sacramento, California
June 27, 2013
AMERICAN TAX CREDIT PROPERTIES II L.P.
BALANCE SHEETS
MARCH 30, 2014 AND 2013
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
YEARS ENDED MARCH 30, 2014 AND 2013
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
YEARS ENDED MARCH 30, 2014 AND 2013
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 30, 2014 AND 2013
See reconciliation of net income to net cash used in operating activities on page 26.
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES II L.P.
STATEMENTS OF CASH FLOWS - CONTINUED
YEARS ENDED MARCH 30, 2014 AND 2013
See Notes to Financial Statements.
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 30, 2014 AND 2013
1.
Organization, Purpose and Summary of Significant Accounting Policies
American Tax Credit Properties II L.P. (the "Partnership") was formed on October 26, 1988 and the Certificate of Limited Partnership of the Partnership was filed under the Delaware Revised Uniform Limited Partnership Act. There was no operating activity until admission of the limited partners (the “Limited Partners”) on June 28, 1989. The Partnership was formed to invest primarily in leveraged low-income multifamily residential complexes (the "Property" or "Properties") that qualified for the low-income housing tax credit (the “Low-income Housing Tax Credit”) in accordance with Section 42 of the Internal Revenue Code (the “IRC”), through the acquisition of limited partner equity interests (the "Local Partnership Interests") in partnerships (the "Local Partnership" or "Local Partnerships") that are the owners of the Properties. The Partnership invested in one Local Partnership whose Property also qualified for the historic rehabilitation tax credit in accordance with IRC Section 47. Such interests were acquired in 1989 and 1990. Richman Tax Credit Properties II L.P. (the "General Partner") was formed on October 26, 1988 to act as the General Partner of the Partnership.
Basis of Accounting and Fiscal Year
The Partnership's records are maintained on the accrual basis of accounting for both financial reporting and tax purposes. For financial reporting purposes, the Partnership's fiscal year ends March 30 and its quarterly periods end June 29, September 29 and December 30. The Local Partnerships have a calendar year for financial reporting purposes. The Partnership and the Local Partnerships each have a calendar year for income tax purposes.
Investment in Local Partnerships
The Partnership accounts for its investment in local partnerships in accordance with the equity method of accounting, under which the investment is carried at cost and is adjusted for the Partnership's share of each Local Partnership’s results of operations and by cash distributions received. Equity in loss of each investment in Local Partnership allocated to the Partnership is recognized to the extent of the Partnership’s investment balance in each Local Partnership. Equity in loss in excess of the Partnership's investment balance in a Local Partnership is allocated to other partners' capital in any such Local Partnership. Previously unrecognized equity in loss of any Local Partnership is recognized in the fiscal year in which equity in income is earned by such Local Partnership or additional investment is made by the Partnership. Distributions received subsequent to the elimination of an investment balance for any such investment in a Local Partnership are recorded as other income from local partnerships. As a result of cumulative equity losses and distributions and the sale of certain Local Partnerships’ Properties and/or the Partnership’s Local Partnership Interests, the Partnership’s investment in local partnerships reached a zero balance during the year ended March 30, 2013.
The Partnership assessed the carrying value of its investment in local partnerships at least annually in the fourth quarter of its fiscal year or whenever there were indications that a permanent impairment may have occurred. If the carrying value of an investment in a Local Partnership exceeded the estimated value derived by management, the Partnership reduced its investment in any such Local Partnership (unless the impairment was considered to be temporary) and included such reduction in equity in loss of investment in local partnerships. Impairment was measured by comparing the investment carrying amount to the estimated residual value of the investment.
The Partnership does not consolidate the accounts and activities of the Local Partnerships, which are considered Variable Interest Entities as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810; Subtopic 10, because the Partnership is not considered the primary beneficiary. The Partnership's balance in investment in local partnerships represents the maximum exposure to loss in connection with such investments. The Partnership's exposure to loss on the Local Partnerships is mitigated by the condition and financial performance of the underlying Properties as well as the financial strength of the local general partners (the “Local General Partners”). In addition, the Local Partnerships’ partnership agreements grant the Local General Partners the power to direct the activities that most significantly impact the Local Partnerships’ economic success. As described above, the Partnership’s investment in local partnerships has a zero balance.
Advances and additional capital contributions (collectively the “Advances”) that are not required under the terms of the Local Partnerships’ partnership agreements but which are made to the Local Partnerships are recorded as investment in local partnerships. Certain Advances are considered by the Partnership to be voluntary loans to the respective Local Partnerships and the Partnership may be reimbursed at a future date to the extent such Local Partnerships generate distributable cash flow or receive proceeds from sale or refinancing.
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
1.
Organization, Purpose and Summary of Significant Accounting Policies (Continued)
Cash and Cash Equivalents
The Partnership considers all highly liquid investments purchased with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates market value.
Fair Value Measurements
ASC Topic 820 clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability and establishes the following fair value hierarchy:
·
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Partnership has the ability to access;
·
Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as interest rates and yield curves that are observable at commonly quoted intervals; and
·
Level 3 inputs are unobservable inputs for the asset or liability that are typically based on an entity’s own assumptions as there is little, if any, related market activity.
For instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the fair value measurement will fall within the lowest level input that is significant to the fair value measurement in its entirety.
Investment in Pemberwick Fund
The Partnership carries its investment in Pemberwick Fund (”Pemberwick”), an investment grade institutional short duration bond fund, at estimated fair value. Realized capital gains (losses) are included in (offset against) interest revenue. Investment in Pemberwick is classified as available-for-sale and unrealized gains (losses) are included as items of comprehensive income (loss) and are reported as a separate component of partners' equity (deficit).
Income Taxes
The Partnership is a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income and deductions are passed through to and are reported by its partners on their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service (“IRS”) and other taxing authorities. Income tax returns filed by the Partnership are subject to examination by the IRS for a period of three years. While no Partnership income tax returns are currently being examined by the IRS, tax years subsequent to 2009 remain subject to examination. These financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. In accordance with ASC Topic 740; Subtopic 10, the Partnership has included in Note 7 disclosures related to differences in the financial and tax bases of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
2.
Capital Contributions
On June 14, 1989, the Partnership commenced the offering of units (the "Units") through Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Selling Agent"). On June 28, 1989, July 31, 1989 and September 22, 1989, under the terms of the Amended and Restated Agreement of Limited Partnership of the Partnership (the "Partnership Agreement"), the General Partner admitted the Limited Partners to the Partnership in three closings. At these closings, subscriptions for a total of 55,746 Units representing $55,746,000 in Limited Partners' capital contributions were accepted. In connection with the offering of Units, the Partnership incurred organization and offering costs of $6,534,064, of which $75,000 was capitalized as organization costs and $6,459,064 was charged to the Limited Partners' equity as syndication costs. The General Partner contributed $100 to the Partnership.
Net income (loss) is allocated 99% to the Limited Partners and 1% to the General Partner in accordance with the Partnership Agreement. The Partnership paid nonresident state withholding taxes of $31,810 on behalf of certain of the Limited Partners in April 2014 in connection with gains recognized by a Local Partnership for the year ended December 31, 2013.
3.
Cash and Cash Equivalents
As of March 30, 2014, the Partnership has $375,716 in cash and cash equivalents. Of such amount, $330,203 is held in accounts at two financial institutions in which such accounts are insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The entire amount is FDIC insured as of March 30, 2014. The remaining $45,513 is held in an account at a financial institution in which such amount is invested in a portfolio of securities that are direct obligations of the U.S. Treasury and are backed by the full faith and credit of the United States of America.
4.
