Attached files
| file | filename |
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| EX-32.1 - BOSTON FINANCIAL - BOSTON FINANCIAL TAX CREDIT FUND VIII LP | tc8q3fy11ex32-1.htm |
| EX-32.2 - BOSTON FINANCIAL - BOSTON FINANCIAL TAX CREDIT FUND VIII LP | tc8q3fy11ex32-2.htm |
| EX-31.2 - BOSTON FINANCIAL - BOSTON FINANCIAL TAX CREDIT FUND VIII LP | tc8q3fy11ex31-2.htm |
| EX-31.1 - BOSTON FINANCIAL - BOSTON FINANCIAL TAX CREDIT FUND VIII LP | tc8q3fy11ex31-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2010
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
For the transition period from __________________________________ to_________________________________
Commission file number 0-26522
Boston Financial Tax Credit Fund VIII, A Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-3205879
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 Arch Street, Boston, Massachusetts 02110-1106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b -2 of the Exchange Act.
Large accelerated filer ___ Accelerated Filer ___
Non-accelerated filer ___ (Do not check if a smaller reporting company) Smaller reporting company X
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b -2 of the Exchange Act).
Yes No X .
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheets - December 31, 2010 (Unaudited)
and March 31, 2010 (Audited) 1
Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 2010 and 2009 2
Statement of Changes in Partners' Equity (Unaudited) -
For the Nine Months Ended December 31, 2010 3
Statements of Cash Flows (Unaudited) - For the Nine
Months Ended December 31, 2010 and 2009 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
Item 4. Controls and Procedures 13
PART II - OTHER INFORMATION
Items 1-6 14
SIGNATURE 15
CERTIFICATIONS 18
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
BALANCE SHEETS
December 31, 2010 (Unaudited) and March 31, 2010 (Audited)
|
Assets
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December 31
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March 31
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||||||
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Cash and cash equivalents
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$ | 236,187 | $ | 372,567 | ||||
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Investments in Local Limited Partnerships (Note 1)
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2,000,336 | 2,322,351 | ||||||
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Other assets
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833 | 233 | ||||||
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Total Assets
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$ | 2,237,356 | $ | 2,695,151 | ||||
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Liabilities and Partners' Equity
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||||||||
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Due to affiliate
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$ | 771,394 | $ | 568,505 | ||||
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Accrued expenses
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30,888 | 56,036 | ||||||
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Total Liabilities
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802,282 | 624,541 | ||||||
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General, Initial and Investor Limited Partners' Equity
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1,435,074 | 2,070,610 | ||||||
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Total Liabilities and Partners' Equity
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$ | 2,237,356 | $ | 2,695,151 | ||||
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 2010 and 2009
(Unaudited)
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Three Months Ended
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Nine Months Ended
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|||||||||||||||
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December 31,
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December 31,
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December 31,
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December 31,
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|||||||||||||
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2010
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2009
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2010
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2009
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|||||||||||||
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Revenue:
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||||||||||||||||
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Investment
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$ | 265 | $ | 2,430 | $ | 912 | $ | 2,901 | ||||||||
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Total Revenue
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265 | 2,430 | 912 | 2,901 | ||||||||||||
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Expense:
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||||||||||||||||
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Asset management fees, affiliate
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67,629 | 65,852 | 202,889 | 197,556 | ||||||||||||
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Provision for valuation allowance on
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||||||||||||||||
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advances to Local Limited Partnerships
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- | - | - | 209,146 | ||||||||||||
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Impairment on investments in Local
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||||||||||||||||
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Limited Partnerships
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337,000 | 198,000 | 426,000 | 716,000 | ||||||||||||
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General and administrative
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||||||||||||||||
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(includes reimbursements to an affiliate
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||||||||||||||||
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in the amounts of $97,888 and
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||||||||||||||||
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$79,170 for the nine months ended
