ITEM 1.     FINANCIAL STATEMENTS

HOUSING PROGRAMS LIMITED

STATEMENT OF NET ASSETS IN LIQUIDATION

(Liquidation Basis)

(Unaudited)

(in thousands)

March 31, 2012

See Accompanying Notes to Financial Statements

STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION

(Liquidation Basis)

(Unaudited)

(in thousands)

For the Period From February 1, 2012 to March 31, 2012

See Accompanying Notes to Financial Statements

BALANCE SHEET

                                   (in thousands)

December 31, 2011

See Accompanying Notes to Financial Statements

STATEMENTS OF DISCONTINUED OPERATIONS

(Unaudited)

(in thousands, except per interest data)

See Accompanying Notes to Financial Statements

STATEMENT OF CHANGES IN PARTNERS' DEFICIT/NET ASSETS IN LIQUIDATION

(Unaudited)

(in thousands)

See Accompanying Notes to Financial Statements

STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

See Accompanying Notes to Financial Statements

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Note 1 – BASIS OF PRESENTATION

As of January 31, 2012, Housing Programs Limited (the “Partnership” or “Registrant”) adopted the liquidation basis of accounting due to the sale of its limited partnership interest in its sole remaining investment (as discussed in “Note 3”).

As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its financial statements at January 31, 2012 to the liquidation basis of accounting. Consequently, assets have been valued at estimated net realizable value and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation of the Partnership. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the Corporate General Partner’s (as defined below) estimates as of the date of the financial statements.

The Corporate General Partner estimates that the liquidation process will be completed by December 31, 2012. Because the success in realization of assets and the settlement of liabilities is based on the Corporate General Partner’s best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period.

General

The information contained in the following notes to the unaudited financial statements is condensed from that which would appear in the annual audited financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and related notes thereto contained in the annual report for the fiscal year ended December 31, 2011 filed by the Partnership. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year.

In the opinion of the Partnership, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring items) necessary to present fairly the statement of net assets in liquidation of the Partnership at March 31, 2012, statement of changes in net assets in liquidation for the period from February 1, 2012 to March 31, 2012 and the results of operations and changes in cash flows for the period from January 1 to January 31, 2012 and the three months ended March 31, 2011.

The balance sheet at December 31, 2011 has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by generally accepting accounting principles for complete financial statements.

At both March 31, 2012 and December 31, 2011, there were 12,050 limited partnership interests outstanding.

Organization

On January 31, 2012, an affiliate of the Corporate General Partner entered into a management agreement with a third party management services company for the management of a portfolio of approximately 147 properties with 10,184 units held by entities, including the Partnership, in which Aimco and its affiliates have minority limited and general partner interests. On January 31, 2012, an affiliate of the Corporate General Partner also entered into an option agreement with the management services company pursuant to which it granted the company the exclusive option, for a period ending on December 27, 2013, to purchase the minority interests in the portfolio held by Aimco and its affiliates. Aimco expects the sale of such interests to be completed later this year, pending the satisfaction of certain closing conditions.

The General Partners have a one percent interest in profits and losses of the Partnership. The limited partners have the remaining 99 percent interest which is allocated in proportion to their respective individual investments.

The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States.

The Partnership’s management evaluated subsequent events through the time this Quarterly Report on Form 10-Q was filed.

Certain reclassifications have been made to the 2011 balances to conform to the 2012 presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

Method of Accounting for Investments in Local Limited Partnerships

The investments in local limited partnerships (the “Local Limited Partnerships”) were accounted for using the equity method. 

Net Income (Loss) Per Limited Partnership Interest

Net income (loss) per limited partnership interest was computed by dividing the limited partners' share of net income (loss) by the number of limited partnership interests outstanding at the beginning of the year. The number of limited partnership interests used was 12,050 for the period from January 1 to January 31, 2012 and 12,070 for the three months ended March 31, 2011.