Investment in Pemberwick Fund
The Partnership carries its investment in Pemberwick, an investment grade institutional short duration bond fund, at estimated fair value. Pemberwick was organized in February 2010 as a non-diversified open-end management investment company registered under the Investment Company Act of 1940, as amended, that seeks maximum current income consistent with liquidity and stability of principal. In selecting a portfolio of securities for Pemberwick, the investment advisor of Pemberwick (the “Advisor”) will select investments so that Pemberwick’s assets will be rated “A-” or better by a nationally recognized statistical rating organization (“NRSRO”) such as Moody’s Investor Services, Inc. (“Moody’s”) and/or by Standard & Poor’s Financial Services, LLC (“S&P”) (or if commercial paper rated in the highest category) or, if a rating is not available, deemed to be of comparable quality by the Advisor, or securities issued by banking institutions operating in the United States and having assets in excess of $200 billion. Approximately 90% or more of Pemberwick’s assets will either be invested in securities rated AA or better (if commercial paper rated in the highest category) by a NRSRO or in securities of banking institutions operating in the United States and having assets in excess of $200 billion.
The weighted average duration of Pemberwick’s assets is approximately 1.92 years as of March 30, 2014. Redemptions from Pemberwick are immediately liquid and unrestricted. Pemberwick’s net asset value (“NAV”) is $10.07 and $10.12 per share as of March 30, 2014 and 2013, respectively. The Partnership’s investment in Pemberwick as of March 30, 2014 and 2013 is $6,149,426 and $2,807,679, respectively. An unrealized gain of $20,759 as of March 30, 2014 is reflected as accumulated other comprehensive income in the accompanying balance sheet as of March 30, 2014. The Partnership has earned $178,004 of interest revenue from its investment in Pemberwick as of March 30, 2014. The fair value of the Partnership’s investment in Pemberwick is classified within Level 1 of the fair value hierarchy of the guidance on Fair Value Measurements (see Note 1). Pemberwick’s NAV was $10.09 as of May 31, 2014.
The Advisor is an affiliate of the General Partner. For its services, the Advisor is entitled to receive an annual advisory fee of 0.50% of the average daily net assets of Pemberwick. The Advisor may, in its discretion, voluntarily waive its fees or reimburse certain Pemberwick expenses; however, the Advisor is not required to do so. The Advisor has waived 70% of its fee earned since Pemberwick’s inception and earned $7,799 and $4,487 in connection with the Partnership’s investment in Pemberwick for the years ended March 30, 2014 and 2013, respectively, enough to cover its direct costs. The Advisor’s asset management affiliate, Richman Asset Management, Inc. (“RAM”) has agreed to reduce its administration and management fees (see Note 6) payable by the Partnership to the extent any fee of the Advisor payable by Pemberwick would be duplicative of any profit that RAM would receive from the Partnership.
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
5.
Investment in Local Partnerships
The Partnership initially acquired a Local Partnership Interest in fifty Local Partnerships. As of March 30, 2014, the Partnership owns a Local Partnership Interest in the following nineteen Local Partnerships (see discussion below regarding Queen Lane Investors’ sale of its underlying Property):
1.
1989 Westview Arms Limited Partnership;
2.
Batesville Family, L.P.;
3.
Browning Road Phase I, L.P.;
4.
Canton Partners, L.P.;
5.
De Queen Villas Limited Partnership;
6.
Eudora Manor Limited Partnership;
7.
Hill Com I Associates Limited Partnership;
8.
Hill Com II Associates Limited Partnership;
9.
Lakeside Housing Limited Partnership;
10.
Lawrence Road Properties, Ltd.;
11.
Lexington Estates Ltd., A Mississippi Limited Partnership;
12.
Littleton Avenue Community Village, L.P. (“Littleton”);
13.
Lula Courts Ltd., L.P.;
14.
Magee Elderly, L.P.;
15.
Patton Place Limited Partnership;
16.
Purvis Heights Properties, L.P.;
17.
Queen Lane Investors (“Queen Lane”);
18.
Tchula Courts Apartments, L.P.; and
19.
Village Creek Limited Partnership.
Although the Partnership generally owns a 99% Local Partnership Interest in the remaining Local Partnerships, the Partnership acquired along with American Tax Credit Properties III L.P. ("ATCP III"), an investment partnership whose general partner is an affiliate of the General Partner, a 99% Local Partnership Interest in the following Local Partnerships:
In connection with the initial purchase of fifty Local Partnership Interests, under the terms of the partnership agreement of each Local Partnership, as of March 30, 2014 the Partnership is committed to make capital contributions in the aggregate of $48,460,126, which includes Advances to certain Local Partnerships and all of which has been paid.
The remaining Properties are principally comprised of subsidized and leveraged low-income multifamily residential complexes located throughout the United States. The required holding period of each Property, in order to avoid Low-income Housing Tax Credit recapture, is fifteen years from the year in which the Low-income Housing Tax Credits commence on the last building of the Property (the “Compliance Period”). The Compliance Periods of all the Local Partnerships expired in a prior year. The rents of the Properties, certain of which receive project based rental subsidy payments pursuant to subsidy agreements, are subject to specific laws, regulations and agreements with federal and state agencies. The subsidies expire at various times. The Partnership cannot predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs. Such changes could adversely affect the future net operating income and debt structure of the Local Partnerships receiving such subsidies. As of December 31, 2013, the Local Partnerships have outstanding mortgage loans payable totaling approximately $30,025,000 and accrued interest payable on such loans totaling approximately $5,585,000, which are secured by security interests and liens common to mortgage loans on the Local Partnerships' real property and other assets.
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
5.
Investment in Local Partnerships (Continued)
For the year ended March 30, 2013, the investment in local partnerships activity consists of the following:
During the year ended March 30, 2014, the Partnership sold its Local Partnership Interest in Trenton Heights Apartments, L.P. (“Trenton Heights”) to an affiliate of the Local General Partner of Trenton Heights; the Partnership received $20,000 in connection with the sale. Such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2014.
During the year ended March 30, 2014, Queen Lane sold its underlying Property to its first mortgage lender under the terms of an Option to Purchase and Right of First Offer, in connection with which Queen Lane recognized a gain of $2,042,871; such amount is reflected as gain on sale of property in the combined statement of operations of the Local Partnerships for the year ended December 31, 2013 herein Note 5. The Partnership received no proceeds in connection with the sale. The Local General Partner of Queen Lane intends to dissolve Queen Lane as soon as possible.
During the year ended March 30, 2014, the Partnership sold its Local Partnership Interests in Bruce Housing Associates, L.P. (“Bruce Housing”), Ivy Family, L.P. (“Ivy Family”), Plantersville Family, L.P., Renova Properties, L.P., Simpson County Family, L.P. and Twin Pine Family, L.P. to an affiliate of the Local General Partner of such Local Partnerships for a total of $28,416; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2014. In addition, the Partnership received $32,938 for distributions that were due to the Partnership under the terms of the partnership agreements of such Local Partnerships; such amount is included in other income from local partnerships in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2014 (see Note 1). Such Local Partnerships have the same Local General Partner. The 99% Local Partnership Interests in Bruce Housing and Ivy Family were acquired along with ATCP III (see discussion above herein Note 5), whereby Registrant owned 37.25%. ATCP III sold its interest in Bruce Housing and Ivy Family as part of the same transaction.
During the year ended March 30, 2014, the Partnership sold its Local Partnership Interest in Auburn Hills Apartments Limited Partnership (“Auburn Hills”) to an affiliate of the Local General Partner of Auburn Hills. Although the Partnership received no proceeds in connection with the sale, the Partnership received $1,500 in April 2014 for distributions that were due to the Partnership under the terms of the partnership agreement of Auburn Hills. Such amount is included in due from local partnerships in the accompanying balance sheet of the Partnership as of March 30, 2014 and in other income from local partnerships in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year then ended (see Note 1).
