Item 1. Business.
General
Independence Tax Credit Plus L.P. III (the "Partnership") is a limited partnership which was formed under the laws of the State of Delaware on December 23, 1993. The general partner of the Partnership is Related Independence Associates III L.P., a Delaware limited partnership (the "General Partner"). The general partner of the General Partner is Related Independence Associates III Inc., a Delaware corporation ("RIAI III").
On June 7, 1994, the Partnership commenced a public offering (the "Offering") of Beneficial Assignment Certificates ("BACs") representing assignments of limited partnership interests in the Partnership ("Limited Partnership Interests"), managed by Related Equities Corporation (the "Dealer Manager"), pursuant to a prospectus dated June 7, 1994 (the "Prospectus").
As of the termination of the offering on May 9, 1995, the Partnership had received $43,440,000 of gross proceeds of the Offering (the "Gross Proceeds") from 2,810 investors ("BACs holders"). (See Item 8, "Financial Statements and Supplementary Data," Note 1).
The Partnership's business is primarily to invest as a limited partner in other partnerships ("Local Partnerships") owning apartment complexes ("Apartment Complexes" or "Properties") that are eligible for the low-income housing tax credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986, some of which may also be eligible for the historic rehabilitation tax credit ("Historic Tax Credit"; together with Housing Tax Credits, "Tax Credits"). The Partnership's investment in each Local Partnership represents from 98.99% to 99.98% with one Local Partnership at 41.86% of the Partnership's interests in the Local Partnerships. As of March 31, 2001, the Partnership had acquired interests in twenty Local Partnerships. As of March 31, 2001, approximately $35,051,000 (including approximately $3,142,000 classified as a loan repayable from sale/refinancing proceeds in accordance with the Contribution Agreement and including acquisition fees of approximately $2,510,000) of net proceeds has been invested in Local Partnerships of which approximately $1,560,000 remains to be paid to the Local Partnerships (including approximately $397,000 being held in escrow), as certain benchmarks such as occupancy levels must be attained prior to the release of such funds. The Partnership does not intend to acquire additional subsidiary partnerships.
Investment Objectives/General Incentives
The Partnership has been formed to invest in low-income Apartment Complexes that are eligible for the Housing Tax Credit enacted in the Tax Reform Act of 1986. Some Apartment Complexes may also be eligible for Historic Rehabilitation Tax Credits ("Historic Complexes"). The investment objectives of the Partnership are described below.
1. Entitle qualified BACs holders to Tax Credits over the period of the Partnership's entitlement to claim Tax Credits (for each Property, generally ten years from the date of investment or, if later, the date the Property is leased to qualified tenants; referred to herein as the "Credit Period") with respect to each Apartment Complex.
2. Preserve and protect the Partnership's capital.
3. Participate in any capital appreciation in the value of the Properties and provide distributions of Sale or Refinancing Proceeds upon the disposition of the Properties.
4. Allocate passive losses to individual BACs holders to offset passive income that they may realize from rental real estate investments and other passive activities, and allocate passive losses to corporate BACs holders to offset business income.
One of the Partnership's objectives is to entitle qualified BACs holders to Tax Credits over the Credit Period. Each of the Local Partnerships in which the Partnership has acquired an interest has been allocated by the relevant state credit agencies the authority to recognize Tax Credits during the Credit Period provided that the Local Partnership satisfies the rent restriction, minimum set-aside and other requirements for recognition of the Tax Credits at all times during such period. Once a Local Partnership has become eligible to recognize Tax Credits, it may lose such eligibility and suffer an event of "recapture" if its Property fails to remain in compliance with the Tax Credit requirements. None of the Local Partnerships in which the Partnership has acquired an interest has suffered an event of recapture.
There can be no assurance that the Partnership will achieve its investment objectives as described above.
Competition
The real estate business is highly competitive and substantially all of the properties acquired by the Partnership are expected to have active competition from similar properties in their respective vicinities. In addition, various other limited partnerships may, in the future, be formed by the General Partner and/or its affiliates to engage in businesses which may be competitive with the Partnership.
Employees
The Partnership does not have any direct employees. All services are performed for the Partnership by the General Partner and its affiliates. The General Partner receives compensation in connection with such activities as set forth in Items 11 and 13. In addition, the Partnership reimburses the General Partner and certain of its affiliates from expenses incurred in connection with the performance by their employees of services for the Partnership in accordance with the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement").
Item 2.
Item 2. Properties.
As of March 31, 2001, the Partnership had acquired an interest in twenty Local Partnerships, all of which have been consolidated for accounting purposes. Except for the interest in New Zion Apartments, L.P. ("New Zion"), the Partnership's investment in each Local Partnership represents 98.99% or 99.89% of the partnership interests in the Local Partnership. The Partnership's investment in New Zion represents 42.39% of the partnership interest in the subsidiary partnership (the other 58.12% limited partnership interest is owned by affiliates of the Partnership, with the same management). Set forth below is a schedule of the Local Partnerships including certain information concerning their respective Apartment Complexes (the "Local Partnership Schedule"). Further information concerning these Local Partnerships and their properties, including any encumbrances affecting the properties, may be found in Schedule III to the financial statements which are included herein.
All leases are generally for periods not greater than one to two years and no tenant occupies more than 10% of the rentable square footage.
Commercial tenants (to which average rental per square foot applies) comprise less than 5% of the rental revenues of the Partnership. Maximum rents for the residential units are determined annually by HUD and reflect increases/decreases in consumer price indices in various geographic areas. Market conditions, however, determine the amount of rent actually charged.
Management annually reviews the physical state of the properties and suggests to the respective general partners of the Local Partnerships ("Local General Partners") budget improvements which are generally funded from cash flow from operations or release of replacement reserve escrows to the extent available.
Management annually reviews the insurance coverage of the properties and believes such coverage is adequate.
See Item 1, Business, above for the general competitive conditions to which the properties described above are subject.
Real estate taxes are calculated using rates and assessed valuations determined by the township or city in which the property is located. Such taxes have approximated 1% of the aggregate cost of the properties as shown in Schedule III to the financial statements included herein.