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||||||||||||||||
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December 31, 2010 and 2009,
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||||||||||||||||
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respectively)
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50,557 | 58,177 | 156,301 | 153,354 | ||||||||||||
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Amortization
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437 | 437 | 1,311 | 1,955 | ||||||||||||
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Total Expenses
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455,623 | 322,466 | 786,501 | 1,278,011 | ||||||||||||
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Loss before equity in income
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||||||||||||||||
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of Local Limited Partnerships
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(455,358 | ) | (320,036 | ) | (785,589 | ) | (1,275,110 | ) | ||||||||
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Equity in income of Local Limited
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||||||||||||||||
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Partnerships (Note 1)
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3,936 | 73,862 | 150,053 | 84,061 | ||||||||||||
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Loss on sale of investments in Local
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||||||||||||||||
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Limited Partnerships
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- | - | - | (136,762 | ) | |||||||||||
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Net Loss
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$ | (451,422 | ) | $ | (246,174 | ) | $ | (635,536 | ) | $ | (1,327,811 | ) | ||||
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Net Loss allocated:
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||||||||||||||||
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General Partners
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$ | (4,514 | ) | $ | (2,462 | ) | $ | (6,355 | ) | $ | (13,278 | ) | ||||
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Limited Partners
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(446,908 | ) | (243,712 | ) | (629,181 | ) | (1,314,533 | ) | ||||||||
| $ | (451,422 | ) | $ | (246,174 | ) | $ | (635,536 | ) | $ | (1,327,811 | ) | |||||
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Net Loss Per Limited Partner
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||||||||||||||||
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Unit (36,497 Units)
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$ | (12.25 | ) | $ | (6.68 | ) | $ | (17.24 | ) | $ | (36.02 | ) | ||||
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the Nine Months Ended December 31, 2010
(Unaudited)
|
Initial
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Investor
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|||||||||||||||
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General
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Limited
|
Limited
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||||||||||||||
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Partners
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Partner
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Partners
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Total
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|||||||||||||
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Balance at March 31, 2010
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$ | 20,707 | $ | 100 | $ | 2,049,803 | $ | 2,070,610 | ||||||||
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Net Loss
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(6,355 | ) | - | (629,181 | ) | (635,536 | ) | |||||||||
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Balance at December 31, 2010
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$ | 14,352 | $ | 100 | $ | 1,420,622 | $ | 1,435,074 | ||||||||
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 2010 and 2009
(Unaudited)
|
2010
|
2009
|
|||||||
|
Net cash used for operating activities
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$ | (181,137 | ) | $ | (293,332 | ) | ||
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Net cash provided by investing activities
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44,757 | 857,416 | ||||||
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Net increase (decrease) in cash and cash equivalents
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(136,380 | ) | 564,084 | |||||
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Cash and cash equivalents, beginning
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372,567 | 109,829 | ||||||
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Cash and cash equivalents, ending
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$ | 236,187 | $ | 673,913 | ||||
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included with the Fund's Form10-K for the year ended March 31, 2010. In the opinion of the Managing General Partner, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Fund's financial position and results of operations. The results of operations for the periods may not be indicative of the results to be expected for the year.
The Managing General Partner has elected to report results of the Local Limited Partnerships on a 90 day lag basis because the Local Limited Partnerships report their results on a calendar year basis. Accordingly, the financial information about the Local Limited Partnerships that is included in the accompanying financial statements is as of September 30, 2010 and 2009 and for the nine months then ended.
Generally, profits, losses, tax credits and cash flows from operations are allocated 99% to the Limited Partners and 1% to the General Partner. Net proceeds from a sale or refinancing will be allocated 95% to the Limited Partners and 5% to the General Partner, after certain priority payments. The General Partners may have an obligation to fund deficits in their capital accounts, subject to limits set forth in the Partnership Agreement. However, to the extent that the General Partners’ capital accounts are in a deficit position, certain items of net income may be allocated to the General Partners in accordance with the Partnership Agreement.