During the year ended March 30, 2014, the Partnership sold its Local Partnership Interests in Eagle View, Ltd. and Summers Village Limited Partnership to the Local General Partner of such Local Partnerships or affiliates thereof for a total of $20,767; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2014. In addition, the Partnership received $14,233 for distributions that were due to the Partnership under the terms of the partnership agreements of such Local Partnerships; such amount is included in other income from local partnerships in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 20, 2014 (see Note 1). The total proceeds of $35,000 were received in April 2014 and are included in due from local partnerships in the accompanying balance sheet of the Partnership as of March 30, 2014. The Local General Partners of such Local Partnerships are affiliates of each other.
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
5. Investment in Local Partnerships (Continued)
During the year ended March 30, 2014, the Partnership sold its Local Partnership Interest in Santa Juanita Limited Dividend Partnership (“Santa Juanita”) to an affiliate of the Local General Partner of Santa Juanita; there were no proceeds in connection with the sale. The 99% Local Partnership Interest in Santa Juanita was acquired along with American Tax Credit Properties L.P. (“ATCP”), another investment partnership whose general partner is an affiliate of the General Partner, whereby Registrant owned 64.36%. ATCP sold its interest in Santa Juanita as part of the same transaction.
During the year ended March 30, 2013, the Partnership sold its Local Partnership Interest in North Hills Farms Limited Partnership (“North Hills Farms”) to affiliates of the Local General Partners of North Hills Farms for $3,586,431 under the terms of a purchase agreement (the “North Hills Farms Purchase Agreement”). The Partnership recognized a gain of $2,185,051 in connection with the sale; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2013. After further resolution of North Hills Farms’ accounts under the terms of the North Hills Farms Purchase Agreement, the sale price was increased by $28,364; such amount is included in due from local partnerships in the accompanying balance sheet of the Partnership as of March 30, 2014 and in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year then ended. After such sale and as a result of cumulative equity losses, distributions and the sale of certain Local Partnerships’ Properties and/or the Partnership’s Local Partnership Interests, the Partnership’s investment in local partnerships reached a zero balance as of March 30, 2013.
During the year ended March 30, 2013, the Partnership sold its Local Partnership Interest in Mirador del Toa Limited Partnership (“Mirador del Toa”) to an affiliate of the Local General Partner of Mirador del Toa for $19,241; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2013. After accounting for its share of cumulative income, losses and distributions, the Partnership’s investment in Mirador del Toa had reached a zero balance prior to the sale. The 99% Local Partnership Interest in Mirador del Toa was shared with ATCP III (see discussion above herein Note 5), whereby the Partnership owned 39.94%. ATCP III sold its interest in Mirador del Toa as part of the same transaction.
During the year ended March 30, 2013, the Partnership sold its Local Partnership Interests in Cleveland Square, Ltd. and Corrigan Square, Ltd. to an affiliate of the Local General Partners of such Local Partnerships for a total of $79,200; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2013. Such Local Partnerships have the same Local General Partner. After accounting for its share of cumulative income, losses and distributions, the Partnership’s investment in such Local Partnerships had reached a zero balance prior to the sale.
During the year ended March 30, 2010, Harborside Housing Limited Partnership (“Harborside”) sold its underlying Property to an unaffiliated third party, in connection with which the Partnership had received $3,917,439 as of March 30, 2012. Upon final resolution of Harborside’s accounts, the Partnership received an additional $55,469 during the year ended March 30, 2013; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2013. Harborside has been dissolved. After accounting for its share of cumulative income, losses and distributions, the Partnership’s investment in Harborside reached a zero balance in a prior year.
The non-mandatory mortgages of Littleton matured in October 2006 but have not been repaid or formally extended. In May 2014, the first mortgage holder issued a declaration of default demanding Littleton’s immediate payment of an amount in excess of $6.5 million. Such amount includes all unpaid principal and accrued interest to date and amounts for real estate tax liens that had been sold to third parties and were redeemed by the lender. Unpaid principal and accrued interest on the second mortgage as of June 2014 is in excess of $3.1 million. Littleton’s Local General Partner reports that a refinancing of the mortgages is unlikely.
Equity in loss of investment in local partnerships is limited to the Partnership’s investment balance in each Local Partnership; any excess is applied to other partners' capital in any such Local Partnership (see Note 1). The amount of such excess losses applied to other partners’ capital was $1,405,825 and $949,102 for the years ended December 31, 2013 and 2012, respectively, as reflected in the combined statements of operations of the Local Partnerships herein Note 5.
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
5. Investment in Local Partnerships (Continued)
The Partnership’s investment in local partnerships reached a zero balance during the year ended March 30, 2013 (see Note 1). The amounts reflected as the Partnership’s investment balance in the combined balance sheets of the Local Partnerships herein Note 5 represent cumulative carrying value adjustments made by the Partnership (see Note 1).
The combined balance sheets of the Local Partnerships as of December 31, 2013 and 2012 and the combined statements of operations of the Local Partnerships for the years then ended are reflected on pages 34 and 35, respectively. The combined balance sheets of the Local Partnerships as of December 31, 2013 and 2012 do not include any balances in connection with the Local Partnerships in which the Partnership no longer owns an interest as of such dates, while the combined statements of operations of the Local Partnerships for the years then ended include the results of operations of such Local Partnerships for the period prior to the sales or other dispositions (see discussion above herein Note 5).
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
5. Investment in Local Partnerships (Continued)
The combined balance sheets of the Local Partnerships as of December 31, 2013 and 2012 are as follows:
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
5. Investment in Local Partnerships (Continued)
The combined statements of operations of the Local Partnerships for the years ended December 31, 2013 and 2012 are as follows:
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
6.
Transactions with General Partner and Affiliates
Pursuant to the terms of the Partnership Agreement, the Partnership incurs an annual management fee (the “Management Fee”) and an annual additional management fee (the “Additional Management Fee”) payable to the General Partner for its services in connection with the management of the affairs of the Partnership. The annual Management Fee is equal to the greater of $100,000 or .14% of Invested Assets (as such term is defined in the Partnership Agreement), while the annual Additional Management Fee is equal to .06% of Invested Assets. The cumulative total of the management fees and administration fees (see discussion below herein Note 6) is limited to 0.5% of Invested Assets. The Partnership incurred Management Fees of $89,442 and $100,825 for the years ended March 30, 2014 and 2013, respectively, and Additional Management Fees of $20,895 and $43,211 for the years ended March 30, 2014 and 2013, respectively. Such amounts are aggregated and reflected under the caption management fees - affiliate in the accompanying statements of operations and comprehensive income (loss). Unpaid Management Fees and Additional Management Fees in the cumulative amount of $14,538 and $61,891 are included in payable to general partner and affiliates in the accompanying balance sheets as of March 30, 2014 and 2013, respectively.
In addition, pursuant to the terms of the Partnership Agreement, the Partnership is authorized to contract for administrative services provided to the Partnership. From the inception of the Partnership through November 23, 1999, such administrative services were provided by ML Fund Administrators Inc. (“MLFA”), an affiliate of the Selling Agent, pursuant to an Administrative Services Agreement. MLFA resigned the performance of its basic services under the Administrative Services Agreement effective November 23, 1999, with certain transitional services continued through April 30, 2000. The General Partner transitioned the administrative services to RAM without any changes to the terms of the Administrative Services Agreement. Pursuant to such agreement, the Partnership incurs an annual administration fee (the “Administration Fee”) and an annual additional administration fee (the “Additional Administration Fee”) for administrative services provided to the Partnership. The annual Administration Fee is equal to the greater of $100,000 or .14% of Invested Assets, while the annual Additional Administration Fee is equal to .06% of Invested Assets. The cumulative total of the administration fees and management fees is limited as described above herein Note 6. The Partnership incurred Administration Fees of $89,442 and $100,825 for the years ended March 30, 2014 and 2013, respectively, and Additional Administration Fees of $20,895 and $43,211 for the years ended March 30, 2014 and 2013, respectively. Such amounts are aggregated and reflected under the caption administration fees - affiliate in the accompanying statements of operations and comprehensive income (loss). Unpaid Administration Fees and Additional Administration Fees due to RAM in the cumulative amount of $10,738 and $58,075 are included in due to general partner and affiliates in the accompanying balance sheets as of March 30, 2014 and 2013, respectively.
