Attached files
FINANCIAL AND COMPLIANCE REPORTS AND
INDEPENDENT AUDITOR'S REPORT
MANSUR WOOD LIVING CENTER, L.P.
DECEMBER 31, 2009 AND 2008
PAGE
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INDEPENDENT AUDITORS' REPORT
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3
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FINANCIAL STATEMENTS:
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BALANCE SHEETS
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4
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STATEMENTS OF INCOME
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6
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STATEMENTS OF CHANGES IN PARTNERS' EQUITY
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7
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STATEMENTS OF CASH FLOWS
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8
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NOTES TO FINANCIAL STATEMENTS
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9
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SUPPLEMENTAL INFORMATION:
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INDEPENDENT AUDITOR'S REPORT ON INFORMATION
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ACCOMPANYING THE BASIC FINANCIAL STATEMENTS
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17
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SUPPLEMENTAL SCHEDULE
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18
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PAILET, MEUNIER and LeBLANC, L.L.P.
Certified Public Accountants
Management Consultants
INDEPENDENT AUDITOR'S REPORT
To the Partners
MANSUR WOOD LIVING CENTER, L.P.
Bettendorf, Iowa
We have audited the accompanying balance sheets of MANSUR WOOD LIVING CENTER, L.P. as of December 31, 2009 and 2008 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 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. The partnership has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the partnership's internal control over financial reporting. Accordingly, we express no such opinion. An audit 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 MANSUR WOOD LIVING CENTER, L.P. as of December 31, 2009 and 2008 and the results of its operations, changes in partners' equity and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ PAILET, MEUNIER and LeBLANC, L.L.P.
Metairie, Louisiana
May 13, 2010
3421 N. Causeway Blvd., Suite 701. Metairie, LA 70002Telephone (504) 837-0770 . Fax (504) 837-7102
Member of
IGAF Worldwide - Member Firms in Principal Cities . PCAOB - Public Company Accounting Oversight Board
AICPA Centers . Center for Public Company Audit Firms (SEC)
Governmental Audit Quality Center . Private Companies Practice Section (PCPS)
MANSUR WOOD LIVING CENTER, L.P.
BALANCE SHEETS
DECEMBER 31, 2009 AND 2008
ASSETS
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2009
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2008
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Current Assets
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Cash and Equivalents
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352 | $ | 7,908 | |||||
Accounts Receivable
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36,517 | 41,015 | ||||||
TIF Receivable
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55,565 | 48,369 | ||||||
Prepaid Insurance
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27,793 | 19,296 | ||||||
Total Current Assets
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120,227 | 116,588 | ||||||
Restricted Deposits and Reserves
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Tenant Security Deposits
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33,820 | 35,500 | ||||||
Tax and Insurance Escrow
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33,595 | 33,110 | ||||||
Water/Sewer Escrow
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84,000 | 53,000 | ||||||
Replacement Reserve
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47,423 | 38,197 | ||||||
Total Restricted Deposits and Reserves
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198,838 | 159,807 | ||||||
Property and Equipment
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||||||||
Buildings
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10,910,416 | 10,910,416 | ||||||
Furniture & Fixtures
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128,966 | 128,966 | ||||||
11,039,382 | 11,039,382 | |||||||
Accumulated Depreciation
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(3,953,647 | ) | (3,535,254 | ) | ||||
Land
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51,500 | 51,500 | ||||||
Total Property and Equipment
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7,137,235 | 7,555,628 | ||||||
Other Assets | ||||||||
Financing Fees - Net
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30,027 | 37,711 | ||||||
Total Other Assets
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30,027 | 37,711 | ||||||
Total Assets
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7,486,327 | $ | 7,869,734 |
See Accountant's Report and Notes to Financial Statements
3
BALANCE SHEETS
DECEMBER 31, 2009 AND 2008
2009
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2008
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LIABILITIES AND PARTNERS' EQUITY
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Current Liabilities
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Accounts Payable
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$ | 52,587 | $ | 60,890 | ||||
Accrued Expenses
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2,976 | 2,688 | ||||||
Prepaid Rent
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821 | 184 | ||||||
Tenant Security Deposit
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33,348 | 37,255 | ||||||
Accrued Interest Payable
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20,593 | 21,384 | ||||||
Accrued Real Estate Taxes
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119,735 | 129,260 | ||||||
Reporting Fees Payable
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55,000 | 50,000 | ||||||
Current Portion of Long Term Debt
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105,321 | 127,858 | ||||||
Total Current Liabilities