1. Investments in Local Limited Partnerships
The Fund has limited partnership interests in five Local Limited Partnerships, which were organized for the purpose of owning and operating multi-family housing complexes, all of which are government assisted. The Fund's ownership interest in the Local Limited Partnerships is 99%, with the exception of Springwood, which is 79.20%, and Hemlock Ridge, which is 77%. The Fund may have negotiated or may negotiate options with the Local General Partners to purchase or sell the Fund’s interests in the Local Limited Partnerships at the end of the Compliance Period at nominal prices. In the event that Local Limited Partnerships are sold to third parties, or upon dissolution of the Local Limited Partnerships, proceeds will be distributed according to the terms of each Local Limited Partnership agreement.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
1. Investments in Local Limited Partnerships (continued)
The following is a summary of investments in Local Limited Partnerships at December 31, 2010 and March 31, 2010:
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December 31
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March 31
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|||||||
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Capital contributions and advances paid to Local Limited Partnerships
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$ | 18,442,398 | $ | 19,336,206 | ||||
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Cumulative equity in losses of Local Limited Partnerships (excluding
|
||||||||
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cumulative unrecognized losses of $4,329,316 and $3,787,055 at
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||||||||
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December 31 and March 31, 2010, respectively)
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(11,216,498 | ) | (11,767,212 | ) | ||||
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Cumulative cash distributions received from Local Limited Partnerships
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(882,099 | ) | (837,342 | ) | ||||
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Investments in Local Limited Partnerships before adjustments
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6,343,801 | 6,731,652 | ||||||
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Excess investment costs over the underlying assets acquired:
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||||||||
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Acquisition fees and expenses
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651,057 | 662,167 | ||||||
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Cumulative amortization of acquisition fees and expenses
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(196,067 | ) | (198,254 | ) | ||||
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Investments in Local Limited Partnerships before valuation allowance
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6,798,791 | 7,195,565 | ||||||
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Valuation allowance on investments in Local Limited Partnerships
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(4,798,455 | ) | (4,873,214 | ) | ||||
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Investments in Local Limited Partnerships
|
$ | 2,000,336 | $ | 2,322,351 | ||||
The Fund has recorded an impairment allowance for its investments in certain Local Limited Partnerships in order to appropriately reflect the estimated net realizable value of these investments.
The Fund’s share of net losses of the Local Limited Partnerships for the nine months ended December 31, 2010 and 2009 is $528,776 and $934,634, respectively. For the nine months ended December 31, 2010 and 2009, the Fund has not recognized $678,829 and $1,018,695, respectively, of equity in losses relating to certain Local Limited Partnerships where cumulative equity in losses and cumulative distributions exceeded its total investment in the Local Limited Partnership.
During the nine months ended December 31, 2010, the fund sold its interest in one Local Limited Partnership, resulting in a net loss of $0. The Fund anticipates the interest in two Local Limited Partnerships will terminate as a result of the underlying property foreclosures.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (continued)
(Unaudited)
|
2.
|
New Accounting Principles
|
Consolidation of Variable Interest Entities
In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs). The amended guidance modifies the consolidation model to one based on control and economics, and replaces the current quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the amended guidance requires continual reconsideration of the primary beneficiary of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE. Additionally, the amendment requires enhanced and expanded disclosures around VIEs. This amendment is effective for fiscal years beginning after November 15, 2009. The adoption of this guidance on April 1, 2010 did not have a material effect on the Fund’s financial statements.
3. Significant Subsidiaries
The following Local Limited Partnerships invested in by the Fund represent more than 20% of the Fund’s total assets or equity as of December 31, 2010 or 2009 or net losses for the three months then ended. The following financial information represents the performance of these Local Limited Partnerships for the three months ended September 30, 2010 and 2009:
|
2010
|
2009
|
|||||||
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Oak Knoll Renaissance, Limited Partnership
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||||||||
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Revenue
|
$ | 533,880 | $ | 525,982 | ||||
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Net Income
|
$ | 3,976 | $ | 74,608 | ||||
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain matters discussed herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words like “anticipate, “estimate,” “intend,” “project,” “plan,” “expect,” “believe,” “could,” and similar expressions are intended to identify such forward-looking statements. The Fund intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements and is including this statement for purposes of complying with these safe harbor provisions. Although the Fund believes the forward-looking statements are based on reasonable assumptions, the Fund can give no assurance that its expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, general economic and real estate conditions and interest rates.
