UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-17015
INDEPENDENCE TAX CREDIT PLUS L.P. IV
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 13-3809869
- ------------------------------------------------- ---------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- ------------------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 317-5700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests and Beneficial Assignment Certificates
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes [ ] No [X]
The approximate aggregate book value of the voting and non-voting common
equity held by non-affiliates of the Registrant as of September 30, 2004 was
$21,221,000, based on Limited Partner equity as of such date.
DOCUMENTS INCORPORATED BY REFERENCE
None
CAUTIONARY STATEMENT FOR PURPOSES OF
THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO THE "SAFE HARBOR" PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.
2
PART I
Item 1. Business
General
- -------
Independence Tax Credit Plus L.P. IV (the "Partnership") is a limited
partnership which was formed under the laws of the State of Delaware on February
22, 1995. The general partner of the Partnership is Related Independence L.L.C.,
a Delaware limited liability company (the "General Partner"). On November 17,
2003, CharterMac, acquired Related Capital Company ("RCC"), which is the
indirect parent of RCC Manager L.L.C, the managing member of the General
Partner. Pursuant to the acquisition, CharterMac acquired controlling interests
in the General Partner. This acquisition did not affect the Partnership or its
day-to-day operations, as the majority of the General Partner's management team
remained unchanged.
On July 6, 1995, the Partnership commenced a public offering (the "Offering") of
Beneficial Assignment Certificates ("BACs") representing assignments of limited
partnership interests in the Partnership ("Limited Partnership Interests"),
managed by Related Equities Corporation (the "Dealer Manager"), pursuant to a
prospectus dated July 6, 1995 (the "Prospectus").
The Partnership has received $45,844,000 of Gross Proceeds of the Offering from
2,759 investors ("BACs holders"). The solicitation for the subscription of BACs
was terminated as of May 22, 1996 and the final closing occurred on August 15,
1996.
The Partnership's business is primarily to invest in other partnerships ("Local
Partnerships") owning apartment complexes ("Apartment Complexes" or
"Properties") that are eligible for the low-income housing tax credit ("Housing
Tax Credit") enacted in the Tax Reform Act of 1986, some of which may also be
eligible for the historic rehabilitation tax credit ("Historic Tax Credit";
together with Housing Tax Credits, "Tax Credits"). As of March 31, 2005, the
Partnership has acquired an interest in fourteen Local Partnerships, all of
which have been consolidated. The Partnership's investments in Local
Partnerships represent from 98.99% to 99.89% interests except for one investment
which is a 58.12% interest. As of March 31, 2005, the Partnership has invested
approximately $37,814,000 (including approximately $1,161,000 classified as a
loan repayable from sale/refinancing proceeds in accordance with the
Contribution Agreement and not including acquisition fees of approximately
$1,771,000) of net proceeds in fourteen Local Partnerships of which
approximately $1,391,000 remains to be paid to the Local Partnerships (including
approximately $593,000 being held in escrow) as certain benchmarks, such as
occupancy level, are attained prior to the release of the funds. The Partnership
does not anticipate acquiring additional properties, but the Partnership may be
required to fund potential purchase price adjustments based on tax credit
adjustor clauses. See Item 2, Properties, below.
The investment objectives of the Partnership are described below:
1. Entitle qualified BACs holders to Housing Tax Credits over the period of the
Partnership's entitlement to claim Tax Credits (for each Property, generally ten
years from the date of investment or, if later, the date the Property is leased
to qualified tenants; referred to herein as the "Credit Period") with respect to
each Apartment Complex.
2. Preserve and protect the Partnership's capital.
3. Participate in any capital appreciation in the value of the Properties and
provide distributions of Sale or Refinancing Proceeds upon the disposition of
the Properties.
4. Allocate passive losses to individual BACs holders to offset passive income
that they may realize from rental real estate investments and other passive
activities, and allocate passive losses to corporate BACs holders to offset
business income.
One of the Partnership's objectives is to entitle qualified BACs holders to
Housing Tax Credits over the Credit Period. Each of the Local Partnerships in
which the Partnership has acquired an interest has been allocated by the
relevant state credit agencies the authority to recognize Tax Credits during the
Credit Period provided that the Local Partnership satisfies the rent
restriction, minimum set-aside and other requirements for recognition of the Tax
Credits at all times during such period. Once a Local Partnership has become
eligible to recognize Tax Credits, it may lose such eligibility and suffer an
event of "recapture" if its Property fails to remain in compliance with the Tax
Credit requirements. None of the Local Partnerships in which the Partnership has
acquired an interest has suffered an event of recapture.
There can be no assurance that the Partnership will achieve its investment
objectives as described above.
The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate and poor economic
conditions.
The tax credits ("Tax Credits") are attached to a subsidiary partnership ("Local
Partnership") for a period of 10 years (the "Tax Credit Period") and are
transferable with the property during the entirety of such ten year period. If
trends in the real estate market warranted the sale of a property, the remaining
Tax Credits would transfer to the new owner, thereby adding value to the
property on the market. However, such value declines each year and is not
included in the financial statement carrying amount. The Tax Credit periods are
scheduled to expire at various times through December 31, 2012 with respect to
the Local Partnerships depending upon when the Tax Credit Period commenced.
A loss on impairment of assets is recorded when management estimates amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time the property
investments themselves are reduced to estimated fair value (generally using the
discounted cash flow valuation method). Through March 31, 2005, the Partnership
has not recorded any loss on impairment of assets or reduction to estimated fair
value.
3
While the value of the remaining Tax Credits are a factor in calculating fair
value, the expiration of the Tax Credit Period, in and of itself, is not the
only factor in determining whether there is an impairment and generally does not
have any adverse impact on the fair value of the Local Partnerships.
Segments
- --------
The Partnership operates in one segment, which is the investment in multi-family
residential property.
Competition
- -----------
The real estate business is highly competitive and substantially all of the
properties acquired by the Partnership are expected to have active competition
from similar properties in their respective vicinities. In addition, various
other limited partnerships may, in the future, be formed by the General Partner
and/or its affiliates to engage in businesses which may be competitive with the
Partnership.
Employees
- ---------
The Partnership does not have any direct employees. All services are performed
for the Partnership by the General Partner and its affiliates. The General
Partner receives compensation in the connection with such activities as set
forth in Items 11 and 13. In addition, the Partnership reimburses the General
Partner and certain of its affiliates from expenses incurred in connection with
the performance by their employees of services for the Partnership in accordance
with the Partnership's Amended and Restated Agreement of Limited Partnership
(the "Partnership Agreement").