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390,381 | 429,519 | ||||||
Long Term Debt
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Mortgage Payable
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3,265,951 | 3,393,810 | ||||||
Less Current Portion Long-Term Debt
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(105,321 | ) | (127,858 | ) | ||||
Due to Related Parties
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455,941 | 414,229 | ||||||
Due to Developer
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445,732 | 445,732 | ||||||
Total Long-Term Debt
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4,062,303 | 4,125,913 | ||||||
Total Liabilities
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4,452,684 | 4,555,432 | ||||||
Partners' Equity
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Partners Equity
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3,033,643 | 3,314,302 | ||||||
Total Liabilities and Partners' Equity
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$ | 7,486,327 | $ | 7,869,734 |
See Accountant's Report and Notes to Financial Statements
4
MANSUR WOOD LIVING CENTER, L.P.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
2009
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2008
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Revenues
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Rent Revenue
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$ | 669,756 | $ | 646,846 | ||||
Laundry & Vending
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1,082 | 859 | ||||||
NSF & Late Fee Revenue
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3,317 | 4,277 | ||||||
Security Deposit Forfeitures
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2,589 | - | ||||||
Other Revenue
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9,004 | 8,774 | ||||||
Total Revenue
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685,748 | 660,756 | ||||||
Expenses
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Administrative
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127,523 | 100,987 | ||||||
Utilities
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81,061 | 83,699 | ||||||
Operating and Maintenance
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45,685 | 37,747 | ||||||
Taxes and Insurance
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73,377 | 86,774 | ||||||
Interest Expense
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. 251,521 | 260,695 | ||||||
Depreciation & Amortization
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426,078 | 426,078 | ||||||
Total Expenses
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1,005,245 | 995,980 | ||||||
Income (Loss) from Rental Operations
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(319 497 | ) | (335,224 | ) | ||||
Other Income (Expenses)
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Interest Income
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179 | 1,633 | ||||||
Insurance Proceeds - Fire Damage
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1,357,981 | |||||||
Repairs - Fire Damage
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(1,297,582 | ) | ||||||
Over Accrued Real Estate Taxes
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43,659 | |||||||
Entity Expense - Reporting Fees
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(5,000 | ) | (5,000 | ) | ||||
Total Other Income (Expenses)
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38,838 | 57,032 | ||||||
Net Income (Loss)
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(280,659 | ) |
Maal
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See Accountant's Report and Notes to Financial Statements
5
MANSUR WOOD LIVING CENTER, L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31,2009 AND 2008
2009
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2008
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Partners' Equity - January 1,
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$ | 3,314,302 | $ | 3,592,493 | ||||
Contributions by Partners
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- | - | ||||||
Net Income (Loss)
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(280,659 | ) | (278,192 | ) | ||||
Distributions to Partners
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- | - | ||||||
Partners' Equity - December 31,
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$ | 3,033,643 | $ | 3,314,302 |
See Accountant's Report and Notes to Financial Statements
6
MANSUR WOOD LIVING CENTER, L.P.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
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2009
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2008
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Cash flows from operating activities:
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Net Income
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$ | (280,659 | ) | $ | (278,192 | ) | ||
Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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426,078 | 426,078 | ||||||
(Increase) decrease in accounts receivable
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(33,698 | ) | 15,093 | |||||
(Increase) decrease in prepaid expenses
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(8,497 | ) | (11,430 | ) | ||||
Increase (decrease) in accounts payable
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(8,306 | ) | (48,783 | ) | ||||
Increase (decrease) in interest payable
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(791 | ) | (734 | ) | ||||
Net change in tenants' security deposits held
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(3,906 | ) | 6,692 | |||||
Increase (decrease) real estate taxes payable
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(9,525 | ) | 1,954 | |||||
Increase (decrease) in accrued liabilities
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288 | (5 | ) | |||||
Increase (decrease) in deferred insurance proceeds
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- | (162,514 | ) | |||||
Increase (decrease) in prepaid rent
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637 | (433 | ) | |||||
Total adjustments
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362,280 | 225,918 | ||||||
Net cash provided (used) by operating activities