Critical Accounting Policies
The Fund’s accounting polices include those that relate to its recognition of investments in Local Limited Partnerships using the equity method of accounting. The Fund’s policy is as follows:
The Local Limited Partnerships in which the Fund invests are Variable Interest Entities (VIEs). The Fund is involved with the VIEs as a non-controlling limited partner equity holder. The investments in the Local Limited Partnerships are made primarily to obtain tax credits on behalf of the Fund’s investors. The Tax Credits generated by Local Limited Partnerships are not reflected on the books of the Fund as such credits are allocated to investors for use in offsetting their federal income tax liability. The general partners of the Local Limited Partnerships, who are considered to be the primary beneficiaries, have the power to direct the activities of the Local Limited Partnerships and an obligation to absorb losses of the Local Limited Partnerships. The general partners control the day-to-day operations of the Local Limited Partnerships and are responsible for maintaining compliance with the tax credit program and for providing subordinated financial support in the event operations cannot support debt and property tax payments. The Fund, through its ownership percentages, may participate in property disposition proceeds. The timing and amounts of these proceeds are unknown but can impact the Fund’s financial position, results of operations or cash flows. Because the Fund is not the primary beneficiary of these VIEs, it accounts for its investments in the Local Limited Partnerships using the equity method of accounting. The Fund's exposure to economic and financial statement losses is limited to its investments in the VIEs. The Fund may be subject to additional losses to the extent of any financial support that the Fund voluntarily provides in the future. Under the equity method, the investment is carried at cost, adjusted for the Fund’s share of net income or loss and for cash distributions from the Local Limited Partnerships; equity in income or loss of the Local Limited Partnerships is included currently in the Fund's operations. A liability is recorded for delayed equity capital contributions to Local Limited Partnerships. Under the equity method, a Local Limited Partnership investment will not be carried below zero. To the extent that equity in losses are incurred when the Fund’s carrying value of the respective Local Limited Partnership has been reduced to a zero balance, the losses will be suspended and offset against future income. Income from a Local Limited Partnership, where cumulative equity in losses plus cumulative distributions have exceeded the total investment in the Local Limited Partnership, will not be recorded until all of the related unrecorded losses have been offset. To the extent that a Local Limited Partnership with a carrying value of zero distributes cash to the Fund, that distribution is recorded as income on the books of the Fund.
The Fund has implemented policies and practices for assessing other-than-temporary declines in the values of its investments in Local Limited Partnerships. Periodically, the carrying values of the investments are tested for other-than-temporary impairment. If an other-than-temporary decline in carrying value exists, a provision to reduce the investment to the sum of the estimated remaining benefits will be recorded in the Fund's financial statements. The estimated remaining benefits for each Local Limited Partnership consist of estimated future tax losses and tax credits over the estimated life of the investment and estimated residual proceeds at disposition. Included in the estimated residual proceeds calculation is an estimated net operating income capitalized at a rate specific to the location of each Local Limited Partnership less the estimated terminal debt balance of the Local Limited Partnership. Generally, the carrying values of most Local Limited Partnerships will decline through losses and distributions. However, the Fund may record impairment losses if the expiration of tax credits outpaces losses and distributions from any of the Local Limited Partnerships.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources
At December 31, 2010, the Fund had cash and cash equivalents of $236,187, as compared to $372,567 at March 31, 2010. The decrease is primarily attributable to cash used for operating activities, partially offset by cash distributions received from Local Limited Partnerships.
The General Partner initially designated 5% of the Gross Proceeds as Reserves, as defined in the Partnership Agreement. The Reserves were established to be used for working capital of the Fund and contingencies related to the ownership of Local Limited Partnership interests. The General Partner may increase or decrease such Reserves from time to time, as it deems appropriate. At December 31, 2010 and March 31, 2010, approximately $206,000 and $317,000, respectively, has been designated as Reserves.
To date, professional fees relating to various Property issues totaling approximately $69,000 have been paid from Reserves. In the event a Local Limited Partnership encounters operating difficulties requiring additional funds, the Fund’s management might deem it in its best interest to voluntarily provide such funds in order to protect its investment. As of December 31, 2010, the Fund has advanced approximately $1,417,000 to Local Limited Partnerships to fund operating deficits.
The General Partner believes that the investment income earned on the Reserves, along with cash distributions received from Local Limited Partnerships, to the extent available, will be sufficient to fund the Fund’s ongoing operations. Reserves may be used to fund operating deficits, if the General Partner deems funding appropriate. To date, the Fund has used approximately $132,000 of Reserves to fund operations. If Reserves are not adequate to cover the Fund’s operations, the Fund will seek other financing sources including, but not limited to, the deferral of Asset Management Fees paid to an affiliate of the General Partner or working with Local Limited Partnerships to increase cash distributions.