4
Item 2. Properties
As of March 31, 2005, the Partnership has acquired an interest in fourteen Local
Partnerships, all of which have been consolidated. Except for the interest in
New Zion Apartments, L.P. ("New Zion"), the Partnership's investment in each
Local Partnership represents 98.99% or 99.89% of the partnership interests in
the Local Partnership. The Partnership's investment in New Zion represents
58.12% of the partnership interest in the subsidiary partnership (the other
41.86% limited partnership interest is owned by an affiliate of the Partnership,
with the same management). Through the rights of the Partnership and/or an
affiliate of the General Partner, which affiliate has a contractual obligation
to act on behalf of the Partnership, to remove the general partner and to
approve certain major operating and financial decisions, the Partnership has a
controlling financial interest in all of the Local Partnerships it has invested.
Set forth below is a schedule of the Local Partnerships including certain
information concerning their respective Apartment Complexes (the "Local
Partnership Schedule"). Further information concerning the Local Partnerships
and their properties, including any encumbrances affecting the properties may be
found in Item 15. Schedule III .
Local Partnership Schedule
--------------------------
Percentage of Units
Occupied at May 1,
Name and Location --------------------------------------------
(Number of Units) Date Acquired 2005 2004 2003 2002 2001
- -------------------------------------------------------------- ---- ---- ---- ---- ----
BX-8A Team Associates, L.P. October 1995 100% 98% 93% 100% 95%
Bronx, NY (41)
Westminster Park Plaza June 1996 94% 98% 98% 99% 98%
(a California Limited Partnership)
Los Angeles, CA (130)
Fawcett Street Limited Partnership June 1996 100% 97% 100% 98% 98%
Tacoma, WA (60)
Figueroa Senior Housing Limited Partnership November 1996 97% 98% 98% 100% 99%
Los Angeles, CA (66)
NNPHI Senior Housing Limited Partnership December 1996 100% 97% 99% 100% 99%
Los Angeles, CA (75)
Belmont/McBride Apartments Limited Partnership January 1997 95% 100% 98% 95% 100%
Paterson, NJ (42)
Sojourner Douglass, L.P. February 1997 100% 100% 100% 100% 95%
Paterson, NJ (20)
New Zion Apartments Limited Partnership October 1997 94% 96% 95% 88% 100%
Shreveport, LA (100)
Bakery Village Urban Renewal Associates, L.P. December 1997 98% 98% 99% 100% 99%
Montclair, NJ (125)
Marlton Housing Partnership, L.P. May 1998 96% 96% 92% 100% 100%
(a Pennsylvania limited partnership)
Philadelphia, PA (25)
GP Kaneohe Limited Partnership July 1999 100% 100% 100% 98% 100%
Kaneohe, HI (44)
KSD Village Apartments, Phase II, Ltd. July 1999 94% 100% 94% 88% 88%
Danville, KY (16)
Kanisa Apartments, Ltd. October 1999 92% 86% 88% 86% 92%
Fayette County, KY (59)
Guymon Housing Partners, L.P. December 1999 96% 96% 100% 100% 100%
Guymon, OK (92)
Leases are generally for periods not greater than one to two years and no tenant
occupies more than 10% of the rentable square footage.
Management continuously reviews the physical state of the properties and
suggests to the respective Local General Partners budget improvements which are
generally funded from cash flow from operations or release of replacement
reserve escrows.
Management periodically reviews the insurance coverage of the properties and
believes such coverage is adequate.
See Item 1, Business, above for the general competitive conditions to which the
properties described above are subject.
5
Real estate taxes are calculated using rates and assessed valuations determined
by the township or city in which the property is located. Such taxes have
approximated less than 1% of the aggregate cost of the properties as shown in
Schedule III included herein.
Housing Tax Credits with respect to a given Apartment Complex are available for
a ten-year period that commences when the property is rented to qualified
tenants. However, the annual Tax Credits available in the year in which the
Apartment Complex is placed in service must be prorated based upon the months
remaining in the year. The amount of the annual Tax Credit not available in the
first year will be available in the eleventh year. In certain cases, the
Partnership acquired its interest in a Local Partnership after the Local
Partnership had placed its Apartment Complex in service. In these cases, the
Partnership may be allocated Tax Credits only beginning in the month following
the month in which it acquired its interest and Tax Credits allocated in any
prior period are not available to the Partnership.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
6
PART II
Item 5. Market for the Registrant's Common Equity and Related Security Holder
Matters
As of March 31, 2005, the Partnership had issued and outstanding 45,844 Limited
Partnership Interests, each representing a $1,000 capital contribution to the
Partnership, or an aggregate capital contribution of $45,844,000. All of the
issued and outstanding Limited Partnership Interests have been issued to
Independence Assignor Inc. (the "Assignor Limited Partner"), which has in turn
issued 45,844 BACs to the purchasers thereof for an aggregate purchase price of
$45,844,000. Each BAC represents all of the economic and virtually all of the
ownership rights attributable to a Limited Partnership Interest held by the
Assignor Limited Partner. BACs may be converted into Limited Partnership
Interests at no cost to the holder (other than the payment of transfer costs not
to exceed $100), but Limited Partnership Interests so acquired are not
thereafter convertible into BACs.
Neither the BACs nor the Limited Partnership Interests are traded on any
established trading market. The Partnership does not intend to include the BACs
for quotation on NASDAQ or for listing on any national or regional stock
exchange or any other established securities market. The Revenue Act of 1987
contained provisions which have an adverse impact on investors in "publicly
traded partnerships." Accordingly, the General Partner plans to impose limited
restrictions on the transferability of the BACs and the Limited Partnership
Interests in secondary market transactions. Implementation of the restrictions
should prevent a public trading market from developing and may adversely affect
the ability of an investor to liquidate his or her investment quickly. It is
expected that such procedures will remain in effect until such time, if ever, as
further revision of the Revenue Act of 1987 may permit the Partnership to lessen
the scope of the restrictions.
As of May 4, 2005, the Partnership has approximately 2,534 registered holders of
an aggregate of 45,844 BACs.
All of the Partnership's general partnership interests, representing an
aggregate capital contribution of $1,000, are held by the General Partner.
There are no material legal restrictions in the Partnership Agreement on the
ability of the Partnership to make distributions.
The Partnership has made no distributions to the BACs holders as of March 31,
2005. The Partnership does not anticipate providing cash distributions to its
BACs holders other than from net refinancing or sales proceeds.
Item 6. Selected Financial Data
The information set forth below presents selected financial data of the
Partnership. Additional financial information is set forth in the audited
financial statements in Item 8 hereof.