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
7.
Taxable Income (Loss)
A reconciliation of the financial statement net income of the Partnership for the years ended March 30, 2014 and 2013 to the tax return income (loss) for the years ended December 31, 2013 and 2012 is as follows:
The differences between the investment in local partnerships for financial reporting and tax purposes as of December 31, 2013 and 2012 are as follows:
Payable to general partner and affiliate in the accompanying balance sheets represents accrued Management Fees and Administration Fees, which are not deductible for tax purposes until paid pursuant to IRC Section 267.
AMERICAN TAX CREDIT PROPERTIES II L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
MARCH 30, 2014 AND 2013
8.
Fair Value of Financial Instruments
The estimated fair value amounts have been determined using available market information, assumptions, estimates and valuation methodologies.
Cash and cash equivalents
The carrying amount approximates fair value.
Investment in Pemberwick Fund, a short duration bond fund
The weighted average duration of Pemberwick’s assets is approximately 1.92 years as of March 30, 2014. Redemptions from Pemberwick are immediately liquid and unrestricted. Pemberwick’s net asset value (“NAV”) is $10.07 and $10.12 per share as of March 30, 2014 and 2013, respectively. The Partnership’s investment in Pemberwick as of March 30, 2014 and 2013 is carried at its fair value of $6,149,426 and $2,807,679, respectively. The fair value of the Partnership’s investment in Pemberwick is classified within Level 1 of the fair value hierarchy of the guidance on Fair Value Measurements (see Note 1). Pemberwick’s NAV was $10.09 as of May 31, 2014.
Investment in local partnerships
The Partnership assessed the carrying value of its investment in local partnerships at least annually in the fourth quarter of its fiscal year or whenever there were indications that a permanent impairment may have occurred. If the carrying value of an investment in a Local Partnership exceeded the estimated value derived by management, the Partnership reduced its investment in any such Local Partnership (unless the impairment was considered to be temporary) and included such reduction in equity in loss of investment in local partnerships. Impairment was measured by comparing the investment carrying amount to the estimated residual value of the investment. The investment in local partnerships, carried at zero as of March 30, 2014 and 2013, approximates fair value.
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A.
Item 9A. Controls and Procedures.
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed by Registrant in reports that Registrant files or submits under the Exchange Act is recorded, processed, summarized and timely reported as provided in SEC rules and forms. Registrant periodically reviews the design and effectiveness of its disclosure controls and procedures, including compliance with various laws and regulations that apply to its operations. Registrant makes modifications to improve the design and effectiveness of its disclosure controls and procedures, and may take other corrective action, if its reviews identify a need for such modifications or actions. In designing and evaluating the disclosure controls and procedures, Registrant recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Registrant has carried out an evaluation, under the supervision and the participation of its management, including the Chief Executive Officer and Chief Financial Officer of Richman Tax Credits, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the year ended March 30, 2014. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of Richman Tax Credits concluded that Registrant’s disclosure controls and procedures were effective as of March 30, 2014.
Management’s Annual Report on Internal Control Over Financial Reporting
Registrant is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer of Richman Tax Credits, Registrant conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation, management has concluded that Registrant’s internal control over financial reporting was effective as of March 30, 2014.
This Annual Report does not include an attestation report of Registrant’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by Registrant’s independent registered public accounting firm pursuant to rules of the SEC that permit Registrant to provide only management’s report in this Annual Report.
Changes in Internal Control Over Financial Reporting
There were no changes in Registrant’s internal control over financial reporting during the three months ended March 30, 2014 that have materially affected, or are reasonably likely to materially affect, Registrant’s internal control over financial reporting.
Item 9B.
Item 9B. Other Information.
None.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance.
Registrant has no officers or directors. The General Partner manages Registrant's affairs and has general responsibility and authority in all matters affecting its business. The responsibilities of the General Partner are currently carried out by Richman Tax Credits. The executive officers and director of Richman Tax Credits are:
1Director holds office until his successor is elected and qualified. All officers serve at the pleasure of the Director.
Richard Paul Richman, age 66, is the sole Director of Richman Tax Credits. Mr. Richman is the Chairman and a stockholder of Richman Group. Mr. Richman is involved in the syndication, development and management of residential property. Mr. Richman is also the sole director of Richman Tax Credit Properties Inc., an affiliate of Richman Tax Credits and the general partner of the general partner of American Tax Credit Properties L.P., the sole director of Richman Housing Credits Inc., an affiliate of Richman Tax Credits and the general partner of the general partner of American Tax Credit Properties III L.P. and the sole director of Richman American Credit Corp., an affiliate of Richman Tax Credits and the manager of American Tax Credit Trust, a Delaware statutory business trust.
David A. Salzman, age 53, is the President of Richman Tax Credits and is a stockholder and the President of Richman Group. Mr. Salzman has been employed by Richman Group or an affiliate since 1986 and is responsible for the acquisition of residential real estate for syndication for Richman Group.
James Hussey, age 53, is a Vice President and the Treasurer of Richman Tax Credits. Mr. Hussey, the Treasurer of Richman Group, is engaged primarily in the finance operations of Richman Group. In addition, Mr. Hussey is a Vice President and the Treasurer of Richman Asset Management, Inc. (“RAM”), an affiliate of Richman Tax Credits. Mr. Hussey is engaged primarily in the partnership management and finance operations of RAM. Prior to joining RAM, Mr. Hussey, a Certified Public Accountant, was the Chief Financial Officer of WCI Communities Inc. NE Region and Spectrum Communities, LLC. From 1989 to 1998, Mr. Hussey held various positions with Center Development Corp, a developer of affordable housing in the New York metropolitan area.
Gina K. Dodge, age 58, is the Secretary of Richman Tax Credits and a Vice President and the Secretary of Richman Group. Ms. Dodge has been employed by Richman Group or an affiliate since 1988 and, as the Director of Investor Services, is responsible for communications with investors.
Charles L. Krafnick, age 52, is the Assistant Treasurer of Richman Tax Credits and is the Assistant Treasurer of Richman Group. Mr. Krafnick, a Certified Public Accountant, has been employed by Richman Group or an affiliate since 1994 and is engaged primarily in the finance operations of Richman Group. In addition, Mr. Krafnick is the Assistant Treasurer of RAM. Mr. Krafnick's responsibilities in connection with RAM include various finance and partnership management functions.
Registrant is not aware of any family relationship between the director and executive officers listed in this Item 10.
Registrant is not aware of the involvement in certain legal proceedings with respect to the director and executive officers listed in this Item 10.
Mr. Richman, Mr. Hussey and Mr. Krafnick serve on a committee that performs the functions of an audit committee on behalf of Registrant (the “Audit Committee”). Each of Mr. Richman, Mr. Hussey and Mr. Krafnick meets the qualifications of an audit committee financial expert. Mr. Richman, Mr. Hussey and Mr. Krafnick are not independent under the NASDAQ Stock Market independence standards; however Registrant believes that each exercises his judgment in the best interest of Registrant with respect to matters that would ordinarily be passed upon by an audit committee.
Item 10. Directors, Executive Officers and Corporate Governance (Continued).
The Board of Director of Richman Tax Credits has adopted a code of ethics for senior financial officers of Registrant, applicable to Registrant's principal executive officer, principal financial officer and comptroller or principal accounting officer, or persons performing similar functions. Registrant will provide to any person without charge a copy of such code of ethics upon written request to the General Partner at 340 Pemberwick Road, Greenwich, Connecticut 06831, Attention: Secretary.
Item 11.
Item 11. Executive Compensation.