Since the Fund invests as a limited partner, the Fund has no contractual duty to provide additional funds to Local Limited Partnerships beyond its specified investment. Thus, as of December 31, 2010, the Fund had no contractual or other obligation to any Local Limited Partnership which had not been paid or provided for.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 2010.
Results of Operations
Three Month Period
For the three months ended December 31, 2010, the Fund’s operations resulted in a net loss of $451,422 as compared to a net loss of $246,174 for the three months ended December 31, 2009. The increase in net loss is primarily attributable to an increase in impairment on investments in Local Limited Partnerships, a decrease in equity in income of Local Limited Partnerships, partially offset by a decrease in general and administrative expenses recorded by the Fund. The increase in impairment on investments in Local Limited Partnerships is a result of more impairment recorded on investments in Local Limited Partnerships during the three months ended December 31, 2010, as compared to the same three month period of 2009. The decrease in equity in income of Local Limited Partnerships is due to a decrease in income recorded by certain Local Limited Partnerships. The decrease in general and administrative expenses is primarily due to a decrease in accounting and salary expenses recorded by the Fund for the three months ended December 31, 2010, as compared to the three months ended December 31, 2009.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
Nine Month Period
For the nine months ended December 31, 2010, the Fund’s operations resulted in a net loss of $635,536 as compared to a net loss of $1,327,811 for the nine months ended December 31, 2009. The decrease in net loss is primarily attributable to a decrease in impairment on investments in Local Limited Partnerships, a decrease in provision for valuation allowance on advances to Local Limited Partnerships, a decrease in loss on sale of investments in Local Limited Partnerships, and an increase in equity in income of Local Limited Partnerships. The decrease in impairment on investments in Local Limited Partnerships is primarily due to less impairment recorded on investments in Local Limited Partnerships. The decrease in provision for valuation allowance on advances to Local Limited Partnerships is the result of a decrease in advances paid to Local Limited Partnerships for the nine months ended December 31, 2010, as compared to the same nine month period of 2009. The decrease in loss on sale of investments in Local Limited Partnerships is a result of no gain or loss on sale of investments in Local Limited Partnerships in the current period as compared to a net loss on sale of investments in three Local Limited Partnerships during the nine months ended December 31, 2009. The increase in equity in income of Local Limited Partnerships is due to an increase in income recorded by certain Local Limited Partnerships.
Portfolio Update
The Fund is a Massachusetts limited partnership organized to invest in Local Limited Partnerships which own and operate apartment complexes which are eligible for low income housing tax credits that may be applied against the federal income tax liability of an investor. The Fund’s objectives are to: (i) provide investors with annual tax credits which they may use to reduce their federal income tax liability; (ii) provide limited cash distributions from the operations of apartment complexes; and (iii) preserve and protect the Fund’s capital. Arch Street VIII Limited Partnership is the General Partner of the Fund. ALZA Corporation is the class A limited partner of Arch Street VIII Limited Partnership; Boston Financial BFG Investments, LLC is the class B limited partner of Arch Street VIII Limited Partnership and Arch Street VIII, Inc. is the general partner of Arch Street VIII Limited Partnership. Arch Street VIII Limited Partnership and Arch Street VIII, Inc. are affiliates of Boston Financial. The fiscal year of the Fund ends on March 31.
As of December 31, 2010, the Fund’s investment portfolio consists of limited partnership interests in five Local Limited Partnerships, each of which owns and operates a multi-family apartment complex and each of which has generated Tax Credits. Since inception, the Fund generated Tax Credits of approximately $1,429 per Limited Partner Unit. The aggregate amount of Tax Credits generated by the Fund was consistent with the objective specified in the Fund’s prospectus.
Properties that receive low income housing Tax Credits must remain in compliance with rent restriction and set-aside requirements for at least 15 calendar years from the date the property is placed in service (the “Compliance Period”). Failure to do so would result in the recapture of a portion of the property’s Tax Credits. The Compliance Period expired for all Properties on or prior to December 31, 2010. The Fund shall dissolve and its affairs shall be wound up upon the disposition of the final Local Limited Partnership interest and other assets of the Fund. Investors will continue to be Limited Partners, receiving K-1s and quarterly and annual reports, until the Fund is dissolved. One Local Limited Partnership interest was disposed of during the nine months ended December 31, 2010.