Year Ended March 31,
-----------------------------------------------------------------------------
OPERATIONS 2005 2004 2003* 2002 2001
- ------------------------------------ ------------- ------------- -------------- -------------- ---------------
Revenues $ 5,968,825 $ 5,869,146 $ 5,799,931 $ 5,691,878 $ 5,848,287
Operating expenses (9,234,871) (8,956,621) (9,213,437) (9,032,990) (9,641,822)
------------ ------------ ------------- ------------- -------------
Loss before minority interest (3,266,046) (3,087,475) (3,413,506) (3,341,112) (3,793,535)
Minority interest in loss of
subsidiary
partnership 29,336 26,201 34,355 34,650 19,869
------------ ------------ ------------- ------------- -------------
Net loss $ (3,236,710) $ (3,061,274) $ (3,379,151) $ (3,306,462) $ (3,773,666)
============ ============ ============= ============= =============
Net loss per weighted average BAC $ (69.90) $ (66.11) $ (72.97) $ (71.40) $ (81.49)
============ ============ ============= ============= =============
Year Ended March 15,
-----------------------------------------------------------------------------
FINANCIAL POSITION 2005 2004 2003 2002 2001
- ------------------------------------ ------------- ------------- -------------- -------------- ---------------
Total assets $ 70,814,773 $ 73,292,160 $ 75,661,500 $ 78,765,789 $ 80,941,604
============ ============ ============= ============= =============
Total liabilities $ 49,612,903 $ 48,812,277 $ 48,094,142 $ 47,526,993 $ 46,542,781
============ ============ ============= ============= =============
Minority interest $ 1,884,360 $ 1,925,663 $ 1,951,864 $ 2,244,151 $ 2,097,716
============ ============ ============= ============= =============
Total partners' capital $ 19,317,510 $ 22,554,220 $ 25,615,494 $ 28,994,645 $ 32,301,107
============ ============ ============= ============= =============
* Reclassified for comparative purposes.
At March 31, 2005, 2004, 2003 2002 and 2001, total assets decreased
approximately $2,477,000, $2,369,000, $3,104,000, $2,176,000 and $5,446,000 due
to depreciation and amortization and a reduction in cash and cash equivalents.
At March 31, 2005, 2004, 2003, 2002 and 2001, property and equipment decreased
approximately $2,353,000, $2,358,000, $2,532,000, $1,376,000 and $1,152,000
primarily due to depreciation expense. At March 31, 2005, 2004 and 2003,
mortgage notes decreased approximately $214,000, $89,000 and $339,000,
respectively. At March 31, 2002 and 2001 mortgage notes increased approximately
$79,000 and $1,100,000, respectively.
7
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership's primary source of funds include (i) interest earned on Gross
Proceeds which are invested in tax-exempt money market instruments pending
purchase price adjustments of Local Partnerships and (ii) working capital
reserve and interest thereon. All these sources are available to meet
obligations of the Partnership.
The Partnership has received $45,844,000 in gross proceeds for BACs pursuant to
a public offering, resulting in net proceeds available for investment of
approximately $36,446,000 after volume discounts, payment of sales commissions,
acquisition fees and expenses, organization and offering expenses and
establishment of a working capital reserve.
As of March 31, 2005, the Partnership has invested approximately $37,814,000
(including approximately $1,161,000 classified as a loan repayable from
sale/refinancing proceeds in accordance with the Contribution Agreement and not
including acquisition fees of approximately $1,771,000) of net proceeds in
fourteen Local Partnerships of which approximately $1,391,000 remains to be paid
to the Local Partnerships (including approximately $593,000 being held in
escrow) as certain benchmarks, such as occupancy level, are attained prior to
the release of the funds. During the year ended March 31, 2005, approximately
$14,000 was paid to Local Partnerships. The Partnership does not anticipate
acquiring additional properties, but the Partnership may be required to fund
potential purchase price adjustments based on tax credit adjustor clauses. There
were no such adjustments made during the year ended March 31, 2005.
As of March 31, 2005, cash and cash equivalents of the Partnership and its
fourteen consolidated Local Partnerships decreased approximately ($67,000) due
to the acquisition of property and equipment ($38,000), an increase in cash held
in escrow relating to investing activities ($64,000), repayments of mortgage
notes ($214,000), a net decrease in due to local general partners and affiliates
relating to investing activities ($375,000), an increase in deferred costs
($5,000) and a decrease in capitalization of consolidated subsidiaries
attributable to minority interest ($12,000) which exceeded cash provided by
operating activities ($641,000). Included in the adjustments to reconcile the
net loss to net cash provided by operations is depreciation and amortization of
approximately $2,448,000.
Total expenses for the years ended March 31, 2005 and 2004, excluding
depreciation and amortization, interest and general and administrative - related
parties, totaled $4,062,712 and $3,846,737, respectively. Accounts payable and
other liabilities totaled $9,075,556 and $8,239,856, respectively, which are
comprised of the following amounts:
March 31,
-------------------------------
2005 2004
-------------- --------------
Accounts payable $ 457,500 $ 540,436
Accrued interest payable 8,236,181 7,318,920
Security deposits payable 381,875 380,500
----------- ------------
Total accounts payable $ 9,075,556 $ 8,239,856
=========== ============
As indicated in the above table, accrued interest payable comprised
approximately 91% and 89% of the total accounts payable and other liabilities
amount at March 31, 2005 and 2004. Such amount represents the accrued interest
on all mortgage loans, which include primary and secondary loans. Certain
secondary loans have provisions such that interest is accrued but not payable
until a future date. The Partnership anticipates the payment of accrued interest
on the secondary loans (which make up the majority of the accrued interest
payable amount indicated in the above table and which have been accumulating
since the Partnership's investment in the respective Local Partnership) will be
made from future refinancings or sales proceeds of the respective Local
Partnerships. In addition, each Local Partnership's mortgage notes are
collateralized by the land and buildings of the respective Local Partnership,
and are without further recourse to the Partnership.
Security deposits payable are offset by cash held in security deposits, which
are included in "Cash held in escrow" on the financial statements.
Accounts payable are short term liabilities which are expected to be paid from
operating cash flows, working capital balances at the Local Partnership level,
local general partner advances and in certain circumstances advances from the
Partnership. Because the provisions of the secondary loans defer the payment of
accrued interest of the respective Local Partnerships, the Partnership believes
it (and the applicable Local Partnerships) has sufficient liquidity and ability
to generate cash and to meet existing and known or reasonably likely future cash
requirements over both the short and long term.