Variable Interest Entities

In determining whether it is the primary beneficiary of a VIE, the Partnership considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Partnership’s investment; the obligation or likelihood for the Partnership or other investors to provide financial support; and the similarity with and significance to the business activities of the Partnership and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

At December 31, 2011, the Partnership held a variable interest in one VIE for which the Partnership was not the primary beneficiary.  The Partnership concluded, based on its qualitative consideration of the partnership agreement, the partnership structure and the role of the general partner in the Local Limited Partnership, that the general partner of the Local Limited Partnership was the primary beneficiary of the Local Limited Partnership. In making this determination, the Partnership considered the following factors:

·         the general partner conducted and managed the business of the Local Limited Partnership;

·         the general partner had the responsibility for and sole discretion over selecting a property management agent for the Local Limited Partnership’s underlying real estate property;

·         the general partner was responsible for approving operating and capital budgets for the property owned by the Local Limited Partnership;

·         the general partner was obligated to fund any recourse obligations of the Local Limited Partnership;

·         the general partner was authorized to borrow funds on behalf of the Local Limited Partnership; and

·         the Partnership, as a limited partner in the Local Limited Partnership, did not have the ability to direct or otherwise significantly influence the activities of the Local Limited Partnership that most significantly impact such entity’s economic performance.

The one VIE at December 31, 2011 consisted of a Local Limited Partnership that was directly engaged in the ownership and management of one apartment property with a total of 330 units.  The Partnership was involved with this VIE as a non-controlling limited partner equity holder. The Partnership’s maximum exposure to loss as a result of its involvement with this unconsolidated VIE was limited to the Partnership’s recorded investment in and receivables from this VIE, which was zero at December 31, 2011. the Partnership assigned its interest in this Local Limited Partnership to a third party on January 31, 2012.

Note 2 – aDJUSTMENT TO LIQUIDATION BASIS OF ACCOUNTING

At January 31, 2012, in accordance with the liquidation basis of accounting, assets were adjusted to their estimated net realizable value and liabilities were adjusted to their estimated settlement amount. The net adjustment required to convert to the liquidation basis of accounting was a decrease in net liabilities of approximately $554,000, which is included in the Statements of Changes in Partners’ Deficit/Net Assets in Liquidation. The net adjustment is summarized as follows:

NOTE 3 - INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

On December 21, 2011, Jenny Lind Hall II, L.P., sold its investment property to a third party for a gross sale price of $2,250,000. After payment of closing costs and repayment of the notes payable encumbering the property, the Partnership did not receive any proceeds from the sale. The Partnership had no investment balance remaining in this Local Limited Partnership as of January 31, 2012 or December 31, 2011.

On January 31, 2012, the Partnership assigned its limited partnership interest in Oshtemo Limited Dividend Housing Association to a third party for $350,000. The proceeds received were recognized as gain on sale of interest in Local Limited Partnership for the period from January 1 through January 31, 2012, as the Partnership had no remaining investment balance in the Local Limited Partnership at January 31, 2012 or December 31, 2011. Oshtemo Limited Dividend Housing Association was the Partnership’s sole remaining investment.

NOTE 4 – TRANSACTIONS WITH AFFILIATED PARTIES

Under the terms of the Restated Certificate and Agreement of the Limited Partnership, the Partnership is obligated to pay to the general partners an annual management fee equal to 0.5 percent of the Partnership’s original remaining invested assets of the Local Limited Partnerships at the beginning of the year. Invested assets is defined as the costs of acquiring project interests including the proportionate amount of the mortgage loans related to the Partnership's interests in the capital accounts of the respective Local Limited Partnerships. Approximately $7,000 and $23,000 for the period from January 1 to January 31, 2012 and the three months ended March 31, 2011, respectively, have been expensed. At December 31, 2011, approximately $694,000 of such fees were unpaid and are included in accrued fees due to affiliates. During the period from February 1 to March 31, 2012, the Partnership paid approximately $157,000 of management fees with proceeds from the sale of its limited partnership interest in Oshtemo Limited Dividend Housing Association.