Registrant has no officers or directors. Registrant does not pay or accrue any fees, salaries or other forms of compensation to the officers or director of Richman Tax Credits and did not pay any such compensation during the years ended March 30, 2014 and 2013. During the years ended March 30, 2014 and 2013, Richman Tax Credits did not pay any compensation to any of its officers or its director. The director and certain officers of Richman Tax Credits receive compensation from certain affiliates of Richman Tax Credits for services performed for various affiliated entities which may include services performed for Registrant.
Under the terms of the Partnership Agreement, Registrant has entered into certain arrangements with the General Partner and certain of its affiliates which provide for compensation to be paid to the General Partner and certain of its affiliates. See Notes 4 and 6 to the audited financial statements included in Item 8 - Financial Statements and Supplementary Data of this Annual Report.
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, Registrant has no executive officers. The levels of compensation payable to the General Partner and/or its 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 and Related Stockholder Matters.
Prizm Investments and certain affiliates thereof, having the mailing address P.O. Box 47638, Phoenix, Arizona 85068, are the owners of 6,389 Units, representing approximately 11.46% of all such Units. As of June 17, 2014, no person or entity, other than Prizm Investments and certain affiliates thereof, was known by Registrant to be the beneficial owner of more than five percent of the Units.
Neither the General Partner, Richman Tax Credits nor the director or any officer of Richman Tax Credits own any Units. Richman Tax Credits is wholly-owned by Richard Paul Richman.
Item 13.
Item 13. Certain Relationships and Related Transactions and Director Independence.
Transactions With Related Persons
The General Partner and certain of its affiliates are entitled to receive certain fees and reimbursement of expenses and have received/earned fees for services provided to Registrant as described in Notes 4 and 6 to the audited financial statements included in Item 8 - Financial Statements and Supplementary Data herein. Such fees will continue to be incurred by Registrant during the fiscal year ending March 30, 2015.
Review, Approval or Ratification of Transactions With Related Parties
Pursuant to the terms of the Partnership Agreement, Registrant has specific rights and limitations in conducting business with the General Partner and affiliates. To date, Registrant has followed such provisions of the Partnership Agreement. Registrant's unwritten policies for transacting business with related parties are to first refer to the Partnership Agreement in connection with conducting such business or making payments and then, if circumstances arise for which a new related party transaction is contemplated, present the proposed transaction to certain officers of Richman Tax Credits for review and approval. If any matter in connection with such transaction might be unclear under the terms of the Partnership Agreement, such matter is presented to general or outside counsel for review prior to any such transaction being entered into by Registrant.
Indebtedness of Management
No officer or director of Richman Tax Credits or any affiliate of the foregoing was indebted to Registrant at any time during the years ended March 30, 2014 and 2013.
Item 13. Certain Relationships and Related Transactions and Director Independence (Continued).
Corporate Governance
As discussed elsewhere in this Annual Report, Registrant does not have any directors, although as noted above Mr. Richman, Mr. Hussey and Mr. Krafnick serve on a committee that performs the functions of an audit committee on behalf of Registrant. Under NASDAQ Stock Market independence standards, Mr. Richman, Mr. Hussey and Mr. Krafnick would not be considered independent as they serve as officers of Richman Tax Credits. Although Mr. Richman, Mr. Hussey and Mr. Krafnick are not independent under NASDAQ rules, Registrant believes that each exercises his judgment in the best interest of Registrant with respect to matters that would ordinarily be passed upon by an audit committee. Registrant is not a listed issuer whose securities are listed on a national securities exchange, or an inter-dealer quotation system which has requirements that a majority of the board of directors be independent, and Registrant is not required to have an audit committee which consists of independent directors and meets the other requirements of the Securities Exchange Act of 1934 and the rules promulgated thereunder.
Item 14.
Item 14. Principal Accountant Fees and Services.
Registrant’s independent registered public accounting firm billed Registrant the following fees for professional services rendered in the years ended March 30, 2014 and 2013:
Audit fees consist of fees for the annual audit and review of Registrant’s interim financial statements and review of documents filed with the SEC. Tax fees generally represent fees for annual tax return preparation. There were no other accounting fees incurred by Registrant in fiscal 2014 and 2013.
The Audit Committee has adopted a set of pre-approval policies and procedures under which, pursuant to the requirements of the Sarbanes-Oxley Act of 2002, all audit and permitted non-audit services to be performed by the independent registered public accounting firm require pre-approval by the Audit Committee. The Audit Committee approved all fiscal 2014 and 2013 principal accountant fees and services.
PART IV
Item 15.
Item 15. Exhibits and Financial Statement Schedules.
(a)
Financial Statements, Financial Statement Schedules and Exhibits.
(1)
Financial Statements.
See Item 8 - Financial Statements and Supplementary Data.
(2)
Financial Statement Schedules.
No financial statement schedules are included because of the absence of the conditions under whichthey are required or because the information is included in the financial statements or the notes thereto.
(3)
Exhibits.
Incorporated by
Exhibit
Reference to
4.1
Amended and Restated Agreement of Limited Partnership of Registrant
Exhibit A to Registrant’s Prospectus filed May 16, 1989 (File No. 33-25337)
10.01
1989 Westview Arms Limited Partnership
Exhibit 10.8 to Form 10-Q
Amended and Restated Certificate and
Report for the period ended September 29, 1990
Articles of Limited Partnership
(File No. 0-18405)
10.02
2000-2100 Christian Street Associates
Exhibit 10.8 to Form 10-Q
Amended and Restated Agreement of
Report for the period ended December 30, 1989
Limited Partnership
(File No. 33-25337)
10.03
Ann Ell Apartments Associates, Ltd.
Exhibit 10.1 to Form 10-Q
Second Amended and Restated Agreement of
Report for the period ended June 29, 1990
Limited Partnership
(File No. 0-18405)
10.04
Auburn Hills Apartments Limited
Exhibit 10.2 to Form 10-Q
Partnership Amended and
Report for the period ended June 29, 1990
Restated Certificate and Articles
(File No. 0-18405)
of Limited Partnership
10.05
Auburn Hills Townhouses Limited
Exhibit 10.01 to Form 10-K
Partnership Amended and Restated
Report for the year ended March 30, 1990
Agreement of Limited Partnership
(File No. 0-18405)
10.06
Batesville Family, L.P. Amended and
Exhibit 10.02 to Form 10-K
Restated Agreement of Limited
Report for the year ended March 30, 1990
Partnership
(File No. 0-18405)
10.07
Batesville Family, L.P. First
Exhibit 10.05 to Form 10-K
Amendment to the Amended and
Report for the year ended March 30, 1992
Restated Agreement of Limited Partnership
(File No 0-18405)
10.08
Amendment No. 1 to the Batesville Family, L.P.
Exhibit 10.06 to Form 10-K
Amended and Restated
Report for the year ended March 30, 1992
Agreement of Limited Partnership
(File No. 0-18405)
10.09
Amendment No. 2 to the Batesville
Exhibit 10.1 to Form 10-Q
Family, L.P. Amended and Restated
Report for the period ended December 30, 1990
Agreement of Limited Partnership
(File No. 0-18405)
Incorporated by
Exhibit
Reference to
10.10
Batesville Family, L.P. Amendment
Exhibit 10.1 to Form 10-Q
No. 3 to Amended and Restated
Report for the period ended December 30, 1991
Agreement of Limited Partnership
(File No. 0-18405)
10.11
Browning Road Phase I, L.P.
Exhibit 10.1 to Form 10-Q
Amended and Restated Agreement
Report for the period ended September 29, 1990
of Limited Partnership
(File No. 0-18405)
10.12
Browning Road Phase I, L.P.
Exhibit 10.2 to Form 10-Q
First Agreement to Amended and
Report for the period ended September 29, 1990
Restated Agreement of Limited Partnership
(File No. 0-18405)
10.13
Bruce Housing Associates, L.P.
Exhibit 10.03 to Form 10-K
Amended and Restated Agreement of
Report for the year ended March 30, 1990
Limited Partnership
(File No. 0-18405)
10.14
Amendment No. 1 to the
Exhibit 10.12 to Form 10-K
Bruce Housing Associates, L.P.