A working capital reserve has been designated from the Partnership's funds
available for investment, which includes amounts which may be required for
potential purchase price adjustments based on tax credit adjustor clauses. At
March 31, 2005, approximately $33,000 of this reserve remained unused. The
General Partner believes that these reserves, plus any cash distributions
received from the operations of the Local Partnerships, will be sufficient to
fund the Partnership's ongoing operations for the foreseeable future. During the
year ended March 31, 2005, there were no distributions from Local Partnerships.
Management anticipates receiving distributions in the future, although not to a
level sufficient to permit providing cash distributions to the BACs holders.
The Partnership had negotiated Operating Deficit Guaranty Agreements with the
development stage Local Partnerships by which the general partners of such Local
Partnerships and/or their affiliates have agreed to fund operating deficits for
a specified period of time. The terms of the Operating Deficit Guaranty
Agreements vary for each of these Local Partnerships, with maximum dollar
amounts to be funded for a specified period of time, generally three years,
commencing on the break-even date. As of both March 31, 2005 and 2004, the gross
amount of the Operating Deficit Guarantees aggregate approximately $1,897,000.
As of both March 31, 2005 and 2004, $0 has been funded under the Operating
Deficit Guaranty Agreements. Amounts funded under such agreements will be
treated as non-interest bearing loans, which will be paid only out of 50% of
available cash flow or out of available net sale or refinancing proceeds.
8
Partnership management fees owed to the General Partner amounting to
approximately $1,967,000 and $1,630,000 were accrued and unpaid as of March 31,
2005 and 2004, respectively.
The Partnership has invested all of the net proceeds available for investment in
fourteen Local Partnerships, of which all will generate tax credits in 2005. Due
to increased market demand for investments in properties that were eligible to
receive tax credits at the time the Partnership was investing its capital and
limitations on the types of investments which may be obtained by the Partnership
the purchase price for interests in Local Partnerships which are qualified for
purchase by the Partnership have increased. As a result of these changes,
management does not believe that the Partnership has been able to invest the
proceeds available for investment in a manner which will enable the Partnership
to achieve tax credits in the range of $140-150 for each $1,000 BAC each year in
which the Partnership is receiving its full entitlement of tax credits.
Management is not aware of any trends or events, commitments or uncertainties,
which have not otherwise been disclosed that will or are likely to impact
liquidity in a material way. Management believes the only impact would be from
laws that have not yet been adopted. The portfolio is diversified by the
location of the properties around the United States so that if one area of the
country is experiencing downturns in the economy, the remaining properties in
the portfolio may be experiencing upswings. However the geographic
diversification of the portfolio may not protect against a general downturn in
the national economy. The tax credits will be attached to the project for a
period of ten years, and will be transferable with the property during the
remainder of such ten-year period. If trends in the real estate market warranted
the sale of a property, the remaining tax credits would transfer to the new
owner, thereby adding value to the property on the market. However, such value
declines each year and is not included in the financial statement carrying
amount.
Tabular Disclosure of Contractual Obligations
- ---------------------------------------------
The following table summarizes the Partnership's commitments as of March 31,
2005, to make future payments under its debt agreements and other contractual
obligations.
Less than 1 - 3 3 -5 More than
Total 1 Year Years Years 5 Years
------------- ------------- ------------- ------------- --------------
Mortgage notes payable (a) $ 36,098,561 $ 637,599 $ 1,129,240 $ 1,107,031 $ 33,224,691
============ ============ ============ ============ ============
(a) The mortgage loans are payable in aggregate monthly installments of
approximately $131,000 including principal and interest with rates varying
from 0% to 9.11% per annum and have maturity dates ranging from 2008
through 2051. The loans are collateralized by the land and buildings of the
subsidiary partnerships, the assignment of certain subsidiary partnerships'
rents and leases, and are without further recourse.
Off Balance Sheet Arrangements
- ------------------------------
The Partnership has no off-balance sheet arrangements.
Critical Accounting Policies
- ----------------------------
In preparing the consolidated financial statements, management has made
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. Set forth below is a summary of the accounting policies
that management believes are critical to the preparation of the consolidated
financial statements.
a) Property and Equipment/Valuation of Long-Lived Assets
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, and any other costs incurred
in acquiring the properties. The cost of property and equipment is depreciated
over their estimated useful lives using accelerated and straight-line methods.
Expenditures for repairs and maintenance are charged to expense as incurred;
major renewals and betterments are capitalized. At the time property and
equipment are retired or otherwise disposed of, the cost and accumulated
depreciation are eliminated from the assets and accumulated depreciation
accounts and the profit or loss on such disposition is reflected in earnings.
The Partnership complies with Statement of Financial Accounting Standards (SFAS)
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". A loss
on impairment of assets is recorded when management estimates amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. At that time property investments
themselves are reduced to estimated fair value (generally using discounted cash
flows) when the property is considered to be impaired and the depreciated cost
exceeds estimated fair value.
Through March 31, 2005, the Partnership has not recorded any loss on impairment
of assets or reductions to estimated fair value.
b) Revenue Recognition
Rental income is earned under standard residential operating leases and is
typically due the first day of each month, but can vary by property due to the
terms of the tenant leases. Rental income is recognized when earned and charged
to tenants' accounts receivable if not received by the due date. Rental payments
received in advance of the due date are deferred until earned. Rental subsidies
are recognized as rental income during the month in which it is earned.
Other revenues are recorded when earned and consist of the following items:
Interest income earned on cash and cash equivalent balances and cash held in
escrow balances, income from forfeited security deposits, late charges, laundry
and vending income and other rental related items.
9
Other revenues include the following amounts at both the Partnership and Local
Partnership level:
Years Ended March 31,
------------------------------------------------
2005 2004 2003
-------------- -------------- --------------
Interest $ 34,738 $ 41,261 $ 77,958
Other 249,548 199,750 201,559
------------ ------------ ------------
Total other revenue $ 284,286 $ 241,011 $ 279,517
============ ============ ============
c) Related Parties
Under the terms of the Partnership Agreement, the Partnership has entered into
certain arrangements with the General Partner and its affiliates, which provide
for compensation to be paid to the General Partner and its affiliates. Such
arrangements include (but are not limited to) agreements to pay nonrecurring
Acquisition Fees, a nonaccountable Acquisition Expense allowance, an accountable
expense reimbursement and Subordinated Disposition Fees to the General Partner
and/or its affiliates. In addition, the General Partner is entitled to a
subordinated interest in Cash from Sales or Financings and a 1% interest in Net
Income, Net Loss, Distributions of Adjusted Cash from Operations and Cash from
Sales or Financings. Certain members and officers of the General Partner receive
compensation from the General Partner and its affiliates for services performed
for various affiliated entities which may include services performed for the
Partnership. The maximum annual partnership management fee paid to the General
Partner is 0.5% of invested assets. See Note 8 to the Financial Statements in
Item 8, which is incorporated herein by reference.