In connection with investments in development-stage Apartment Complexes, the General Partner generally requires that the Local General Partners provide completion guarantees and/or undertake to repurchase the Partnership's interest in the Local Partnership if construction or rehabilitation is not completed substantially on time or on budget ("Development Deficit Guarantees"). The Development Deficit Guarantees generally also require the Local General Partner to provide any funds necessary to cover net operating deficits of the Local Partnership until such time as the Apartment Complex has achieved break-even operations. The General Partner generally requires that the Local General Partners undertake an obligation to fund operating deficits of the Local Partnership (up to a stated maximum amount) during a limited period of time (typically three to five years) following the achievement of break-even operations ("Operating Deficit Guarantees"). As of March 31, 2001, 2000 and 1999, the gross amounts of the Operating Deficit Guarantees aggregate approximately $5,129,000, $1,610,000 of which has expired as of March 31, 2001. Management does not expect that expiration to have a material impact on liquidity, based on prior years' fundings. As of March 31, 2001, approximately $1,347,000 has been funded under the Operating Deficit Guaranty Agreements. Under the terms of the Development and Operating Deficit Guarantees, amount funded will be treated as Operating Loans which will not bear interest and which will be repaid only out of 50% of available cash flow or out of available net sale or refinancing proceeds. In some instances, the Local General Partners are required to undertake an obligation to comply with a Rent-Up Guaranty Agreement, whereby the Local General Partner agrees to pay liquidated damages if predetermined occupancy rates are not achieved. These payments are made without right of repayment. In cases where the General Partner deems it appropriate, the obligations of a Local General Partner under the Development Deficit, Operating Deficit and/or Rent-Up Guarantees are secured by letters of credit and/or cash escrow deposits.
Tax Credits with respect to a given Apartment Complex are available for a ten-year period that commences when the property is leased to qualified tenants. However, the annual Tax Credits available in the year in which the Apartment Complex is placed in service, must be prorated based upon the number of months remaining in the year. The amount of the annual Tax Credit not available in the first year will be available in the eleventh year. In certain cases, the Partnership acquired its interest in a Local Partnership after the Local Partnership had placed its Apartment Complex in service. In these cases, the Partnership may be allocated Tax Credits only beginning in the month following the month in which it acquired its interest and Tax Credits allocated in any prior period are not available to the Partnership.
Item 3.
Item 3. Legal Proceedings.
This information is incorporated by reference to the discussion of Lewis Street L.P., Pacific East L.P., and Brannon Group L.C. in the Results of Operations of Certain Local Partnerships contained in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Security Holder Matters.
As of March 31, 2001, the Partnership had issued and outstanding 43,440 Limited Partnership Interests, each representing a $1,000 capital contribution to the Partnership, or an aggregate capital contribution of $43,440,000. All of the issued and outstanding Limited Partnership Interests have been issued to Independence Assignor Inc. (the "Assignor Limited Partner"), which has in turn issued 43,440 BACs to the purchasers thereof for an aggregate purchase price of $43,440,000. Each BAC represents all of the economic and virtually all of the ownership rights attributable to a Limited Partnership Interest held by the Assignor Limited Partner. BACs may be converted into Limited Partnership Interests at no cost to the holder (other than the payment of transfer costs not to exceed $100), but Limited Partnership Interests so acquired are not thereafter convertible into BACs.
Neither the BACs nor the Limited Partnership Interests are traded on any established trading market. The Partnership does not intend to include the BACs for quotation on NASDAQ or for listing on any national or regional stock exchange or any other established securities market. The Revenue Act of 1987 contained provisions which have an adverse impact on investors in "publicly traded partnerships." Accordingly, the General Partner has imposed limited restrictions on the transferability of the BACs and the Limited Partnership Interests in secondary market transactions. Implementation of the restrictions should prevent a public trading market from developing and may adversely affect the ability of an investor to liquidate his or her investment quickly. It is expected that these procedures will remain in effect until such time, if ever, as further revision of the Revenue Act of 1987 may permit the Partnership to lessen the scope of the restrictions.
As of May 1, 2001, the Partnership has approximately 2,563 registered holders of an aggregate of 43,440 BACs.
All of the Partnership's general partnership interests, representing an aggregate capital contribution of $1,000, are held by the General Partner.
There are no material legal restrictions in the Partnership Agreement on the ability of the Partnership to make distributions. However, the Partnership has made no distributions to the BACs holders as of March 31, 2001. The Partnership does not anticipate providing cash distributions to its BACs holders other than from net refinancing or sales proceeds.
In January 2001, affiliates of Everest Properties, Inc. ("Everest") conducted a tender offer for up to 1,104.47 BACs. In connection with a prior tender offer for BACs, an affiliate of the General Partner entered into a standstill agreement dated as of April 23, 1997 (the "Standstill"), which precluded Everest from independently soliciting BACs (by tender offer or otherwise). At Everest's request, the General Partner caused its affiliate to release Everest from the Standstill for the limited purpose of permitting Everest to make its tender offer. In connection with such arrangements, Everest agreed to cover all of the Partnership's expenses with respect to processing the tender offer including mailing costs, legal fees and other administrative costs incurred by the Partnership. These reimbursements resulted in aggregate payments to the Partnership of $42,165 which are reflected as "other income" on the financial statements for Fiscal Year 2000.
Item 6.
Item 6. Selected Financial Data.
The information set forth below presents selected financial data of the Partnership. There were no operations prior to commencement of the Offering of BACs on June 7, 1994. Additional financial information is set forth in the audited financial statements in Item 8 hereof.
During the year ended March 31, 2001, total assets decreased primarily due to depreciation and a decrease in cash and cash equivalent. During the year ended March 31, 2000, total assets decreased primarily due to a decrease in construction in process. The decrease in total liabilities is primarily due to principal payments on mortgage notes. During the year ended March 31, 1999, total assets increased primarily due to increases in property and equipment and construction in progress. The increase in total liabilities is primarily due to the proceeds from the mortgage notes payable and construction loans payable used to pay for the property and equipment, and construction in progress acquisitions. During the years ended March 31, 1998 and 1997, total assets and liabilities increased primarily due to the continued acquisition of Local Partnerships. For the years ended March 31, 1998 and 1997, property and equipment increased approximately $18,000,000 and $11,600,000, respectively, construction in progress (decreased) increased approximately $(700,000) and $600,000, respectively, and mortgage notes increased approximately $6,000,000 and $4,900,000, respectively. For the year ended March 31, 1997, the increase in property and equipment and construction in progress was partially offset by a decrease in cash and cash equivalents, investments available-for-sale and cash held in escrow as a result of the funding of such acquisitions and construction. For the years ended March 31, 1998 and 1997, respectively, minority interest increased due to capital contributions from local general partners.