As of January 31, 2012 and December 31, 2011, the accrued fees due to the Corporate General Partner exceeded the Partnership’s cash. The Partnership Agreement provides that the fees and advances due to the Corporate General Partner may only be paid from the Partnership’s available cash. Prior to the adoption of liquidation basis, the Partnership had accrued fees due to affiliates of approximately $701,000. As the balance of the accrued fees exceeded the amount of proceeds received from the January 2012 sale of the Partnership’s last remaining investment, the Partnership will be unable to repay the entire balance of accrued fees due to the Corporate General Partner and therefore adjusted the balance to $157,000, its estimated settlement value. As noted above, the remaining $157,000 was paid in February 2012.

Pursuant to the Partnership Agreement, AIMCO Properties, L.P., an affiliate of the Corporate General Partner, advanced the Partnership approximately $12,000 during the three months ended March 31, 2011 to fund partnership operating expenses. There were no advances made during the three months ended March 31, 2012. AIMCO Properties, L.P. charged interest on advances under the terms permitted by the Partnership Agreement.  The advances bore interest at the prime rate plus 2%. Interest expense for both the period from January 1 to January 31, 2012 and the three months ended March 31, 2011 was approximately $1,000. At December 31, 2011, the total advances and accrued interest due to AIMCO Properties, L.P. was approximately $117,000. During the three months ended March 31, 2012, the Partnership repaid the entire balance of approximately $118,000 of advances and accrued interest with proceeds from the sale of its limited partnership interest in Oshtemo Limited Dividend Housing Association.

An affiliate of NAPICO was the property manager for one of the Local Limited Partnerships. During the three months ended March 31, 2011, affiliates of the Corporate General Partner were paid approximately $6,000 for providing property management services.

NOTE 5 - CONTINGENCIES

The Corporate General Partner monitors developments in the area of legal and regulatory compliance.

Liquidity and Capital Resources

As of January 31, 2012, the Partnership adopted the liquidation basis of accounting due to the sale of its limited partnership interest in its sole remaining investment. 

On December 21, 2011, Jenny Lind Hall II, L.P., sold its investment property to a third party for a gross sale price of $2,250,000. After payment of closing costs and repayment of the notes payable encumbering the property, the Partnership did not receive any proceeds from the sale. The Partnership had no investment balance remaining in this Local Limited Partnership as of January 31, 2012 or December 31, 2011.

On January 31, 2012, the Partnership assigned its limited partnership interest in Oshtemo Limited Dividend Housing Association to a third party for $350,000. The proceeds received were recognized as gain on sale of interest in Local Limited Partnership for the period from January 1 through January 31, 2012, as the Partnership had no remaining investment balance in the Local Limited Partnership at January 31, 2012 or December 31, 2011. Oshtemo Limited Dividend Housing Association was the Partnership’s sole remaining investment.

The Partnership's primary source of funds consisted of distributions from Local Limited Partnerships in which the Partnership had invested. As a result of the sale of the Partnership’s sole remaining investment on January 31, 2012, the Partnership determined that it would not have sufficient cash to distribute to its partners.

At March 31, 2012, the Partnership had cash and cash equivalents of approximately $52,000 compared to approximately $1,000 at December 31, 2011.

Distributions received from Local Limited Partnerships are recognized as a reduction of the investment balance until the investment balance has been reduced to zero. Subsequent distributions received are recognized as income. During the period from January 1 to January 31, 2012, and the three months ended March 31, 2011 there were no such distributions received from the Local Limited Partnerships.

As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its financial statements at January 31, 2012 to the liquidation basis of accounting. Consequently, assets have been valued at estimated net realizable value and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation of the Partnership. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the Corporate General Partner’s estimates as of the date of the financial statements.