New Accounting Pronouncements
- -----------------------------
On December 16, 2004, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 153, Exchanges of Nonmonetary Assets - An Amendment of
APB Opinion No. 29 ("SFAS No. 153"). The amendments made by SFAS No. 153 are
based on the principle that exchanges of nonmonetary assets should be measured
based on fair value of the assets exchanged. Further, the amendments eliminate
the narrow exception for nonmonetary exchanges of similar productive assets and
replace it with a broader exception for exchanges of nonmonetary assets that do
not have "commercial substance." SFAS No. 153 is effective for nonmonetary
assets exchanges occurring in fiscal period beginning after June 15, 2005. The
Company does not believe that the adoption of SFAS No. 153 on June 15, 2005 will
have a material effect on the Company's consolidated financial statements.
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46 is applicable immediately for variable interest entities created after
January 31, 2003. For variable interest entities created before February 1,
2003, the provisions of FIN 46 were originally applicable no later than December
15, 2003. The Partnership has not created any variable interest entities after
January 31, 2003. In December 2003 the FASB redeliberated certain proposed
modifications and revised FIN 46 ("FIN 46 (R)"). The revised provisions are
applicable no later than the first reporting period ending after March 15, 2004.
The adoption of FIN 46 (R) does not have a material impact on the Partnership's
financial reporting and disclosures.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
changes the accounting for certain financial instruments that, under previous
guidance, could be classified as equity or "mezzanine" equity, by now requiring
those instruments to be classified as liabilities ( or assets in some
circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150
requires disclosure regarding the terms of those instruments and settlement
alternatives. The guidance in SFAS No. 150 generally was effective for all
financial instruments entered into or modified after May 31, 2003, and was
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003. The Partnership has evaluated SFAS No. 150 and determined that it
does not have an impact on the Partnership's financial reporting and
disclosures.
Results of Operations
- ---------------------
The net loss for the years ended March 31, 2005, 2004 and 2003 totaled
$3,236,710, $3,061,274 and $3,379,151, respectively.
The Partnership and BACs holders began recognizing Housing Tax Credits with
respect to a property when the credit period for such property commenced.
Because of the time required for the acquisition, completion and rent-up of
properties, the amount of Tax Credits per BAC has gradually increased over the
first three years of the Partnership. Housing Tax Credits not recognized in the
first three years will be recognized in the 11th through 13th years. The
Partnership generated $5,356,758 of Housing Tax Credits during each of the 2004,
2003 and 2002 tax years.
The Partnership's results of operations for the years ended March 31, 2005, 2004
and 2003 consisted primarily of the results of the Partnership's investment in
fourteen consolidated Local Partnerships. The majority of Local Partnership
income continues to be in the form of rental income with the corresponding
expenses being divided among operations, depreciation and mortgage interest.
2005 vs. 2004
- -------------
Rental income increased approximately 1% for the year ended March 31, 2005 as
compared to the corresponding period ended March 31, 2004, primarily due to
rental rate increases.
Other income increased approximately $43,000 for the year ended March 31, 2005
as compared to the corresponding period ended March 31, 2004, primarily due to
the write-off of certain payables at one Local Partnership and an increase in
late charges and insufficient funds charges at a second Local Partnership.
Total expenses, excluding general and administrative-related parties and repairs
and maintenance, remained fairly consistent with an increase of approximately 1%
for the year ended March 31, 2005 as compared to the corresponding period ended
March 31, 2004.
10
General and administrative-related parties increased approximately $69,000 for
the year ended March 31, 2005, as compared to the corresponding period ended
March 31, 2004, primarily due to two Local Partnerships changing from third
party management companies in 2004 to affiliated management companies in 2005.
Repairs and maintenance increased approximately $103,000 for the year ended
March 31, 2005, as compared to the corresponding period ended March 31, 2004,
primarily due to an increase in supplies and miscellaneous maintenance expense
at one Local Partnership, the building exterior being painted and an increase in
wheelchair lift repairs at a second Local Partnership and an increase in
exterior painting expense at a third Local Partnership.
2004 vs. 2003
- -------------
Rental income increased approximately 2% for the year ended March 31, 2004 as
compared to the corresponding period ended March 31, 2003, primarily due to
rental rate increases.
Other income decreased approximately $39,000 for the year ended March 31, 2004
as compared to the corresponding period ended March 31, 2003, primarily due to a
decrease in interest earned on cash and equivalents due to smaller balances and
lower interest rates at the Local Partnerships and at the Partnership level, as
well as a decrease in interest earned on a capital installment at a Local
Partnership.
Total expenses, excluding general and administrative, repairs and maintenance,
taxes and insurance, remained fairly consistent with a decrease of approximately
4% for the year ended March 31, 2004 as compared to the corresponding period
ended March 31, 2003.
General and administrative decreased approximately $270,000 for the year ended
March 31, 2004 as compared to the corresponding period ended March 31, 2003,
primarily due to one-time administrative incentive fees at two Local
Partnerships in the prior year.
Repairs and maintenance increased approximately $101,000 for the year ended
March 31, 2004 as compared to the corresponding period ended March 31, 2003,
primarily due to tree trimming and fence replacement at one Local Partnership
and roof and gate repairs at a second Local Partnership.
Taxes decreased approximately $44,000 for the year ended March 31, 2004 as
compared to the corresponding period ended March 31, 2003, primarily due to a
payment of back property taxes by one Local Partnership in the prior year.
Insurance increased approximately $72,000 for the year ended March 31, 2004 as
compared to the corresponding period ended March 31, 2003, primarily due to
increases in insurance premiums at the Local Partnerships.
Other
- -----
The Partnership's investment as a limited partner in the Local Partnerships is
subject to the risks of potential losses arising from management and ownership
of improved real estate. The Partnership's investments also could be adversely
affected by poor economic conditions generally, which could increase vacancy
levels and rental payment defaults and by increased operating expenses, any or
all of which could threaten the financial viability of one or more of the Local
Partnerships.