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81,621 | (52,274 | ) | |||||
Cash flows from investing activities:
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Transfer (to) from operating reserves
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(485 | ) | 34,332 | |||||
Transfer (to) from replacement reserve
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(9,227 | ) | 145,044 | |||||
Transfer (to) from security deposit
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1,680 | (6,132 | ) | |||||
Net cash provided (used) by investing activities
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(8,032 | ) | 173,244 | |||||
Cash flows from financing activities:
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Increase (Payments) Related Party Debts
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41,712 | - | ||||||
Principal (Payments) on long-term debt
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(127,858 | ) | (118,741 | ) | ||||
Increase (Payments) reporting fees payable
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5,000 | 5,000 | ||||||
Net cash provided (used) by financing activities
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(81,146 | ) | (113,741 | ) | ||||
Net increase (decrease) in cash and equivalents
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(7,556 | ) | 7,229 | |||||
Cash and equivalents, beginning of year
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7,908 | 679 | ||||||
Cash and equivalents, end of year
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352 | 7,908 | ||||||
Supplemental disclosures of cash flow information:
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Cash paid during the year for:
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Interest Expense
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$ | 252,312 | $ | 260,695 |
See Accountant's Report and Notes to Financial Statements
7
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
NOTE A - NATURE OF OPERATIONS
MANSUR WOOD LIVING CENTER, L.P. (the Partnership) was organized as a limited partnership under the laws of the State of Illinois formed to acquire, construct, own and operate a rental housing project eligible for low income housing tax credits available under Section 42 of the Internal Revenue Code. The Project consists of 115 rental units located in Carbon Cliff, Illinois. The project began rental operations during calendar year 2000.
The Project is eligible for low-income housing tax credits established under the program described in Section 42 of the Internal Revenue Code. The Partnership's financing agreement and Section 42 Revenue Code provisions place various restrictions on the operations of the Partnership including rental of units only to households with limited income.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows.
Basis of Accounting
The financial statements of the partnership are prepared on the accrual basis of accounting and in accordance with accounting principles generally accepted in the United States of America.
Cash and Cash Equivalents
For purposes of statements of cash flows, cash and cash equivalents represent unrestricted cash and certificates of deposit with original maturities of 90 days or less. The carrying amount approximates fair value because of the short period to maturity of the instruments.
The partnership treats all non replacement reserve, escrows and security deposit funds as cash equivalents. Cash on hand, in checking and savings accounts and certificates of deposit are considered cash equivalents.
8
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Capitalization and Depreciation
Land, buildings and improvements are recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives using the straight-line method. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the statement of operations. The rental property is depreciated over estimated service lives as follows:
Buildings & Improvements
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27 years
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Straight-Line
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Other Improvements
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15 years
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Straight-Line
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Furnishings & Equipment
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5 years
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Straight-Line
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The Partnership reviews its investment in real estate for impairment whenever events or changes in circumstances indicate that the carrying value of such property may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the real estate to the future net undiscounted cash flow expected to be generated by the rental property including the low income housing tax credits and any estimated proceeds from the eventual disposition of the real estate. If the real estate is considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the real estate exceeds the fair value of such property. There were no impairment losses recognized in 2009 or 2008.
The Partnership incurred and capitalized $208,516 of interest and financing fees during the construction period and is depreciating them over 15 years using the straight-line method.
Income Taxes
No provision or benefit for income taxes has been included in this financial statement since taxable income or loss passes through to, and is reportable by, the partners individually. The Partnership is eligible to receive low income tax credits as provided by Section 42 of the Internal Revenue Code.
Tenant Receivable and Bad Debt Policy
Tenant rents are due on the first day of each month of the tenant's lease, Rents are considered delinquent when they become more than 30 days past due. Tenant receivables are charged to bad debt expense when they are determined to be uncollectible based upon a periodic review of the accounts by management. Accounting principles generally accepted in the United States of America require that the allowance method be used to recognize bad debts; however, the effect of using the direct write-off method is not materially different from the results that would have been obtained under the allowance method.