Cash Distributions The Partnership has made no distributions to the BACs holders as of March 31, 2001.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Resources
General
The Partnership's primary source of funds is interest earned on Gross Proceeds which are invested in tax-exempt money market instruments pending final payments to the Local Partnerships. This source of funds is available to meet obligations of the Partnership.
The Partnership had received $43,440,000 in gross proceeds for BACs pursuant to a public offering resulting in net proceeds available for investment of approximately $35,000,000 after volume discounts, payment of sales commissions, acquisition fees and expenses, organization and offering expenses and establishment of a working capital reserve.
As of March 31, 2001, the Partnership has invested approximately $35,051,000 (including approximately $3,142,000 classified as loans repayable from sale/refinancing proceeds in accordance with the Contribution Agreement and not including acquisition fees of approximately $2,510,000) of net proceeds in twenty Local Partnerships of which approximately $1,560,000 remains to be paid to the Local Partnerships (not including approximately $397,000 being held in escrow) as certain benchmarks, such as occupancy level, must be attained prior to the release of the funds. There was one downward price adjustment during the year ended March 31, 2001 in the amount of approximately $23,000 related to one Local Partnership. The Partnership does not intend to acquire additional properties. During the year ended March 31, 2001, approximately $1,305,000 was paid to Local Partnerships, including purchase price adjustments (of which approximately $1,328,000 was released from escrow). Approximately $1,038,000 was placed into escrow for purchase price payments during the year ended March 31, 2001. Although the Partnership will not be acquiring additional properties, the Partnership may be required to fund potential purchase price adjustments based on tax credit adjustor clauses. Such adjustments resulted in a net decrease in the purchase price of approximately $23,000 during the year ended March 31, 2001.
During the year ended March 31, 2001, cash and cash equivalents decreased approximately $659,000. This decrease is due to acquisition of property and equipment ($156,000), a decrease in accounts payable and other liabilities from investing activities ($37,000), a net decrease in due to local general partners and affiliates relating to investing and financing activities ($1,029,000), an increase in deferred costs ($118,000), cash used in operating activities ($581,000), repayment of construction loans ($6,746,000) and a decrease in capitalization of consolidated subsidiaries attributable to minority interest ($143,000) which exceeded proceeds from investments available for sale ($1,300,000), net proceeds and principal payments of mortgage loans ($6,753,000) and a decrease in cash held in escrow relating to investing activities ($96,000). Included in the adjustments to reconcile the net loss to cash used in operating activities is depreciation and amortization of approximately $2,810.000.
A working capital reserve had previously been established from the Partnership's funds available for investment, which includes amounts which may be required for potential purchase price adjustments based on tax credit adjustor clauses. At March 31, 2001, all funds were used.
The Partnership has negotiated development deficit guarantees with the Local Partnerships in which it has invested. The Local General Partners have agreed to fund development deficit through certain dates as defined in the Partnership Agreement of each of the Local Partnerships. Such guarantees are defined in their respective agreements and generally there is no right of repayment to such Local General Partners. All current development deficit guarantees have expired. Management does not expect their expiration to have a material impact on liquidity, based on prior years' fundings.
The Partnership has negotiated Operating Deficit Guaranty Agreements with all Local Partnerships by which the Local General Partners of the Local Partnerships have agreed to fund operating deficits for a specified period of time. The terms of the Operating Deficit Guaranty Agreements vary for each Local Partnership, with maximum dollar amounts to be funded for a specified period of time, generally three years, commencing on the break-even date. As of March 31, 2001, 2000 and 1999, the gross amounts of the Operating Deficit Guarantees aggregate approximately $5,129,000, $1,610,000 of which has expired as of March 31, 2001. Management does not expect that expiration to have a material impact on liquidity, based on prior years' fundings. As of March 31, 2001, approximately $1,347,000 has been funded under the Operating Deficit Guaranty Agreements. Amounts funded under such agreements are treated as noninterest bearing loans, which will be paid only out of 50% of available cash flow or out of available net sale or refinancing proceeds.
In addition, several Local Partnerships had Rent-Up Guaranty Agreements, in which the Local General Partner agreed to pay liquidated damages if predetermined occupancy rates were not achieved. The terms of the Rent-Up Guaranty Agreements varied for each Local Partnership, with maximum dollar amounts to be funded for a specified period of time. As of March 31, 2001, the gross amounts of these Rent-Up Guarantees for the Local Partnerships aggregated approximately $1,779,000 all of which had expired.
The Operating Deficit Guaranty Agreements, Rent-Up Guaranty Agreements, and Development Deficit Guaranty Agreements were negotiated to protect the Partnership's interest in the Local Partnerships and to provide incentive to the Local General Partners to generate positive cash flow.
Partnership management fees owed to the General Partner amounting to approximately $1,199,000 and $858,000 were accrued and unpaid as of March 31, 2001 and 2000, respectively. Without the General Partner's continued accrual without payment of certain fees and expense reimbursements, the Partnership will not be in a position to meet its obligations. The General Partner has continued allowing the accrual without payment of these amounts but are under no obligation to continue to do so.
For discussion of contingencies affecting certain subsidiary partnerships, see Results of Operations of Certain Local Partnerships, below. Since the maximum loss the Partnership would be liable for is its net investment in the respective subsidiary partnerships, the resolution of the existing contingencies is not anticipated to impact future results of operations, liquidity or financial condition in a material way. However, the Partnership's loss of its investment in a Local Partnership will eliminate the ability to generate future Tax Credits from such Local Partnership and may also result in recapture of tax credits if the investment is lost before the expiration of the Credit Period.
Except as described above, management is not aware of any trends or events, commitments or uncertainties, which have not otherwise been disclosed that will or are likely to impact liquidity in a material way. Management believes the only impact would be for laws that have not yet been adopted. The portfolio is diversified by the location of the properties around the United States so that if one area of the country is experiencing downturns in the economy, the remaining properties in the portfolio may be experiencing upswings. However, the geographic diversification of the portfolio may not protect against a general downturn in the national economy. The Partnership has invested the proceeds of its offering in seventeen Local Partnerships, all of which fully have their Tax Credits in place. The Tax Credits are attached to the property for a period of ten years, and are transferable with the property during the remainder of the ten-year period. If trends in the real estate market warranted the sale of a property, the remaining Tax Credits would transfer to the new owner; thereby adding significant value to the property on the market, which are not included in the financial statement carrying amount.
Results of Operations
Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, construction period interest and any other costs incurred in acquiring the properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time property investments themselves are reduced to estimated fair value (generally using discounted cash flows) when the property is considered to be impaired and the depreciated cost exceeds estimated fair value.