There also are substantial risks associated with the operation of Apartment
Complexes receiving government assistance. These include governmental
regulations concerning tenant eligibility, which may make it more difficult to
rent apartments in the complexes; difficulties in obtaining government approval
for rent increases; limitations on the percentage of income which low and
moderate income tenants may pay as rent; the possibility that Congress may not
appropriate funds to enable HUD to make the rental assistance payments it has
contracted to make; and that when the rental assistance contracts expire there
may not be market demand for apartments at full market rents in a Local
Partnership's Apartment Complex.
The Local Partnerships are impacted by inflation in several ways. Inflation
allows for increases in rental rates generally to reflect the impact of higher
operating and replacement costs. Furthermore, inflation generally does not
impact the fixed long-term financing under which real property investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating costs as, for example, for such items as fuel, utilities and labor.
However, continued inflation may result in appreciated values of the Local
Partnership's apartment complexes over a period of time as rental revenues and
replacement cost continue to increase.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Mortgage notes are payable in aggregate monthly installments including principal
and interest at rates varying from 0% to 9.11% per annum. The Partnership does
not believe there is a material risk associated with the various interest rates
associated with the mortgage notes as the majority of the Local Partnership
mortgage notes have fixed rates. The Partnership currently discloses in Item 8,
Note 3 of the Notes to Consolidated Financial Statements, the fair value of the
mortgage notes payable. The Partnership does not have any other market risk
sensitive instruments.
11
Item 8. Financial Statements and Supplementary Data
Sequential
Page
----------
(a)1. Consolidated Financial Statements
Report of Independent Registered Public Accounting
Firm 13
Consolidated Balance Sheets at March 31, 2005 and 2004 45
Consolidated Statements of Operations for the years
ended March 31, 2005, 2004 and 2003 46
Consolidated Statements of Changes in Partners'
Capital (Deficit) for the years ended
March 31, 2005, 2004 and 2003 47
Consolidated Statements of Cash Flows for the years
ended March 31, 2005, 2004 and 2003 48
Notes to Consolidated Financial Statements 49
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS OF INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheets of
INDEPENDENCE TAX CREDIT PLUS L.P. IV AND SUBSIDIARIES (a Delaware limited
partnership) as of March 31, 2005 and 2004, and the related consolidated
statements of operations, changes in partners' capital (deficit) and cash flows
for each of the years in the three-year period ended March 31, 2005. These
consolidated financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of
fourteen, fourteen and thirteen subsidiary partnerships, whose losses aggregated
$2,682,216, $2,485,937 and $2,801,465 for the years ended March 31, 2005, 2004
and 2003, respectively, and whose assets constituted 96% of consolidated assets
at March 31, 2005 and 2004. Those statements were audited by other auditors
whose reports have been furnished to us, and our opinion, insofar as it relates
to the amounts included for these subsidiary partnerships, is based solely on
the reports of the other auditors.
We conducted our audits in accordance with the standards of the Public
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the reports of
the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other
auditors, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of INDEPENDENCE TAX
CREDIT PLUS L.P. IV AND SUBSIDIARIES as of March 31, 2005 and 2004, and the
results of their operations and their cash flows for each of the years ended in
the three-year period ended March 31, 2005, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Friedman LLP
Friedman LLP
New York, New York
June 10, 2005
13
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
BX 8A Team Associates, L.P.
We have audited the accompanying balance sheets of BX 8A Team Associates, L.P.,
for the years ended December 31, 2004 and 2003, and the related statements of
operations, changes in partners' equity (deficit) and cash flows for the years
then ended. These financial statements are the responsibility of the
partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BX 8A Team Associates, L.P. as
of December 31, 2004 and 2003, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Reznick Group, P.C.
Atlanta, Georgia
February 1, 2005
14
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
BX 8A Team Associates, L.P.
We have audited the accompanying balance sheet of BX 8A Team Associates, L.P.
for the years ended December 31, 2003 and 2002, and the related statements of
operations, changes in partners' equity (deficit) and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BX 8A Team Associates, L.P. as
of December 31, 2003 and 2002, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Reznick Fedder & Silverman
Atlanta, Georgia
February 3, 2004
15
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Westminster Park Plaza, L.P.
We have audited the accompanying balance sheets of Westminster Park Plaza, L.P.
as of December 31, 2004 and 2003, and the related statements of operations,
partners' deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westminster Park Plaza, L.P. as
of December 31, 2004 and 2003, and the results of its operations, the changes in
partners' deficit and its cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Reznick Group, P.C.
Sacramento, California
January 18, 2005
16
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
Westminster Park Plaza
We have audited the accompanying balance sheets of Westminster Park Plaza, L.P.
as of December 31, 2003 and 2002, and the related statements of operations,
partners' deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westminster Park Plaza, L.P. as
of December 31, 2003 and 2002, and the results of its operations, the changes in
partners' deficit and its cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Reznick Fedder & Silverman
Sacramento, California
January 16, 2004
17
[LETTERHEAD OF MCDANIEL & HALLSTROM]
To the Partners
FAWCETT STREET LIMITED PARTNERSHIP
Tacoma, Washington
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2004 and 2003, and the related statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2004 and 2003, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/ McDaniel & Hallstrom, CPA's
Belfair, Washington
January 31, 2005
18
[LETTERHEAD OF MCDANIEL & HALLSTROM]
To the Partners
FAWCETT STREET LIMITED PARTNERSHIP
Tacoma, Washington
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2003 and 2002, and the related statements of
operations, partners' equity and cash flows for the years then ended. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/ McDaniel & Hallstrom, CPA's
Belfair, Washington
February 6, 2004
19
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
Figueroa Senior Housing Limited Partnership
Los Angeles, California
I have audited the balance sheet of Figueroa Senior Housing Limited Partnership
at December 31, 2004, and the related statements of loss, changes in partners'
capital, and cash flow for the year then ended. These financial statements are
the responsibility of Figueroa Senior Housing Limited Partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Figueroa Senior Housing Limited
Partnership at December 31, 2004 and the results of its operations for the year
then ended in conformity with generally accepted accounting principles used in
the United States of America.
/s/ Clifford Benn, CPA
January 27, 2005
Carson, California
20
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
Figueroa Senior Housing Limited Partnership
Los Angeles, California
I have audited the balance sheet of Figueroa Senior Housing Limited Partnership
at December 31, 2003, and the related statements of loss, changes in partners'
capital, and cash flow for the year then ended. These financial statements are
the responsibility of Figueroa Senior Housing Limited Partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Figueroa Senior Housing Limited
Partnership at December 31, 2003, and the results of its operations for the year
then ended in conformity with generally accepted accounting principles used in
the United States of America.