The Fund is not a party to any pending legal or administrative proceeding, and to the best of its knowledge, no legal or administrative proceeding is threatened or contemplated against it.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions
Three of the five Properties in which the Fund has an interest had stabilized operations and operated above breakeven at September 30, 2010. The other two Properties have generated cash flow deficits in prior periods that the Local General Partners of those Properties funded through project expense loans, subordinated loans or operating escrows. However, a few Properties have previously experienced operating difficulties that could either: (i) have an adverse impact on the Fund’s liquidity; or (ii) result in their foreclosure. Also, the General Partner, in the normal course of the Fund’s business, may arrange for the future disposition of its interest in certain Local Limited Partnerships. The following Property discussions focus only on such Properties.
As previously reported, in 2004 the Local General Partner of Beaverdam Creek located in Mechanicsville, Virginia, requested approval for a refinancing on the Property’s first mortgage. As part of the agreement to provide the General Partner’s approval of the refinancing, a Put Agreement was entered into whereby the Fund has the right to transfer its interest in the Local Limited Partnership for a nominal price at any time after December 31, 2009, the end of the Property’s Compliance Period. As a result of the refinancing, which closed on May 4, 2005, the Fund received Refinancing Proceeds, as defined in the Local Limited Partnership Agreement, of $890,727. The General Partner, in accordance with and as permitted by the Partnership Agreement, retained the entire amount of the net proceeds in Reserves. On September 30, 2009, the Fund’s interest was transferred. The Fund received $550,000, or $15.07 per Unit. The General Partner, in accordance with and as permitted by the Partnership Agreement, retained the entire amount of the net proceeds in Reserves. It was previously reported that the 2009 estimated tax loss would be $673,780, or $18.46 per Unit; however, this amount did not take into consideration the sales proceeds noted above. The actual 2009 tax income is $40,063, or $1.10 per Unit. The Fund no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner transferred the Fund’s interest in the Local Limited Partnership that owns Pike Place, located in Fort Smith, Arkansas, on September 30, 2009. The Fund received $351,083, or $9.62 per Unit. The General Partner, in accordance with and as permitted by the Partnership Agreement, retained the entire amount of the net proceeds in Reserves. The actual 2009 tax income was $196,062, or $5.37 per Unit. The Fund no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner transferred the Fund’s interest in the Local Limited Partnership that owns West End Place Apartments, located in Springdale, Arkansas, on September 30, 2009. The Fund received $974, or $0.03 per Unit. The General Partner, in accordance with and as permitted by the Partnership Agreement, retained the entire amount of the net proceeds in Reserves. The actual 2009 taxable loss was $465,651, or $12.76 per Unit. The Fund no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner anticipated the Fund’s interest in the Local Limited Partnership that owns Meadow Wood of Pella, located in Pella, Iowa, to terminate by April 2011. The Managing General Partner and Local General Partner negotiated an exit strategy to dispose of the Fund’s interest in the Local Limited Partnership. The transaction occurred on December 31, 2010. The Local General Partner worked with the first mortgage lender to extend the loan maturity, as it matured on July 1, 2010. An extension was granted until November 2010. Subsequently, the first mortgage lender approved the transfer of the Fund’s interest in conjunction with the loan extension. The Tax Credit compliance period ended on December 31, 2009. The Managing General Partner estimates that the transfer of the Fund’s interest will result in an estimated 2010 tax loss of $30,000, or $0.82 per Unit. The Fund no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner anticipated the Fund’s interest in the Local Limited Partnership that owns SpringWood Apartments, located in Tallahassee, Florida, would be terminated upon the sale of the Property in the third quarter of 2008, a transaction that could have resulted in net sales proceeds to the Fund of approximately $1,600,000, or $44.20 per Unit. In July 2008, the potential buyer withdrew their interest to purchase this Property. The Managing General Partner is currently exploring alternative exit strategies for this Local Limited Partnership interest. The Managing General Partner anticipates the Fund’s interest in the Local Limited Partnership
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
will generally terminate no earlier than 90 days upon the projected sale of the Property in June 2011 for a nominal sum. However, the debt matures on March 1, 2011, at which time the first mortgage lender may foreclose on the Property if payment is not made and they do not grant an extension. Although foreclosure would not be ideal, it would provide an exit for the Fund and no penalties would be incurred as the Tax Credit compliance period ended on December 31, 2009.