9
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
The Partnership maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Partnership has not experienced any losses in such accounts to date and believes it is not exposed to any significant credit risk on cash and cash equivalents.
Rental Income and Prepaid Rents
Rental income is recognized for apartment rentals as it accrues. Advance receipts of rental income are deferred and classified as liabilities until earned.
NOTE C - ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
NOTE D - RESTRICTED DEPOSITS AND ESCROWS
According to the partnership, loan and other regulatory agreements, the Partnership is required to maintain the following escrow deposits and reserves:
Security Deposit Escrow
The tenants' security deposits are maintained in an interest-bearing savings account separate from the operating account of the Partnership. Withdrawals are restricted to reimbursements of tenants' security deposits and assessments for damages. The security deposit escrow account was fully funded at December 31, 2009; however, the security deposit escrow account was under funded at December 31, 2008.
Tax and Insurance Escrow
The Partnership makes monthly payments to escrow funds to accumulate reserves for real estate taxes and insurance. Disbursements in 2009 and 2008 for real estate taxes and insurance totaled $119,911 and $185,193, respectively, while deposits to the escrow account totaled $168,042 and $150,862, respectively. At December 31, 2009 and 2008, the Partnership had no delinquent real estate taxes.
10
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
NOTE D - RESTRICTED DEPOSITS AND ESCROWS (CONTINUED)
Reserve for Replacements
The Partnership is required by its loan agreement to make monthly deposits to the Reserve for Replacements totaling $17,400 annually. Disbursements from this escrow are restricted to replacement of structural elements or mechanical equipment. Deposits to the reserve for replacements totaled $17,400 and $1,149,426 during 2009 and 2008 , while disbursements from the account totaled $8,283 and $1,296,032 in 2009 and 2008. The deposits to the reserve for replacements in 2008 included insurance proceeds of $1,132,026, while disbursments from the reserve account in 2008 included repairs for fire damage in the amount of $1,296,032.
NOTE E LONG-TERM DEBT
The notes below are secured by property and equipment of the Partnership at December 31, 2009 and by assignment of all accounts, rents, deposits, or other amounts receivable arising out of the operation of the project.
2009
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2008
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Mortgage note payable, original amount of $3,592,000, bearing interest at 7.57% per annum held by Fannie Mae. Monthly principal and interest installments totaling $25,288 are based on a 15-year amortization of the original note balance. The loan matures July 1, 2016
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$ | 3,222,272 | $ | 3,279,434 | ||||
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Mortgage note payable, original amount of $505,000, bearing interest at 7.30% per annum held by Fannie Mae. Monthly principal and interest installments totaling $6,393 are based on a 10-year amortization of the original note balance. The loan matures July 1, 2010
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43,679 | 114,376 | ||||||
Total mortgages payable
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3,265,951 | 3,393,810 | ||||||
Less: Current maturities of long term debt
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(105,321 | ) | (127,858 | ) | ||||
Total long-term portion
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$ | 3,160,630 | $ | 3,265,952 |
11
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
NOTE E LONG-TERM DEBT (CONTINUED)
Estimated principal payments due over the next five years are as follows:
December 31, 2010
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$ | 105,321 | ||
2011
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66,473 | |||
2012
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71,683 | |||
2013
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77,301 | |||
2014
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88,362 | |||
and Thereafter
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2,945,172 | |||
Totals
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$ | 3.354.312 |
NOTE F - RELATED PARTY TRANSACTIONS
The developer fees were assigned to a newly admitted General Partner, LVMW, LLC, on April 6, 2005. As of December 31, 2009 and 2008, $445,732 of developer fees remained unpaid.
The partnership agreement provides for the Partnership to pay the Limited Partner an annual reporting management fee of $5,000. Reporting fees of $5,000 were incurred during 2009 and 2008. At December 31, 2009 and 2008, $55,000 and $50,000 was owed for reporting fees, respectively.
The partnership agreement provides for the Partnership to pay to the General Partner an annual incentive management fee equal to 70% of available cash flow. No such fee was earned in 2009 and 2008.
The General Partner is required under the Partnership Agreement to provide funds for any development or operating deficits. Funds have been advanced to the Partnership by the General Partner, including advances made pursuant to such obligation. The advances are non-interest bearing, unsecured and due on demand. Outstanding advances by the General Partner under these terms totaled $113,546 and $113,546, as of December 31, 2009 and 2008, respectively.