Through March 31, 2001, the Partnership has not recorded any loss on impairment of assets or reduction to estimated fair value.
At the time management commits to a plan to dispose of assets, said assets are adjusted to the lower of carrying amount or fair value less costs to sell. These assets are classified as property and equipment-held for sale and are not depreciated. Through March 31, 2001, the Partnership has not recorded or classified any property and equipment as held for sale.
The following is a summary of the results of operations of the Partnership for the years ended March 31, 2001, 2000 and 1999 (the 2000, 1999 and 1998 Fiscal Years).
The net loss for the 2000, 1999 and 1998 Fiscal Years aggregated $3,243,768, $3,474,187 and $3,086, 998, respectively.
The Partnership and BACs holders began recognizing Tax Credits with respect to a Property when the Credit Period for such Property commenced. Because of the time required for the acquisition, completion and rent-up of Properties, the amount of Tax Credits per BAC has gradually increased over the first three years of the Partnership. Tax Credits not recognized in the first three years will be recognized in the 11th through 13th years. The Partnership generated $5,682,911, $5,444,802 and $4,743,808 Housing Tax Credits during the 2000, 1999 and 1998, tax years, respectively.
2000 vs. 1999 Rental income increased approximately 8% for the 2000 Fiscal Year as compared to the 1999 Fiscal Year. This increase was primarily due to the rent up of one Local Partnerships.
Total expenses, excluding operating and insurance remained fairly consistent, with an increase of approximately 1% for the 2000 Fiscal Year as compared to the 1999 Fiscal Year.
Operating increased approximately $111,000 for the 2000 Fiscal Year as compared to the 1999 Fiscal Year. This increase was primarily due to the rent up of one Local Partnership.
Insurance increased approximately $30,000 for the 2000 Fiscal Year as compared to the 1999 Fiscal Year. This increase was primarily due to an underaccrual at two Local Partnerships in the 1999 Fiscal Year.
1999 vs. 1998 Rental income increased by approximately 12% for the 1999 Fiscal Year as compared to the 1998 Fiscal Year. This increase was primarily due to the rent up of three Local Partnerships and increase in occupancies at four Local Partnerships.
Other income decreased by approximately 28% for the 1999 Fiscal Year as compared to the 1998 Fiscal Year. This decrease was primarily due to the lower cash and cash equivalent balances in 1999 at six Local Partnerships and at the Partnership level.
Total expenses excluding repairs and maintenance operating, insurance and financial remained fairly consistent with an increase of approximately 4% for the 1999 Fiscal Year as compared to the 1998 Fiscal Year.
Repairs and maintenance increased approximately 27% for the 1999 Fiscal Year as compared to the 1998 Fiscal Year. This increase was primarily due to the rent-up of two Local Partnerships, interior painting and trim replacement at two Local Partnerships repairs, and shrub replacements and playground repairs at a third Local Partnership.
Operating increased approximately 30% for the 1999 Fiscal Year as compared to the 1998 Fiscal Year. This increase was primarily due to the rent up of two Local Partnerships, an underaccrual of the electrical usage at one Local Partnership and an underaccrual of the water and sewer usage at a second Local Partnership.
Insurance decreased approximately 24% for the 1999 Fiscal Year as compared to the 1998 Fiscal Year. This decrease was primarily due to the overaccrual of insurance in the prior year at two Local Partnerships.
Financial increased approximately 22% for the 1999 Fiscal Year as compared to the 1998 Fiscal Year. This increase is primarily due to the rent up of three Local Partnerships in 1999, and the related interest expenses in 1998 were capitalized.
Results of Operations of Certain Local Partnerships
Savannah Park Housing Limited Partnership ("Savannah Park") The Savannah Park's financial statements have been prepared in conformity with U.S. generally accepted accounting principles, which contemplates continuation of the partnership as a going concern. However, Savannah Park is experiencing cash flow difficulties. Due to high vacancies and a significant increase in accounts receivable, Savannah Park is unable to generate sufficient cash flow to meet its financial obligations. In addition, Savannah Park was unable to make all of the required monthly payments on the outstanding mortgage note payable. Since 1998, Savannah Park has been unable to make all of the required payments under the land lease.
Savannah Park's management has been successful in reducing certain operating expenditures and is also implementing new procedures to improve collections and increase occupancy.
In view of these matters, realization of a major portion of the assets in Savannah Park's balance sheet is dependent upon continued operations of Savannah Park, which in turn is dependent upon the partnership's ability to meet its financing requirements, and the success of its future operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Partnership's investment in Savannah Park at March 31, 2001 and 2000 was zero at each date and the minority interest balance was approximately $342,000 and $342,000, respectively. Savannah Park's net loss after minority interest amounted to approximately $58,000, $85,000 and $162,000 for the 2000, 1999, and 1998 and Fiscal Years, respectively.
The financial statements do not include any adjustments relating to the recoverability that might be necessary should Savannah Park be unable to continue as a going concern.
Lewis Street L.P. Lewis Street Limited Partnership ("Lewis Street") has been informed that it is a defendant in a cause of action that has been brought by the project's original developer. This litigation will be vigorously contested by the Local Partnership. Legal counsel for the Local Partnership has indicated that the ultimate liability, if any, with respect to this possible action cannot be determined at this time. The Partnership's investment in Lewis Street at March 31, 2001 and 2000 was zero at each date and the minority interest balance was zero at each date. Lewis Street's net loss after minority interest amounted to approximately $100,000, $98,000 and $99,000 for the 2000, 1999, and 1998 Fiscal Years, respectively.
Pacific East L.P. The Pacific East L.P. was a defendant in a lawsuit filed by one of its tenants for injuries allegedly sustained as a result of an assault by an intruder in the tenant's apartment. A judgment has been rendered in favor of the plaintiff for $260,000. The Local Partnership's liability insurance will cover the judgment therefore no liability related to this litigation has been recorded.