/s/ Clifford Benn, CPA
February 12, 2004
Carson, California
21
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
Figueroa Senior Housing Limited Partnership
Los Angeles, California
I have audited the balance sheet of Figueroa Senior Housing Limited Partnership
at December 31, 2002, and the related statements of loss, changes in partners'
capital, and cash flow for the year then ended. These financial statements are
the responsibility of Figueroa Senior Housing Limited Partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Figueroa Senior Housing Limited
Partnership at December 31, 2002, and the results of its operations for the year
then ended in conformity with generally accepted accounting principles used in
the United States of America.
/s/ Clifford Benn, CPA
March 3, 2003
Carson, California
22
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
NNPHI Senior Housing, L.P.
Los Angeles, California
I have audited the balance sheet of NNPHI Senior Housing, L.P. at December 31,
2004, and the related statements of loss, changes in partners' capital, and cash
flow for the year then ended. These financial statements are the responsibility
of NNPHI Senior Housing, L.P.'s management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NNPHI Senior Housing, L.P. at
December 31, 2004, and the results of its operations for the year then ended in
conformity with generally accepted accounting principles used in the United
States of America.
/s/ Clifford Benn, CPA
January 27, 2005
Carson, California
23
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
NNPHI Senior Housing, L.P.
Los Angeles, California
I have audited the balance sheet of NNPHI Senior Housing, L.P. at December 31,
2003, and the related statements of loss, changes in partners' capital, and cash
flow for the year then ended. These financial statements are the responsibility
of NNPHI Senior Housing, L.P.'s management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NNPHI Senior Housing, L.P. at
December 31, 2003, and the results of its operations for the year then ended in
conformity with generally accepted accounting principles used in the United
States of America.
/s/ Clifford Benn, CPA
February 14, 2004
Carson, California
24
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
NNPHI Senior Housing, L.P.
Los Angeles, California
I have audited the balance sheet of NNPHI Senior Housing, L.P. at December 31,
2002, and the related statements of loss, changes in partners' capital, and cash
flow for the year then ended. These financial statements are the responsibility
of NNPHI Senior Housing, L.P.'s management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NNPHI Senior Housing, L.P. at
December 31, 2002 and the results of its operations for the year then ended in
conformity with generally accepted accounting principles used in the United
States of America.
/s/ Clifford Benn, CPA
February 17, 2003
Carson, California
25
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership
We have audited the accompanying balance sheets of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2004 and 2003,
and the related statements of operations, partners' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2004 and 2003,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Reznick Group, P.C.
Baltimore, Maryland
January 19, 2005
26
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership
We have audited the accompanying balance sheets of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2003 and 2002,
and the related statements of operations, partners' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2003 and 2002,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 23, 2004
27
[LETTERHEAD OF KOCH GROUP & COMPANY, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Sojourner Douglas Urban Renewal Partnership, L.P.
We have audited the accompanying balance sheet of Sojourner Douglas Urban
Renewal Partnership, L.P. (A Limited Partnership) as of December 31, 2004 and
2003 and the related statements of operations, partners' equity (deficiency) and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sojourner Douglas Urban Renewal
Partnership, L.P. (A Limited Partnership) as of December 31, 2004 and 2003, and
the results of its operations, the changes in partners' equity (deficiency) and
its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/ Koch Group & Company, LLP
New York, New York
January, 21, 2005
28
[LETTERHEAD OF FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Sojourner Douglas Urban Renewal Partnership, L.P.
We have audited the accompanying balance sheet of SOJOURNER DOUGLAS URBAN
RENEWAL PARTNERSHIP, L.P. (a limited partnership) as of December 31, 2002, and
the related statements of operations, partners' capital deficiency and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SOJOURNER DOUGLAS URBAN RENEWAL
PARTNERSHIP, L.P. (a limited partnership) as of December 31, 2002, and the
results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Friedman Alpren & Green LLP
New York, New York
February 3, 2003
29
[LETTERHEAD OF COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION
To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited
Partnership, HUD Project No. LA48E000011, at December 31, 2004, and the related
statements of income, partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of New
Zion Apartments Limited Partnership at December 31, 2004, and the results of its
operations, changes in capital, and cash flows for the year then ended in
conformity with U.S. generally accepted accounting principles.
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 2004 taken as a whole. The
accompanying supplemental information (Schedules 1 through 8) is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the audit
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 2005 on our consideration of New Zion Apartments Limited
Partnership's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, grant
agreements, and other matters. The purpose of those reports is to describe the
scope of our testing of internal control over financial reporting and compliance
and the results of that testing and not to provide an opinion on the internal
control over financial reporting or on compliance. Those reports are an integral
part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
January 26, 2005
30
[LETTERHEAD OF COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION
To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited
Partnership, HUD Project No. LA48E000011, at December 31, 2003, and the related
statements of income, partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of New
Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December
31, 2003 and the results of its operations, changes in capital, and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 2003 taken as a whole. The
supplementary Schedules 1, 2 and 3 are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report
dated February 10, 2004 on our consideration of New Zion Apartments Limited
Partnership's internal control, and on its compliance with certain provisions of
laws, regulations, contracts, and grants. Those reports are an integral part of
an audit performed in accordance with Government Auditing Standards and should
be read in conjunction with this report in considering the results of our audit.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
February 10, 2004
31
[LETTERHEAD OF COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION
To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited
Partnership, HUD Project No. LA48E000011, at December 31, 2002, and the related
statements of income, partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of New
Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December
31, 2002 and the results of its operations, changes in capital, and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 2002 taken as a whole. The
supplementary Schedules 1, 2 and 3 are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report
dated February 10, 2003 on our consideration of New Zion Apartments Limited
Partnership's internal control, and on its compliance with certain provisions of
laws, regulations, contracts, and grants. Those reports are an integral part of
an audit performed in accordance with Government Auditing Standards and should
be read in conjunction with this report in considering the results of our audit.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
February 10, 2003
32
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Bakery Village Urban Renewal Associates, L.P.
We have audited the accompanying balance sheets of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2004 and 2003, and the related statements of
operations, partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2004 and 2003, and the results of its
operations, the changes in partners' equity (deficit) and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Reznick Group, P.C.
Baltimore, Maryland
February 28, 2005
33
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
Bakery Village Urban Renewal Associates, L.P.
We have audited the accompanying balance sheets of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2003 and 2002, and the related statements of
operations, partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2003 and 2002, and the results of its
operations, the changes in partners' equity (deficit) and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Reznick Fedder & Silverman
Baltimore, Maryland
February 3, 2004
34
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Marlton Housing Partnership, L.P.