The Limited Partner advanced funds to the Partnership to fund operating deficits. Outstanding advances payable to the Limited Partner at December 31, 2009 and 2008, totaled $278,133 and $263,133, respectively.
NOTE G - PARTNERS AND PARTNERSHIP INTEREST
The Partnership has one General Partner, LVMW, LLC, which has a 1% interest, one Special Limited Partner, WNC Housing, L.P., which has .01% interest and one Investor Limited Partner, WNC Housing Tax Credit Fund VI, L.P., Series 5, which holds a 98.99% interest.
12
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
NOTE H - PARTNERSHIP PROFITS, LOSSES AND DISTRIBUTIONS
Generally, profits and losses are allocated 1% to the General Partner, and 99% to the Limited Partners. Cash flow, as defined by the Partnership Agreement, is generally distributable 1% to the General Partner and 99% to the Limited Partners. Profits and losses arising from the sale, refinancing or other disposition of all or substantially all of the Partnership's assets will be specially allocated based on the respective Partners' capital account balances, as prioritized in the Partnership Agreement. Additionally, the Partnership Agreement provides for other instances in which a special allocation of profits and losses and distributions may be required.
NOTE I - TIF RECEIVABLE AND REAL ESTATE TAXES
Pursuant to a Redevelopment Agreement, dated November 2, 1998, between the Partnership and the Village of Carbon Cliff, Rock Island County, Illinois (the "Village"), the Partnership will be reimbursed 80% of the incremental (as defined) real estate taxes paid to the Village. Real estate taxes remitted to the Village of Carbon Cliff during the years ended December 31, 2009 and 2008 totaled $19,148 and $126,711, respectively.
At December 31, 2009 and 2008, the Partnership was owed $55,565 and $48,369, respectively, by the Village of Carbon Cliff under the terms of this Redevelopment Agreement.
NOTE J - PROPERTY PURCHASE OPTION
According to the Partnership Agreement, the General Partner has an option to purchase partnership property at the end of the low-income housing tax credit compliance period at a price which would facilitate the purchase while protecting the Partnership's tax benefits from the Project. Such option is based on the General Partner or sponsor maintaining the low-income occupancy of the Project and is in a form satisfactory to legal and accounting counsel.
NOTE K - BUSINESS INTERRUPTION
In November 2007, the Project suffered property damage and business interruption due to a severe fire. As a result, the Company has been awarded insurance claims of $1,357,981 for property damage, of which, $1,299,641 has been applied against the cost to restore the property, and $58,340 has been applied against business interruption. The full $1,357,981 is reported in the 2008 income statement as insurance proceeds - fire damage.
13
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009 AND 2008
NOTE L - LOW INCOME HOUSING TAX CREDITS
The following Housing Tax Credits are allocable to the Company during the Credit Period:
Year |
Housing Tax
Credits
|
|||
2000
|
$ | 426,585 | ||
2001
|
895,596 | |||
2002
|
904,461 | |||
2003
|
904,461 | |||
2004
|
904,461 | |||
2005
|
904,461 | |||
2006
|
904,461 | |||
2007
|
904,461 | |||
2008
|
904,461 | |||
2009
|
904,461 | |||
2010
|
477,877 | |||
2011
|
8,866 | |||
TOTAL
|
$ | 9,044,612 |
NOTE M - SUBSEQUENT EVENTS
FASB Accounting Standards Codification Topic 855, "Subsequent Events" addresses events which occur after the balance sheet date but before the issuance of financial statements. An entity must record the effects of subsequent events that provide evidence about conditions that existed at the balance sheet date and must disclose but not record the effects of subsequent events which provide evidence about conditions that existed after the balance sheet date. Additionally, Topic 855 requires disclosure relative to the date through which subsequent events have been evaluated and whether that is the date on which the financial statements were issued or were available to be issued. Management evaluated the activity of MANSUR WOOD LIVING CENTER, L.P. through May 13, 2010, the date the financial statements were issued, and concluded that no subsequent events have occurred that would require recognition in the Financial Statements or disclosure in the Notes to the Financial Statements.