Report for the year ended March 30, 1992
Amended and Restated Agreement
(File No. 0-18405)
of Limited Partnership
10.15
Bruce Housing Associates, L.P.
Exhibit 10.13 to Form 10-K
First Amendment to Amended and Restated
Report for the year ended March 30, 1992
Agreement of Limited Partnership
(File No. 0-18405)
10.16
Amendment No. 2 to the Bruce Housing
Exhibit 10.2 to Form 10-Q
Associates, L.P. Amended and
Report for the period ended December 30, 1990
Restated Agreement of Limited Partnership
(File No. 0-18405)
10.17
Bruce Housing Associates, L.P.
Exhibit 10.2 to Form 10-Q
Amendment No. 3 to the Amended
Report for the period ended December 30, 1991
and Restated Agreement of
(File No. 0-18405)
Limited Partnership
10.18
Canton Partners, L.P.
Exhibit 10.2 to Form 10-Q
Amended and Restated Agreement of
Report for the period ended December 30, 1989
Limited Partnership
(File No. 33-25337)
10.19
Carrington Limited Dividend Housing
Exhibit 10.3 to Form 10-Q
Association Limited Partnership
Report for the period ended September 29, 1990
Amended and Restated Agreement
(File No. 0-18405)
of Limited Partnership
10.20
Carrington Limited Dividend
Exhibit 10.4 to Form 10-Q
Housing Association Limited Partnership
Report for the period ended September 29, 1990
Second Amended and Restated
(File No. 0-18405)
Agreement of Limited Partnership
10.21
Carrington Limited Dividend Housing Association
Exhibit 10.3 to Form 10-Q
Limited Partnership Amendment No. 1 to the
Report for the period ended December 30, 1990
Second Amended and Restated Agreement
(File No. 0-18405)
of Limited Partnership
10.22
Christian Street Associates
Exhibit 10.2 to Form 10-Q
Limited Partnership Second Amended and
Report for the period ended September 29, 1989
Restated Agreement and Certificate
(File No. 33-25337)
of Limited Partnership
Incorporated by
Exhibit
Reference to
10.23
Cityside Apartments, Phase II, L.P.
Exhibit 10.1 to Form 10-Q
Amended and Restated Agreement of
Report for the period ended September 29, 1989
Limited Partnership
(File No. 33-25337)
10.24
Amendment No. 1 to Cityside
Exhibit 10.22 to Form 10-K
Apartments, Phase II, L.P.
Report for the year ended March 30, 1992
Amended and Restated Agreement of
(File No. 0-18405)
Limited Partnership
10.25
Cleveland Square, Ltd.
Exhibit 10.07 to Form 10-K
Amended and Restated Agreement of
Report for the year ended March 30, 1990
Limited Partnership
(File No. 0-18405)
10.26
College Avenue Apartments
Exhibit 10.7 to Form 10-Q
Limited Partnership Amended
Report for the period ended December 30, 1989
and Restated and Articles of
(File No. 33-25337)
Partnership in Commendam
10.27
Corrigan Square, Ltd.
Exhibit 10.09 to Form 10-K
Amended and Restated Agreement of
Report for the year ended March 30, 1990
Limited Partnership
(File No. 0-18405)
10.28
Critical Ventures Housing
Exhibit 10.3 to Form 10-Q
Partnership III, A Washington Limited
Report for the period ended June 29, 1990
Partnership Amended and Restated
(File No. 0-18405)
Agreement of Limited Partnership
10.29
De Queen Villas Limited Partnership
Exhibit 10.11 to Form 10-K
Amended and Restated Certificate and
Report for the year ended March 30, 1990
Agreement of Limited Partnership
(File No. 0-18405)
10.30
Dermott Villas Limited Partnership
Exhibit 10.12 to Form 10-K
Amended and Restated Certificate and
Report for the year ended March 30, 1990
Agreement of Limited Partnership
(File No. 0-18405)
10.31
Eagle View, Ltd. Second Amended and
Exhibit 10.4 to Form 10-K
Restated Certificate of Limited
Report for the period ended June 29, 1990
Partnership and Limited Partnership Agreement
(File No. 0-18405)
10.32
Elm Hill Housing Limited Partnership
Exhibit 10.13 to Form 10-K
Second Amended and Restated
Report for the year ended March 30, 1990
Agreement and Certificate of Limited Partnership
(File No. 0-18405)
10.33
Eudora Manor Limited Partnership
Exhibit 10.14 to Form 10-K
Amended and Restated Agreement
Report for the year ended March 30, 1990
and Certificate of Limited Partnership
(File No. 0-18405)
10.34
Forest Village Housing Partnership
Exhibit 10.2 to Form 10-Q
Amendment No. 1 to Amended and Restated
Report for the period ended December 30, 1993
Agreement of Limited Partnership
(File No. 0-18405)
10.35
Amended and Restated Agreement
Exhibit 10.5 to Form 10-Q
of Limited Partnership
Report for the period ended September 29, 1990
Harborside Housing Limited Partnership
(File No. 0-18405)
Incorporated by
Exhibit
Reference to
10.36
Hill Com I Associates Limited
Exhibit 10.9 to Form 10-Q
Partnership Amended and Restated
Report for the period ended December 30, 1989
Agreement and Certificate of Limited Partnership
(File No. 33-25337)
10.37
Hill Com I Associates
Exhibit 10.35 to Form 10-K
Limited Partnership First Amendment
Report for the year ended March 30, 1992
to Amended and Restated Agreement and
(File No. 0-18405)
Certificate of Limited Partnership
10.38
Hill Com II Associates Limited
Exhibit 10.10 to Form 10-Q
Partnership Amended and Restated
Report for the period ended December 30, 1989
Agreement and Certificate of Limited Partnership
(File No. 33-25337)
10.39
Hill Com II Associates Limited
Exhibit 10.37 to Form 10-K
Partnership First Amendment to
Report for the year ended March 30, 1992
Amended and Restated Agreement and
(File No. 0-18405)
Certificate of Limited Partnership
10.40
Hughes Manor Limited Partnership
Exhibit 10.17 to Form 10-K
Amended and Restated Certificate
Report for the year ended March 30, 1990
and Articles of Limited Partnership
(File No. 0-18405)
10.41
Ivy Family, L.P. Amended and
Exhibit 10.18 to Form 10-K
Restated Agreement of Limited
Report for the year ended March 30, 1990
Partnership
(File No. 0-18405)
10.42
Amendment No. 1 to the Ivy Family,
Exhibit 10.4 to Form 10-Q
L.P. Amended and Restated Agreement
Report for the period ended December 30, 1990
of Limited Partnership
(File No. 0-18405)
10.43
Ivy Family, L.P. Amendment No. 3 to the
Exhibit 10.3 to Form 10-Q
Amended and Restated Agreement
Report for the period ended December 30, 1991
of Limited Partnership
(File No. 0-18405)
10.44
Second Amended and Restated Agreement
Exhibit 10.6 to Form 10-Q
of Limited Partnership Lakeside Housing
Report for the period ended September 29, 1990
Limited Partnership
(File No. 0-18405)
10.45
Lawrence Road Properties, Ltd.
Exhibit 10.11 to Form 10-Q
Amended and Restated Agreement of
Report for the period ended December 30, 1989
Limited Partnership
(File No. 33-25337)
10.46
Amendment No. 2 to the Lawrence Road
Exhibit 10.5 to Form 10-Q
Properties, Ltd. Amended and
Report for the period ended December 30, 1990
Restated Agreement of Limited
(File No. 0-18405)
Partnership
10.47
Lawrence Road Properties, Ltd.