At January 31, 2012, in accordance with the liquidation basis of accounting, assets were adjusted to their estimated net realizable value and liabilities were adjusted to their estimated settlement amount. The net adjustment required to convert to the liquidation basis of accounting was a decrease in net liabilities of approximately $554,000, which is included in the Statements of Changes in Partners’ Deficit/Net Assets in Liquidation. The net adjustment is summarized as follows:

The statement of net assets in liquidation as of March 31, 2012 includes approximately $39,000 of costs that the Corporate General Partner estimates will be incurred during the remaining period of liquidation, based on the assumption that the liquidation process will be completed by December 31, 2012. Because the settlement of liabilities is based on the Corporate General Partner’s best estimates, the liquidation period may be shorter or extended beyond the liquidation period.

Results of Operations

An annual management fee is payable to the general partners of the Partnership and is calculated at 0.5 percent of the original remaining invested assets of the Local Limited Partnerships at the beginning of each year. The management fee is paid to the general partners for their continuing management of Partnership affairs.  Management fees were approximately $7,000 for the period from January 1 to January 31, 2012 and approximately $23,000 for the three months ended March 31, 2011.

Operating expenses, other than management fees and interest expense, consist of legal and accounting fees for services rendered to the Partnership and general and administrative expenses. Legal and accounting fees were approximately $1,000 for the period from January 1 to January 31, 2012 and $9,000 for the three months ended March 31, 2011. General and administrative expenses were approximately $1,000 for the period from January 1 to January 31, 2012 and approximately $4,000 for the three months ended March 31, 2011. The decrease in both legal and accounting and general and administrative expenses is due to the Partnership adopting the liquidation basis of accounting as of January 31, 2012.

Other

Variable Interest Entities

The Partnership consolidates any variable interest entities in which the Partnership holds a variable interest and is the primary beneficiary.  Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics:  (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.  The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the rights to receive benefits that could potentially be significant to the VIE.

In determining whether it is the primary beneficiary of a VIE, the Partnership considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Partnership’s investment; the obligation or likelihood for the Partnership or other investors to provide financial support; and the similarity with and significance to the business activities of the Partnership and the other investors. Significant judgments related to these determinations include estimates about the current and future fair values and performance of real estate held by these VIEs and general market conditions.

At December 31, 2011, the Partnership held a variable interest in one VIE for which the Partnership was not the primary beneficiary.  The Partnership concluded, based on its qualitative consideration of the partnership agreement, the partnership structure and the role of the general partner in the Local Limited Partnership, that the general partner of the Local Limited Partnership was the primary beneficiary of the Local Limited Partnership. In making this determination, the Partnership considered the following factors:

·         the general partner conducted and managed the business of the Local Limited Partnership;

·         the general partner had the responsibility for and sole discretion over selecting a property management agent for the Local Limited Partnership’s underlying real estate property;

·         the general partner was responsible for approving operating and capital budgets for the property owned by the Local Limited Partnership;

·         the general partner was obligated to fund any recourse obligations of the Local Limited Partnership;

·         the general partner was authorized to borrow funds on behalf of the Local Limited Partnership; and

·         the Partnership, as a limited partner in the Local Limited Partnership, did not have the ability to direct or otherwise significantly influence the activities of the Local Limited Partnership that most significantly impact such entity’s economic performance.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity.

Method of Accounting for Investments in Local Limited Partnerships

The Partnership, as a limited partner, did not have a contractual relationship with the Local Limited Partnerships or exercise control over the activities and operations, including refinancing or selling decisions, of the Local Limited Partnerships, that would require or allow for consolidation. Accordingly, the Partnership accounted for its investments in the Local Limited Partnerships using the equity method. The Partnership was allocated profits and losses of the Local Limited Partnerships based upon its respective ownership percentage of 99%. Distributions of surplus cash from operations from the Local Limited Partnership were restricted by the Local Limited Partnership’s Regulatory Agreement with the United States Department of Housing and Urban Development (“HUD”). These restrictions limited the distribution to a portion, generally less than 10%, of the initial invested capital. The excess surplus cash was deposited into a residual receipts reserve, of which the ultimate realization by the Partnership was uncertain as HUD frequently retains it upon sale or dissolution of the Local Limited Partnership. The Partnership was allocated profits and losses and received distributions from refinancings and sales in accordance with the Local Limited Partnership’s partnership agreement. This agreement usually limited the Partnership’s distributions to an amount substantially less than its ownership percentage in the Local Limited Partnership.