As previously reported, the Managing General Partner anticipates the Fund’s interest in the Local Limited Partnership that owns Webster Court, located in Kent, Washington, to terminate, which is projected to occur in late-2011. Net sales proceeds, if any, as well as taxable income, are unknown at this time.
As previously reported, the Managing General Partner anticipated the Fund’s interest in the Local Limited Partnership that owns Live Oak Apartments, located in West Palm Beach, Florida, to terminate as a result of the Property foreclosing in early 2010. However, the Managing General Partner is working with the Local Limited Partnership to improve operations, minimize deficits and keep debt service payments current. To date, the Fund advanced $209,146 to cover May, June and July 2009 debt service payments. The Local Limited Partnership paid the August 2009 debt service payment and all subsequent debt payments to keep the loan current. The Fund’s funding strategy is reviewed periodically to determine if additional Fund advances are warranted to cover future deficits. At this time, the Managing General Partner does not project the use of any further Fund advances. Live Oak Apartments has a second mortgage administered by the Florida Housing Finance Agency (FHFA) in the amount of $1,416,000 as of December 31, 2009. The loan has a rate of 7.04%, with 3% due annually on June 30 and the balance deferred. On September 22, 2009, FHFA agreed not to foreclose for failure of the borrower to make the June 30, 2009 payment of approximately $44,482. The Forbearance Agreement, effective as of June 30, 2009, required the borrower to pay the $44,482 delinquent amount over nine payments of $4,942.45 beginning September 30, 2009 and ending on May 31, 2010. The Compliance Period expired on December 31, 2010. The Managing General Partner continues to negotiate with the Local General Partner on alternative ways to exit the Local Limited Partnership. It is likely that the Local General Partner will purchase the Fund’s interest in the Property for a nominal sum in early-2011.
As previously reported, the Managing General Partner anticipated the Fund’s interest in the Local Limited Partnership that owns Hemlock Ridge, located in Livingston Manor, New York, to terminate in December 2010, at the earliest. The Managing General Partner and Local General Partner are currently negotiating an exit strategy to dispose of the Fund’s interest in the Local Limited Partnership for a nominal sum. A transaction is currently projected to occur in mid-2011. Net sales proceeds, if any, as well as taxable income or loss, is unknown at this time.
As previously reported, the Managing General Partner anticipates the Fund’s interest in the Local Limited Partnership that owns Oak Knoll Renaissance, located in Gary, Indiana, to terminate in late-2011. The Managing General Partner and Local General Partner are currently negotiating an exit strategy to dispose of the Fund’s interest in the Local Limited Partnership. A transaction is currently projected to occur in December 2011. Net sales proceeds, if any, as well as taxable income or loss, is unknown at this time.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Non Applicable
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Fund maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and reported within the specified time periods. The Fund’s Chief Executive Officer and its Chief Financial Officer (collectively, the “Certifying Officers”) are responsible for maintaining disclosure controls for the Fund. The controls and procedures established by the Fund are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.
As of the end of the period covered by this report, the Certifying Officers evaluated the effectiveness of the Fund’s disclosure controls and procedures. Based on the evaluation, the Certifying Officers concluded that as of December 31, 2010, the Fund’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.
Internal Control over Financial Reporting
The Certifying Officers have also concluded that there was no change in the Fund’s internal controls over financial reporting identified in connection with the evaluation that occurred during the Fund’s third fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.
BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
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(a)
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Exhibits
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31.1
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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32.2
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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(b)
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Reports on Form 8-K – No reports on Form 8-K were filed during the quarter ended December 31, 2010
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BOSTON FINANCIAL TAX CREDIT FUND VIII, A LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 14, 2011 BOSTON FINANCIAL TAX CREDIT FUND VIII,
A LIMITED PARTNERSHIP
By: Arch Street VIII Limited Partnership,
its General Partner
/s/Kenneth J. Cutillo
Kenneth J. Cutillo
President
Arch Street VIII, Inc.
Arch Street VIII Limited Partnership
(Chief Executive Officer)