Brannon Group L.C. On April 7, 2000, Civil Action 00 Civ 2715 (JGK) was filed and, is pending in the United States District Court for the Southern District of New York. It is styled "RubinBaum LLP, Plaintiff v. Related Corporate Partners V, L.P., Related Corporate SLP, L.P. (the "Related Defendants"), the Brannon Group, L.L.C., D. Reid Brannon and Ivan Brannon (the "Brannon Defendants"), Defendants, v. Independence SLP III, L.P., the Partnership and Keys 288, LLC, (the "Third Party Defendants"). The managing members of the Brannon Group L.C. were removed for breaching their fiduciary responsibilities and contractual obligations. An affiliate of the General Partner was admitted as the new managing member. The Related Defendants have asserted cross-claims against the Brannon Defendants for breach of fiduciary duties, breach of contract, an accounting and a declaratory judgement that, inter alia, Reid and Ivan Brannon were properly removed as Managers of the Brannon Group L.C. The Brannon Defendants have asserted claims against the Related Defendants and the Third Party Defendants for breach of contract, breach of fiduciary duty, intentional interference with advantageous business relationships, breach of the implied covenant of good faith and fair dealing, unjust enrichment, declaratory and injunctive relief. They seek to recover unspecified compensatory and punitive damages, prejudgement and post-judgement interest, costs and attorney's fees as well as injunctive and declaratory relief. The action is set for trial on the Court's August 24, 2001 docket. The discovery deadline is July 6, 2001. Discovery has just begun. Management intends to vigorously pursue their claims against the Brannon Defendants and to vigorously defend the claims alleged against the Partnership. Given the preliminary stage of these proceedings, we can express no opinion on the likely outcome.
Other
The Partnership's investment as a limited partner in the Local Partnerships is subject to the risks of potential losses arising from management and ownership of improved real estate. The Partnership's investments also could be adversely affected by poor economic conditions generally, which could increase vacancy levels and rental payment defaults and increase operating expenses, any or all of which could threaten the financing viability of one or more of the Local Partnerships.
There also are substantial risks associated with the operation of Apartment Complexes receiving government assistance. These include governmental regulations concerning tenant eligibility, which may make it more difficult to rent apartments in the complexes; difficulties in obtaining government approval for rent increases; limitations on the percentage of income which low and moderate-income tenants may pay as rent; the possibility that Congress may not appropriate funds to enable HUD to make the rental assistance payments it has contracted to make; and that when the rental assistance contracts expire there may not be market demand for apartments at full market rents in a Local Partnership's Apartment Complex.
The Local Partnerships are impacted by inflation in several ways. Inflation allows for increases in rental rates generally to reflect the impact of higher operating and replacement costs. Inflation also affects the Local Partnerships adversely by increasing operating costs, for example, for such items as fuel, utilities and labor.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
INDEPENDENT AUDITORS' REPORT
To the Partners of Independence Tax Credit Plus L.P. III and Subsidiaries (A Delaware Limited Partnership)
We have audited the consolidated balance sheets of Independence Tax Credit Plus L.P. III and Subsidiaries (A Delaware Limited Partnership) as of March 31, 2001 and 2000, and the related consolidated statements of operations, changes in partners' capital (deficit), and cash flows for the years ended March 31, 2001, 2000 and 1999 (the 2000, 1999 and 1998 Fiscal Years, respectively). 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 did not audit the financial statements for twenty (2000, 1999 and 1998 Fiscal Years) subsidiary partnerships whose losses aggregated $2,566,254, $2,970,037 and $2,305,752 for the years ended March 31, 2001, 2000 and 1999, respectively, and whose assets constituted 96% and 94% of the Partnership's assets at March 31, 2001 and 2000, respectively, presented in the accompanying consolidated financial statements. The financial statements of nineteen (2000 and 1999 Fiscal Years) and twenty (1998 Fiscal Year) subsidiary partnerships were audited by other auditors whose reports thereon have been furnished to us and our opinion expressed herein, insofar as it relates to the amounts included for these subsidiary partnerships, is based solely upon the reports of the other auditors. The financial statements for one (2000 and 1999 Fiscal Years) subsidiary partnership were not audited.
We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based upon our audits, and the reports of the other auditors referred to above, the consolidated financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of Independence Tax Credit Plus L.P. III and Subsidiaries at March 31, 2001 and 2000, and the results of their operations and their cash flows for the years ended March 31, 2001, 2000 and 1999, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 10(a), the consolidated financial statements include the financial statements of one subsidiary partnership with a significant contingency and uncertainty. The financial statements of this subsidiary partnership were prepared assuming that it will continue as a going concern. The subsidiary partnership's net losses amounted to $58,460 (Fiscal 2000), $85,452 (Fiscal 1999) and $163,341 (Fiscal 1998) and its assets were $3,576,528 and $3,641,469 at March 31, 2001 and 2000, respectively. These matters raise substantial doubt about this subsidiary partnership's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 10(a). The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
TRIEN ROSENBERG ROSENBERG WEINBERG CIULLO & FAZZARI LLP
New York, New York June 13, 2001
[HOLTHOUSE CARLIN & VAN TRIGT LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of the Edward Hotel Limited Partnership:
We have audited the accompanying balance sheets of Edward Hotel Limited Partnership (a California limited partnership) as of December 31, 2000 and 1999, and the related statements of operations, changes in partners' capital (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the 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 generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Edward Hotel Limited Partnership as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The information included in the accompanying Schedule I is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Holthouse Carlin & Van Trigt LLP Los Angeles, California January 23, 2001
[HOLTHOUSE CARLIN & VAN TRIGT LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of the Edward Hotel Limited Partnership:
We have audited the accompanying balance sheets of Edward Hotel Limited Partnership (a California limited partnership) as of December 31, 1999 and 1998, and the related statements of operations, changes in partners' capital (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the 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 generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Edward Hotel Limited Partnership as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The information included in the accompanying Schedule I is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Holthouse Carlin & Van Trigt LLP Los Angeles, California January 25, 2000
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Pacific-East L.P.
We have audited the accompanying balance sheet of Pacific-East L.P. as of December 31, 2000, and the related statements of operations, changes in partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pacific-East L.P. as of December 31, 2000, and the results of its operations, the changes in partners' deficit and its cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman Atlanta, Georgia January 16, 2001
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Pacific-East L.P.
We have audited the accompanying balance sheet of Pacific-East L.P. as of December 31, 1999, and the related statements of operations, changes in partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pacific-East L.P. as of December 31, 1999, and the results of its operations, the changes in partners' deficit and its cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman Baltimore, Maryland February 4, 2000
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Pacific-East L.P.