We have audited the accompanying balance sheets of Marlton Housing Partnership,
L.P. as of December 31, 2004 and 2003, and the related statements of operations,
changes in partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the 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 Marlton Housing Partnership,
L.P. at December 31, 2004 and 2003, and the results of its operations, the
changes in its partners' equity (deficit) and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
/s/ Reznick Group, P.C.
Baltimore, Maryland
January 28, 2005
35
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
Marlton Housing Partnership, L.P.
We have audited the accompanying balance sheets of Marlton Housing Partnership,
L.P. as of December 31, 2003 and 2002, and the related statements of operations,
changes in partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the 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 Marlton Housing Partnership,
L.P. at December 31, 2003 and 2002, and the results of its operations, the
changes in its partners' equity (deficit) and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
/s/ Reznick Fedder & Silverman
Baltimore, Maryland
February 6, 2004
36
[LETTERHEAD OF FAVORS & ASSOCIATES, CPA's, P.S.]
INDEPENDENT AUDITORS' REPORT
To the Partners
GP Kaneohe Limited Partnership
We have audited the accompanying balance sheets of GP Kaneohe Limited
Partnership as of December 31, 2004 and 2003, and the related statements of
operations, changes in partners' capital (deficit), and cash flows for the years
then ended. These financial statements are the responsibility of the entity's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GP Kaneohe Limited Partnership
as of December 31, 2004 and 2003, and the results of its operations, the changes
in its partners' capital (deficit) and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Favors & Associates, CPA's, P.S.
Fircrest, Washington
January 31, 2005
37
[LETTERHEAD OF FAVORS & ASSOCIATES, CPA's, P.S.]
INDEPENDENT AUDITORS' REPORT
To the Partners
GP Kaneohe Limited Partnership
We have audited the accompanying balance sheet of GP Kaneohe Limited
Partnership, as of December 31, 2002, and the related statements of operations,
changes in partners' capital (deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the entity's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our 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 GP Kaneohe Limited Partnership
as of December 31, 2002, and the results of its operations, the changes in its
partners' capital (deficit) and cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report
dated March 13, 2003, on our consideration of GP Kaneohe Limited Partnership's
internal control, and our test of its compliance with certain provisions of
laws, regulations, contractors and grants. Those reports are an integral part of
an audit performed in accordance with Government Auditing Standards and should
be read in conjunction with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting data required by HUD shown
on pages 10 and 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of the Partnership. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Favors & Associates, CPA's, P.S.
Fircrest, Washington
March 13, 2003
38
[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
KSD Village Apartments, Phase II, Ltd,
We have audited the accompanying balance sheets of KSD Village Apartments, Phase
II, Ltd. as of December 31, 2004 and 2003 and the related statements of
operations, partners' equity (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of KSD Village Apartments, Phase
II, Ltd. as of December 31, 2004 and 2003, and the results of its operations and
its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
February 1, 2005
39
[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
KSD Village Apartments, Phase II, Ltd,
We have audited the accompanying balance sheets of KSD Village Apartments, Phase
II, Ltd. as of December 31, 2003 and 2002, and the related statements of
operations, partners' equity (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of KSD Village Apartments, Phase
II, Ltd. as of December 31, 2003 and 2002, and the results of its operations,
changes in partners' equity (deficit) and its cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.
/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
January 23, 2004
40
[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Kanisa Apartments Ltd.
We have audited the accompanying balance sheets of Kanisa Apartments, Ltd.,
complex no. 083-98017, as of December 31, 2004 and 2003 and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for the years then ended. These financial statements are the responsibility of
the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kanisa Apartments, Ltd. as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a reports
dated February 8, 2005 on our consideration of Kanisa Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, grant agreements, and
other matters. The purpose of those reports is to describe the scope of our
testing of internal control over financial reporting and compliance and the
results of that testing and not to provide an opinion on the internal control
over financial reporting or on compliance. Those reports are an integral part of
an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should
be read in conjunction with this report in considering the results of our
audits.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental data
included in this report is presented for purposes of additional analysis and is
not a required part of the basic financial statements of the partnership. Such
information has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
February 8, 2005
EIN: 61-0866166
Lead Auditor: Darren C. Johnson, CPA
Audit Principal: John T. Miller, CPA
41
[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Kanisa Apartments Ltd.
We have audited the accompanying balance sheets of Kanisa Apartments, Ltd.,
complex no. 083-98017-YHA, as of December 31, 2003 and 2002 and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for the years then ended. These financial statements are the responsibility of
the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kanisa Apartments, Ltd., as of
December 31, 2003 and 2002, and the results of its operations, changes in
partners' equity (deficit), and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated February 13, 2004 on our consideration of Kanisa Apartments, Ltd.'s
internal controls and on our tests of its compliance with certain provisions of
laws, regulations, contracts, and grants. Those reports are an integral part of
an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should
be read in conjunction with this report in considering the results of our
audits.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental data
included in this report is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
February 13, 2004
EIN: 61-0866166
Lead Auditor: Darren C. Johnson, CPA
Audit Principal: John T. Miller, CPA
42
[LETTERHEAD OF HANKINS & COMPANY]
INDEPENDENT AUDITOR'S REPORT
Partners
Guymon Housing Partners Limited Partnership
D/B/A Blue Quail Apartments
We have audited the accompanying balance sheets of GUYMON HOUSING PARTNERS
LIMITED PARTNERSHIP, D/B/A BLUE QUAIL APARTMENTS as of December 31, 2004 and
2003, and the related statements of operations, changes in partners' capital and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for my opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GUYMON HOUSING PARTNERS LIMITED
PARTNERSHIP, D/B/A BLUE QUAIL APARTMENTS as of December 31, 2004 and 2003, and
the results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Hankins & Company
February 18, 2005
Fort Smith, Arkansas
43
[LETTERHEAD OF HANKINS & COMPANY]
INDEPENDENT AUDITOR'S REPORT
Partners
Guymon Housing Partners Limited Partnership
d/b/a Blue Quail Apartments
We have audited the accompanying balance sheets of GUYMON HOUSING PARTNERS
LIMITED PARTNERSHIP, D/B/A BLUE QUAIL APARTMENTS as of December 31, 2003 and
2002, and the related statements of operations, changes in partners' capital and
cash flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted my audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for my opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GUYMON HOUSING PARTNERS LIMITED
PARTNERSHIP, D/B/A BLUE QUAIL APARTMENTS as of December 31, 2003 and 2002, and
the results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Hankins & Company
February 20, 2004
Fort Smith, Arkansas
44
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31,
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2005 2