Exhibit 10.4 to Form 10-Q
Amendment No. 3 to the Amended and Restated
Report for the period ended December 30, 1991
Agreement of Limited Partnership
(File No. 0-18405)
10.48
Lexington Estates Ltd., A Mississippi
Exhibit 10.20 to Form 10-K
Limited Partnership Amended and Restated
Report for the year ended March 30, 1990
Agreement of Limited Partnership
(File No. 0-18405)
Incorporated by
Exhibit
Reference to
10.49
Littleton Avenue Community
Exhibit 10.3 to Form 10-Q
Village, L.P. Amended and
Report for the period ended September 29, 1989
Restated Agreement of Limited Partnership
(File No. 33-25337)
10.50
Lula Courts Ltd., L.P.
Exhibit 10.22 to Form 10-K
Amended and Restated Agreement of
Report for the year ended March 30, 1990
Limited Partnership
(File No. 0-18405)
10.51
Magee Elderly, L.P. Amended
Exhibit 10.1 to Form 10-Q
and Restated Agreement of
Report for the period ended December 30, 1989
Limited Partnership
(File No. 33-25337)
10.52
Mirador del Toa Limited Partnership
Exhibit 10.5 to Form 10-Q
(A Delaware Limited Partnership)
Report for the period ended June 29, 1990
Amended and Restated Agreement
(File No. 0-18405)
of Limited Partnership
10.53
Amendment No. 1 to the Mirador
Exhibit 10.40 to Form 10-K
del Toa Limited Partnership
Report for the year ended March 30, 1991
(A Delaware Limited Partnership)
(File No. 0-18405)
Amended and Restated Agreement
of Limited Partnership
10.54
Nixa Heights Apartments, L.P.
Exhibit 10.24 to Form 10-K
Amended and Restated Agreement and
Report for the year ended March 30, 1990
Certificate of Limited Partnership
(File No. 0-18405)
10.55
North Hills Farms Limited
Exhibit 10.6 to Form 10-Q
Partnership Second Amended and Restated
Report for the period ended June 29, 1990
Agreement of Limited Partnership
(File No. 0-18405)
10.56
First Amendment to the
Exhibit 10.54 to Form 10-K
North Hills Farms Limited Partnership
Report for the year ended March 30, 1992
Second Amended and Restated Agreement
(File No. 0-18405)
of Limited Partnership
10.57
Patton Place Limited Partnership
Exhibit 10.25 to Form 10-K
Second Amended and Restated Agreement
Report for the year ended March 30, 1990
of Limited Partnership
(File No. 0-18405)
10.58
Plantersville Family, L.P.
Exhibit 10.26 to Form 10-K
Amended and Restated Agreement of
Report for the year ended March 30, 1990
Limited Partnership
(File No. 0-18405)
10.59
Powelton Gardens Associates
Exhibit 10.6 to Form 10-Q
Amended and Restated Agreement of
Report for the period ended December 30, 1989
Limited Partnership
(File No. 33-25337)
10.60
Purvis Heights Properties, L.P.
Exhibit 10.28 to Form 10-K
Amended and Restated Agreement of
Report for the year ended March 30, 1990
Limited Partnership
(File No. 0-18405)
10.61
Purvis Heights Properties, L.P.
Exhibit 10.60 to Form 10-K
First Amendment to Amended and
Report for the year ended March 30, 1992
Restated Agreement of Limited Partnership
(File No. 0-18405)
Incorporated by
Exhibit
Reference to
10.62
Amendment No. 1 to the Purvis Heights
Exhibit 10.61 to Form 10-K
Properties, L.P. Amended and Restated
Report for the year ended March 30, 1992
Agreement of Limited Partnership
(File No. 0-18405)
10.63
Amendment No. 2 to the Purvis Heights
Exhibit 10.6 to Form 10-Q
Properties, L.P. Amended and
Report for the period ended December 30, 1990
Restated Agreement of Limited
(File No. 0-18405)
Partnership
10.64
Purvis Heights Properties, L.P.
Exhibit 10.5 to Form 10-K
Amendment No. 3 to the
Report for the period ended December 30, 1991
Amended and Restated
(File No. 0-18405)
Agreement of Limited Partnership
10.65
Queen Lane Investors Amended and
Exhibit 10.29 to Form 10-K
Restated Agreement and Certificate
Report for the year ended March 30, 1990
of Limited Partnership
(File No. 0-18405)
10.66
Queen Lane Investors Amendment No. 1
Exhibit 10.7 to Form 10-Q
to Amended and Restated Agreement
Report for the period ended December 30, 1990
and Certificate of Limited Partnership
(File No. 0-18405)
10.67
Renova Properties, L.P. Amended
Exhibit 10.3 to Form 10-Q
and Restated Agreement of
Report for the period ended December 30, 1989
Limited Partnership
(File No. 33-25337)
10.68
Santa Juanita Limited Dividend
Exhibit 10.5 to Form 10-Q
Partnership Amended and Restated
Report for the period ended December 30, 1989
Agreement of Limited Partnership
(File No. 33-25337)
10.69
Second Amendment of Limited Partnership
Exhibit 10.68 to Form 10-K
of Santa Juanita Limited Dividend Partnership
Report for the year ended March 30, 1994
and Amendment No. 2 to the Amended and
(File No. 0-18405)
Restated Agreement of Limited Partnership
10.70
Amendment No. 1 to Santa Juanita Limited
Exhibit 10.1 to Form 10-Q
Dividend Partnership L.P. Amended and
Report for the period ended September 29, 1995
Restated Agreement of Limited Partnership
(File No. 0-18405)
(Replaces in its entirety Exhibit 10.69 hereof.)
10.71
Amendment No. 2 to Santa Juanita Limited
Exhibit 10.2 to Form 10-Q
Dividend Partnership L.P. Amended and
Report for the period ended September 29, 1995
Restated Agreement of Limited Partnership
(File No. 0-18405)
10.72
Simpson County Family, L.P.
Exhibit 10.4 to Form 10-Q
Amended and Restated Agreement of
Report for the period ended December 30, 1989
Limited Partnership
(File No. 33-25337)
10.73
Summers Village Limited Partnership
Exhibit 10.7 to Form 10-Q
Amended and Restated Certificate
Report for the period ended June 29, 1990
of Limited Partnership and
(File No. 0-18405)
Limited Partnership Agreement
Incorporated by
Exhibit
Reference to
10.74
Tchula Courts Apartments, L.P.
Exhibit 10.33 to Form 10-K
Amended and Restated Agreement and
Report for the year ended March 30, 1990
Certificate of Limited Partnership
(File No. 0-18405)
10.75
The Pendleton (A Louisiana Partnership
Exhibit 10.7 to Form 10-Q
in Commendam) Third Amended and
Report for the period ended September 29, 1990
Restated Articles of Partnership
(File No. 0-18405)
10.76
Trenton Heights Apartments, L.P.