We have audited the accompanying balance sheet of Pacific-East L.P. as of December 31, 1998, and the related statements of operations, changes in partners' deficit and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Pacific-East L.P. as of December 31, 1998, and the results of its operations, the changes in partners' deficit and its cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman Baltimore, Maryland February 16, 1999
[SMITH, ORTIZ, GOMEZ AND BUZZI, P.A. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Partners Overtown Development Group, Ltd. (A Limited Partnership):
We have audited the accompanying balance sheets of Overtown Development Group, Ltd. (A Limited Partnership) as of December 31, 2000 and 1999, and the related statement of operations, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of Overtown Development Group, Ltd. management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audits, the financial statements referred to above present fairly, in all material respects, the financial position of Overtown Development Group, Ltd. as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Smith, Ortiz, Gomez and Buzzi, P.A. Miami, Florida January 31, 2001
[SMITH, ORTIZ, GOMEZ AND BUZZI, P.A. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Partners Overtown Development Group, Ltd. (A Limited Partnership):
We have audited the accompanying balance sheets of Overtown Development Group, Ltd. (A Limited Partnership) as of December 31, 1999 and 1998, and the related statement of operations, changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of Overtown Development Group, Ltd. management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, based on our audits, the financial statements referred to above present fairly, in all material respects, the financial position of Overtown Development Group, Ltd. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Smith, Ortiz, Gomez and Buzzi, P.A. Miami, Florida February 15, 2000
[LAWLOR, O'BRIEN & CHERVENAK, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Sumpter Commons Associates, L.P.
We have audited the accompanying balance sheet of Sumpter Commons Associates, L.P. as of December 31, 2000, and the related statements of operations, changes in partners' capital (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sumpter Commons Associates, L.P. as of December 31, 2000, and the results of its operations, changes in partners' capital (deficit), and cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Lawlor, O'Brien & Chervenak, LLC Totowa, New Jersey February 14, 2001
[LAWLOR, O'BRIEN & CHERVENAK, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Sumpter Commons Associates, L.P.
We have audited the accompanying balance sheet of Sumpter Commons Associates, L.P. as of December 31, 1999, and the related statements of operations, changes in partners' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sumpter Commons Associates, L.P. as of December 31, 1999, and the results of its operations, changes in partners' deficit, and cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Lawlor, O'Brien & Chervenak, LLC Totowa, New Jersey February 15, 2000
[LAWLOR, O'BRIEN & CHERVENAK, LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Sumpter Commons Associates, L.P.
We have audited the accompanying balance sheet of Sumpter Commons Associates, L.P. as of December 31, 1998, and the related statements of operations, changes in partners' deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sumpter Commons Associates, L.P. as of December 31, 1998, and the results of its operations, changes in partners' deficit, and cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Lawlor, O'Brien & Chervenak, LLC West Paterson, New Jersey February 15, 1999
[KOSTIN, RUFFKESS & COMPANY, LLC LETTERHEAD]
To The Partners Park Housing Limited Partnership
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Park Housing Limited Partnership as of December 31, 2000, and the related statements of operations and partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Park Housing Limited Partnership as of December 31, 2000, and the results of its operations and cash flows for the year then ended, in accordance with generally accepted accounting principles.
/s/ Kostin, Ruffkess & Company, LLC West Hartford, Connecticut February 6, 2001
[KOSTIN, RUFFKESS & COMPANY, LLC LETTERHEAD]
To The Partners Park Housing Limited Partnership
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Park Housing Limited Partnership as of December 31, 1999, and the related statements of revenues, expenses and partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Park Housing Limited Partnership as of December 31, 1999, and the results of its operations and cash flows for the year then ended, in accordance with generally accepted accounting principles.
/s/ Kostin, Ruffkess & Company, LLC West Hartford, Connecticut February 2, 2000
[KOSTIN, RUFFKESS & COMPANY, LLC LETTERHEAD]
To The Partners Park Housing Limited Partnership
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Park Housing Limited Partnership as of December 31, 1998, and the related statements of revenues, expenses and partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Park Housing Limited Partnership as of December 31, 1998, and the results of its operations and cash flows for the year then ended, in accordance with generally accepted accounting principles.
/s/ Kostin, Ruffkess & Company, LLC West Hartford, Connecticut February 3, 1999
[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Livingston Manor Urban Renewal Associates, L.P.
We have audited the accompanying balance sheets of Livingston Manor Urban Renewal Associates, L.P. as of December 31, 2000 and 1999, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partner and contracted management agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partner and contracted management agent, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Livingston Manor Urban Renewal Associates, L.P. at December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan LLP Boston, Massachusetts January 16, 2001
[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Livingston Manor Urban Renewal Associates, L.P.
We have audited the accompanying balance sheets of Livingston Manor Urban Renewal Associates, L.P. as of December 31, 1999 and 1998, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partner and contracted management agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partner and contracted management agent, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Livingston Manor Urban Renewal Associates, L.P. at December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan LLP Quincy, Massachusetts January 13, 2000
[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Jefferis Square Housing Partnership, L.P.
We have audited the accompanying balance sheets of Jefferis Square Housing Partnership, L.P. (a Pennsylvania limited partnership) as of December 31, 2000 and 1999, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partners and contracted management agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partners and contracted management agent, 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 Jefferis Square Housing Partnership, L.P. at December 31, 2000 and 1999, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan, LLP Boston, Massachusetts January 15, 2001
[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Jefferis Square Housing Partnership, L.P.