The individual investments were carried at cost plus the Partnership’s share of the Local Limited Partnerships’ profits less the Partnership’s share of the Local Limited Partnerships’ losses, distributions and impairment charges. The Partnership was not legally liable for the obligations of the Local Limited Partnerships and was not otherwise committed to provide additional support to the Local Limited Partnerships. Therefore, it did not recognize losses once its investment in the Local Limited Partnerships reached zero.  Distributions from the Local Limited Partnerships were accounted for as a reduction of the investment balance until the investment balance had been reduced to zero. When the investment balance had been reduced to zero, subsequent distributions received were recognized as income in the statements of operations.

For those investments where the Partnership had determined that the carrying value of its investment approximated the estimated fair value of the investment, the Partnership’s policy was to recognize equity in income of the Local Limited Partnership only to the extent of distributions received and amortization of acquisition costs from the Local Limited Partnership. Therefore, the Partnership limited its recognition of equity earnings to the amount it expected to ultimately realize.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

(a) Disclosure Controls and Procedures

The Partnership’s management, with the participation of the principal executive officer and principal financial officer of the Corporate General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Corporate General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures are effective. 

(b) Changes in Internal Control Over Financial Reporting

There has been no change in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

ITEM 6.     EXHIBITS

See Exhibit Index.

The agreements included as exhibits to this Form 10-Q contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

• should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

• have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

• may apply standards of materiality in a way that is different from what may be viewed as material to an investor; and

• were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. The Partnership acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-Q not misleading. Additional information about the Partnership may be found elsewhere in this Form 10-Q and the Partnership’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov. 

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.

HOUSING PROGRAMS LIMITED

EXHIBIT INDEX

 Exhibit    Description of Exhibit

3.1       Amendment, dated February 2, 2006, to Restated Certificate and Agreement of Limited Partnership incorporated by reference to the Registrant’s Current Report on Form 8-K dated February 2, 2006 and filed February 2, 2006.

3.2       Amendment, dated February 2, 2006, to Restated Certificate and Agreement of Limited Partnership incorporated by reference to the Registrant’s Current Report on Form 8-K dated February 2, 2006 and filed February 2, 2006.

10.2      Assignment and Assumption Agreement by and between Housing Programs Limited, a California limited partnership, Gleason E. Amboy, Joel I. Ferguson, Sol L. Steadman and AMG-MGT, LLC, a Michigan limited liability company, dated June 28, 2011 (Incorporated by reference to the Registrant’s Current Report on Form 8-K dated June 28, 2011).

10.3      First Amendment to Assignment and Assumption Agreement by and between Housing Programs Limited, a California limited partnership, Gleason E. Amboy, Joel I. Ferguson, Sol L. Steadman and AMG-MGT, LLC, a Michigan limited liability company, dated December 28, 2011 (Incorporated by reference to the Registrant’s Current Report on Form 8-K dated January 31, 2012).

31.1     Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2     Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1      Certification of equivalent of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101       XBRL (Extensible Business Reporting Language). The following materials from Housing Program Limited’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012, formatted in XBRL: (i) statement of net assets in liquidation, (ii) statement of changes in net assets in liquidation, (iii) balance sheet, (iv) statements of discontinued operations, (v) statement of changes in partners’ deficit/net assets in liquidation, (vi) statement of cash flows, and (vii) notes to financial statements (1).

(1)       As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.