Exhibit 10.34 to Form 10-K
Amended and Restated Agreement and
Report for the year ended March 30, 1990
Certificate of Limited Partnership
(File No. 0-18405)
10.77
Twin Pine Family, L.P. Amended and
Exhibit 10.35 to Form 10-K
Restated Agreement of Limited
Report for the year ended March 30, 1990
Partnership
(File No. 0-18405)
10.78
Village Creek Limited Partnership
Exhibit 10.8 to Form 10-Q
Amended and Restated Certificate and
Report for the period ended June 29, 1990
Articles of Limited Partnership
(File No. 0-18405)
10.79
York Park Associates Limited Partnership
Exhibit 10.1 to Form 10-Q
Amended and Restated Agreement of
Report for the period ended June 29, 1989
Limited Partnership
(File No. 33-25337)
10.80
Non-Negotiable Purchase Money
Exhibit 10.8 to Form 10-Q
Promissory Notes dated as of
Report for the period ended December 30, 1990
January 19, 1990
(File No. 0-18405)
10.81
Non-Negotiable Purchase Money
Exhibit 10.9 to Form 10-Q
Promissory Notes dated as of May 1, 1990
Report for the period ended December 30, 1990
(File No. 0-18405)
10.82
Assignment and Assumption Agreements
Exhibit 10.63 to Form 10-K
dated as of June 28, 1991 on the
Report for the year ended March 30, 1991
Non-Negotiable Purchase Money
(File No. 0-18405)
Promissory Notes dated as of January 19, 1990
10.83
Assignment and Assumption Agreements
Exhibit 10.64 to Form 10-K
dated as of June 28, 1991 on the
Report for the year ended March 30, 1991
Non-Negotiable Purchase Money
(File No. 0-18405)
Promissory Notes dated as of May 1, 1990
10.84
Promissory Note and Loan Agreement
Exhibit 10.1 to Form 10-Q
dated November 12, 1993
Report for the period ended December 30, 1993
(File No. 0-18405)
16.1
Letter to the Securities and Exchange Commission
Exhibit 16.1 to Current Report on
from Reznick Group, P.C., dated November 9, 2012
Form 8-K filed on November 9, 2012
16.2
Letter to the Securities and Exchange Commission
Exhibit 16.1 to Current Report on
from CohnReznick LLP, dated July 24, 2013
Form 8-K filed on July 24, 2013
*31.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
*31.2
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
Incorporated by
Exhibit
Reference to
*32.1
Section 1350 Certification of Chief Executive Officer
*32.2
Section 1350 Certification of Chief Financial Officer
99.1
Pages 14 through 33 of Prospectus dated May 10, 1989
filed pursuant to Rule 424(b)(3) under the Securities Act of 1933
Exhibit 99.1 to Form 10-K
Report for the year ended March 30, 2009
(File No. 0-18405)
99.2
Pages 47 through 70 of Prospectus dated May 10, 1989 filed
pursuant to Rule 424(b)(3) under the Securities Act of 1933
Exhibit 99.2 to Form 10-K
Report for the year ended March 30, 2009
(File No. 0-18405)
99.3
Pages 86 through 88 of Prospectus dated May 10, 1989 filed
pursuant to Rule 424(b)(3) under the Securities Act of 1933
Exhibit 99.3 to Form 10-K
Report for the year ended March 30, 2009
(File No. 0-18405)
99.4
Supplement No. 1 dated July 25, 1989 of Prospectus dated
May 10, 1989 filed pursuant to Rule 424(b)(3) under the Securities Act of 1933
Exhibit 99.4 to Form 10-K
Report for the year ended March 30, 2009
(File No. 0-18405)
99.5
Supplement No. 2 dated September 18, 1989 of Prospectus dated
May 10, 1989 filed pursuant to Rule 424(b)(3) under the Securities Act of 1933
Exhibit 99.5 to Form 10-K
Report for the year ended March 30, 2009
(File No. 0-18405)
99.6
Independent Auditors’ Report of 1989 Westview Arms Limited
Partnership as of and for the years ended December 31, 2004 and 2003
Exhibit 99.4 to Form 10-K
Report for the year ended March 30, 2005
(File No. 0-18405)
99.7
Independent Auditor’s Report of Auburn Hills Townhouses Limited
Partnership as of and for the year ended December 31, 2004
Exhibit 99.5 to Form 10-K Report
for the year ended March 30, 2005
(File No. 0-18405)
99.8
Independent Auditor’s Report of Bruce Housing Associates, LTD
as of and for the years ended December 31, 2004 and 2003
Exhibit 99.6 to Form 10-K Report
for the year ended March 30, 2005
(File No. 0-18405)
99.9
Report of Independent Registered Public Accounting Firm of Carrington L.D.H.A.
Limited Partnership as of and for the year ended December 31, 2004
Exhibit 99.7 to Form 10-K Report
for the year ended March 30, 2005
(File No. 0-18405)
99.10
Independent Auditors’ Report of College Avenue Apartments Limited
Partnership as of and for the year ended December 31, 2004
Exhibit 99.8 to Form 10-K Report
for the year ended March 30, 2005
(File No. 0-18405)
99.11
Independent Auditor’s Report of North Hill Farms Limited Partnership
as of and for the year ended December 31, 2004
Exhibit 99.9 to Form 10-K Report
for the year ended March 30, 2005
(File No. 0-18405)
99.12
Independent Auditors’ Report of Purvis Heights Properties, L.P. as of
and for the years ended December 31, 2004 and 2003
Exhibit 99.10 to Form 10-K Report
for the year ended March 30, 2005
(File No. 0-18405)
99.13
Independent Auditors’ Report of 1989 Westview Arms Limited
Partnership as of and for the years ended December 31, 2005 and 2004
Exhibit 99.11 to Form 10-K Report
for the year ended March 30, 2006
(File No. 0-18405)
Incorporated by
Exhibit
Reference to
99.14
Audited Financial Statements of North Hill Farms Limited Partnership
as of and for the year ended December 31, 2005
Exhibit 99.12 to Form 10-K Report
for the year ended March 30, 2006
(File No. 0-18405)
99.15
Audited Financial Statements of North Hill Farms Limited Partnership
as of and for the year ended December 31, 2006
Exhibit 99.13 to Form 10-K Report
for the year ended March 30, 2007
(File No. 0-18405)
99.16
Report of Independent Registered Public Accounting Firm of North
Hill Farms Limited Partnership as of and for the year ended December 31, 2006
Exhibit 99.14 to Form 10-K Report
for the year ended March 30, 2007
(File No. 0-18405)
99.17
Audited Financial Statements of Patton Place Limited Partnership as
of and for the year ended December 31, 2006
Exhibit 99.15 to Form 10-K Report
for the year ended March 30, 2007
(File No. 0-18405)
99.18
Report of Independent Registered Public Accounting Firm of North Hill
Farms Limited Partnership as of and for the year ended December 31, 2007
Exhibit 99.16 to Form 10-K Report
for the year ended March 30, 2008
(File No. 0-18405)
99.19
Deferred Fee Agreement between Registrant, the General Partner
and ML Fund Administrators Inc.
Exhibit 99.19 to Form 10-K
Report for the year ended March 30, 2009
(File No. 0-18405)
**101 INS
XBRL Instance Document
**101 SCH
XBRL Schema Document
**101 CAL
XBRL Calculation Linkbase Document
**101 DEF
XBRL Definition Linkbase Document
**101 LAB
XBRL Labels Linkbase Document
**101 PRE
XBRL Presentation Linkbase Document
**101
Financial Statements from the Annual Report on Form 10-K of the Registrant for the year ended March 30, 2014, formatted in Extensible Business Reporting Language (“XBRL”); (i) Balance Sheets as of March 30, 2014 and 2013; (ii) Statements of Operations and Comprehensive Income (Loss) for the years ended March 30, 2014 and 2013; (iii) Statements of Changes in Partners’ Equity (Deficit) for the years ended March 30, 2014 and 2013; and (iv) Statements of Cash Flows for the years ended March 30, 2014 and 2013
* Filed herewith.
** Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act, except as shall be expressly set forth by specific reference in such filing or document.
(b) Exhibits.
See (a)(3) above.
(c) Financial Statement Schedules.
See (a)(2) above.
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.
AMERICAN TAX CREDIT PROPERTIES II L.P.
(a Delaware limited partnership)
By: Richman Tax Credit Properties II L.P.,
General Partner
By: Richman Tax Credits Inc.,
general partner
Dated: June 27, 2014
/s/David Salzman
David Salzman
Chief Executive Officer
Dated: June 27, 2014
/s/James Hussey
James Hussey
Chief Financial Officer
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 in the capacities and on the dates indicated.
Signature
Title
Date
/s/David Salzman
Chief Executive Officer of the general
June 27, 2014
(David Salzman)
partner of the General Partner
/s/James Hussey
Chief Financial Officer of the general
June 27, 2014
(James Hussey)
partner of the General Partner
/s/Richard Paul Richman
Sole Director of the general partner of the
June 27, 2014
(Richard Paul Richman)
General Partner