We have audited the accompanying balance sheets of Jefferis Square Housing Partnership, L.P. (a Pennsylvania limited partnership) as of December 31, 1999 and 1998, and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partners and contracted management agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partners and contracted management agent, 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 Jefferis Square Housing Partnership, L.P. at December 31, 1999 and 1998, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan, LLP Quincy, Massachusetts January 21, 2000
[FRIEDMAN ALPREN & GREEN LLP LETTERHEAD]
Independent Auditors' Report
To the Partners of 2301 First Avenue Limited Partnership:
We have audited the accompanying balance sheet of 2301 First Avenue Limited Partnership as of December 31, 2000, and the related statements of operations, changes in partners' capital deficiency and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 2301 First Avenue Limited Partnership as of December 31, 2000, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Friedman Alpren & Green LLP New York, NY February 8, 2001
[FRIEDMAN ALPREN & GREEN LLP LETTERHEAD]
Independent Auditors' Report
To the Partners of 2301 First Avenue Limited Partnership:
We have audited the accompanying balance sheet of 2301 First Avenue Limited Partnership as of December 31, 1999, and the related statements of operations, changes in partners' capital deficiency and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 2301 First Avenue Limited Partnership as of December 31, 1999, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Friedman Alpren & Green LLP New York, NY February 3, 2000
[LESHKOWITZ & COMPANY, LLP LETTERHEAD]
Independent Auditor's Report
To the Partners of 2301 First Avenue Limited Partnership:
We have audited the accompanying balance sheets of 2301 First Avenue Limited Partnership of at December 31, 1998 and 1997, and the related statements of operations, changes in partners' capital (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of 2301 First Avenue Limited Partnership as of December 31, 1998 and 1997, and the results of its operations, changes in partners' capital and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Leshkowitz & Company, LLP New York, NY February 23, 1999
[TOSKI, SCHAEFER & CO., P.C. LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
The Partners Lewis Street Limited Partnership:
We have audited the accompanying balance sheets of Lewis Street Limited Partnership as of December 31, 2000 and 1999 and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Lewis Street Limited Partnership as of December 31, 2000 and 1999 and the results of its operations, changes in partners' equity and cash flows for the years then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report dated January 31, 2001 on our consideration of the Partnership's internal control and on its compliance with laws and regulations applicable to the financial statements. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
/s/ Toski, Schaefer & Co., P.C. Williamsville, New York January 31, 2001
[TOSKI, SCHAEFER & CO., P.C. LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
The Partners Lewis Street Limited Partnership:
We have audited the accompanying balance sheets of Lewis Street Limited Partnership as of December 31, 1999 and 1998 and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 Lewis Street Limited Partnership as of December 31, 1999 and 1998 and the results of its operations, changes in partners' equity and cash flows for the years then ended, in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued reports dated January 21, 2000 on our consideration of the Partnership's internal control and on its compliance with laws and regulations applicable to the financial statements.
/s/ Toski, Schaefer & Co., P.C. Williamsville, New York January 21, 2000
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Savannah Park Housing Limited Partnership
We have audited the accompanying balance sheet of Savannah Park Housing Limited Partnership as of December 31, 2000, and the related statements of operations, changes in partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Savannah Park Housing Limited Partnership as of December 31, 2000, and the results of its operations, the changes in partners' capital and cash flows for the year then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the partnership will continue as a going concern. As discussed in note B to the financial statements, the partnership's declining cash flow and defaults on its land lease and a note payable raise substantial doubt about the partnership's ability to continue as a going concern. Management's plans in regard to these matters are also described in note B. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Reznick Fedder & Silverman Bethesda, Maryland March 2, 2001
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Savannah Park Housing Limited Partnership
We have audited the accompanying balance sheet of Savannah Park Housing Limited Partnership as of December 31, 1999, and the related statements of operations, changes in partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Savannah Park Housing Limited Partnership as of December 31, 1999, and the results of its operations, the changes in partners' capital and cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman Bethesda, Maryland January 27, 2000
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Savannah Park Housing Limited Partnership
We have audited the accompanying balance sheet of Savannah Park Housing Limited Partnership as of December 31, 1998, and the related statements of operations, changes in partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Savannah Park Housing Limited Partnership as of December 31, 1998, and the results of its operations, the changes in partners' capital and cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ Resnick Fedder & Silverman Bethesda, Maryland February 17, 1999
[BDO Seidman, LLP LETTERHEAD]
Independent Auditors' Report
Brannon Group, L.C. (A Limited Liability Company) Coral Gables, Florida
We have audited the accompanying balance sheet of Brannon Group, L.C. (A Limited Liability Company) as of December 31, 1998, and the related statements of profit and loss, changes in members' capital accounts, and cash flows for the year then ended. These financial statements are the responsibility of the management of the company. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Brannon Group, L.C. at December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ BDO Seidman, LLP Certified Public Accountants Miami, Florida February 15, 1999
[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Mansion Court Phase II Venture Philadelphia, Pennsylvania
We have audited the accompanying balance sheets of Mansion Court Phase II Venture (a Pennsylvania limited partnership) as of December 31, 2000 and 1999 and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partners and contracted management agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mansion Court Phase II Venture at December 31, 2000 and 1999, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan LLP Boston, Massachusetts January 28, 2001
[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Mansion Court Phase II Venture Philadelphia, Pennsylvania
We have audited the accompanying balance sheet of Mansion Court Phase II Venture (a Pennsylvania limited partnership) as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partners and contracted management agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mansion Court Phase II Venture at December 31, 1999 and 1998, and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan LLP Quincy, Massachusetts January 18, 2000
[RBG & CO. LETTERHEAD]
Independent Auditors' Report
Partners Primm Place Partners, L.P. St. Louis, Missouri
We have audited the accompanying balance sheet of Primm Place Partners, L.P., a Missouri limited partnership, as of December 31, 2000 and the related statements of income, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Primm Place Partners, L.P., as of December 31, 2000, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri January 19, 2001
[RBG & CO. LETTERHEAD]
Independent Auditors' Report
Partners Primm Place Partners, L.P. St. Louis, Missouri
We have audited the accompanying balance sheet of Primm Place Partners, L.P., a Missouri limited partnership, as of December 31, 1999 and the related statements of income, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Primm Place Partners, L.P., as of December 31, 1999, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri February 3, 2000
[RBG & CO. LETTERHEAD]
Independent Auditors' Report
Partners Primm Place Partners, L.P. St. Louis, Missouri
We have audited the accompanying balance sheet of Primm Place Partners, L.P., a Missouri limited partnership, as of December 31, 1998 and the related statements of income, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Primm Place Partners, L.P., as of December 31, 1998 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Rubin, Brown, Gornstein & Co. LLP St. Louis, Missouri February 5, 1999
[RAINES AND FISCHER LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of BK-9-A Partners, L.P.:
We have audited the accompanying balance sheet of BK-9-A Partners, L.P. (A New York Limited Partnership) as of December 31, 2000 and the related statements of operations, changes in partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BK-9-A Partners, L.P. (A New York Limited Partnership) as of December 31, 2000, and the results of its operations, changes in its partners' capital and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Raines & Fischer New York, New York January 24, 2001
[RAINES AND FISCHER LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of BK-9-A Partners, L.P.:
We have audited the accompanying balance sheet of BK-9-A Partners, L.P. (A New York Limited Partnership) as of December 31, 1999 and the related statements of operations, changes in partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BK-9-A Partners, L.P. (A New York Limited Partnership) as of December 31, 1999, and the results of its operations, changes in its partners' capital and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Raines & Fischer New York, New York February 9, 2000
[RAINES AND FISCHER LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of BK-9-A Partners, L.P.:
We have audited the accompanying balance sheet of BK-9-A Partners, L.P. (A New York Limited Partnership) as of December 31, 1998 and the related statements of operations, changes in partners' capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BK-9-A Partners, L.P. (A New York Limited Partnership) as of December 31, 1998, and the results of its operations, changes in its partners' capital and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Raines & Fischer New York, New York February 4, 1999
[RAINES AND FISCHER LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of BK-10K Partners, L.P.:
We have audited the accompanying balance sheet of BK-10K Partners, L.P. (A New York Limited Partnership) as of December 31, 2000 and the related statements of operations, changes in partners' capital (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BK-10K Partners, L.P. (A New York Limited Partnership) as of December 31, 2000, and the results of its operations, changes in its partners' capital and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Raines & Fischer New York, New York February 6, 2001
[RAINES AND FISCHER LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of BK-10K Partners, L.P.:
We have audited the accompanying balance sheet of BK-10K Partners, L.P. (A New York Limited Partnership) as of December 31, 1999 and the related statements of operations, changes in partners' capital (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BK-10K Partners, L.P. (A New York Limited Partnership) as of December 31, 1999, and the results of its operations, changes in its partners' capital and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Raines & Fischer New York, New York February 9, 2000
[RAINES AND FISCHER LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of BK-10K Partners, L.P.:
We have audited the accompanying balance sheet of BK-10K Partners, L.P. (A New York Limited Partnership) as of December 31, 1998 and the related statements of operations, changes in partners' capital (deficit), and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of BK-10K Partners, L.P. (A New York Limited Partnership) as of December 31, 1998, and the results of its operations, changes in its partners' capital and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Raines & Fischer New York, New York February 22, 1999
[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Aspen-Olive Associates Philadelphia, Pennsylvania
We have audited the accompanying balance sheets of Aspen-Olive Associates (a Pennsylvania limited partnership) as of December 31, 2000 and 1999 and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partners and contracted management agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partners and contracted management agent, 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 Aspen-Olive Associates at December 31, 2000 and 1999 and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan LLP Boston, Massachusetts January 13, 2001
[ZINER, KENNEDY & LEHAN LLP. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Aspen-Olive Associates Philadelphia, Pennsylvania
We have audited the accompanying balance sheets of Aspen-Olive Associates (a Pennsylvania limited partnership) as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partners and contracted management agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partners and contracted management agent, 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 Aspen-Olive Associates at December 31, 1999 and 1998 and the results of its operations, changes in partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan LLP Quincy, Massachusetts January 27, 2000
[ASHER & COMPANY, LTD. LETTERHEAD]
Independent Auditors' Report
The Partners West Mill Creek Associates III T/A Jameson Court Marlton, New Jersey
We have audited the accompanying balance sheets of West Mill Creek Associates III T/A Jameson Court (A Limited Partnership), PHFA Project No. 0-0476, as of December 31, 2000 and 1999 and the related statements of profit and loss, Partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 West Mill Creek Associates III T/A Jameson Court (A Limited Partnership), PHFA Project No. 0-0476, as of December 31, 2000 and 1999, and the results of its operations, changes in its Partners' capital and its cash flows for the years then ended in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report dated January 22, 2001 on our consideration of West Mill Creek Associates III's T/A Jameson Court (A Limited Partnership), PHFA Project No. 0-0476, internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
/s/ ASHER & COMPANY, Ltd. January 22, 2001 except for Note C as to which the date is February 20, 2001
[ASHER & COMPANY, LTD. LETTERHEAD]
Independent Auditors' Report
The Partners West Mill Creek Associates III T/A Jameson Court Marlton, New Jersey
We have audited the accompanying balance sheets of West Mill Creek Associates III T/A Jameson Court (A Limited Partnership), PHFA Project No. 0-476, as of December 31, 1999 and 1998 and the related statements of profit and loss, Partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our 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 West Mill Creek Associates III T/A Jameson Court (A Limited Partnership), PHFA Project No. 0-476, as of December 31, 1999 and 1998, and the results of its operations, changes in its Partners' capital and its cash flows for the years then ended in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report dated January 21, 2000 on our consideration of West Mill Creek Associates III's T/A Jameson Court (A Limited Partnership), PHFA Project No. 0-476, internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants.
/s/ ASHER & COMPANY, Ltd. January 21, 2000
[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Universal Court Associates
We have audited the accompanying balance sheets of Universal Court Associates (a Pennsylvania limited partnership) as of December 31, 2000 and 1999 and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partners and contracted agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partners and contracted management agent, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Universal Court Associates at December 31, 2000 and 1999, and the results of its operations, changes in its partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan LLP Boston, Massachusetts January 17, 2001
[ZINER, KENNEDY & LEHAN LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Universal Court Associates
We have audited the accompanying balance sheets of Universal Court Associates (a Pennsylvania limited partnership) as of December 31, 1999 and 1998 and the related statements of operations, changes in partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's general partners and contracted agent. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's general partners, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Universal Court Associates at December 31, 1999 and 1998, and the results of its operations, changes in its partners' equity and its cash flows for the years then ended in conformity with generally accepted accounting principles.
/s/ Ziner, Kennedy & Lehan LLP Quincy, Massachusetts January 28, 2000
[COLE, EVANS & PETERSON LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
To the Partners New Zion Apartments Limited Partnership Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December 31, 2000, and the related statements of income, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first paragraph above present fairly, in all material respects, the financial position of New Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December 31, 2000 and the results of its operations, changes in capital, and cash flows for the year then ended in conformity with generally accepted accounting principles.
Our audit was made primarily for the purpose of forming an opinion on the basic financial statements for the year ended December 31, 2000 taken as a whole. The supplementary Schedules 1, 2 and 3 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, we have also issued a report dated February 16, 2001 on our consideration of New Zion Apartments Limited Partnership's internal control, and reports dated February 16, 2001, on its compliance with laws and regulations, compliance with specific requirements applicable to Fair Housing and Non-Discrimination, and compliance with specific requirements applicable to major HUD-assisted programs. Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.
/s/ Cole, Evans & Peterson Lead Auditor: Steven W. Hedgepeth Shreveport, Louisiana Federal ID No. 72-0506596 February 16, 2001
[COLE, EVANS & PETERSON LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
To the Partners New Zion Apartments Limited Partnership Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December 31, 1999, and the related statements of income, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first paragraph above present fairly, in all material respects, the financial position of New Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December 31, 1999 and the results of its operations, changes in capital, and cash flows for the year then ended in conformity with generally accepted accounting principles.
Our audit was made primarily for the purpose of forming an opinion on the basic financial statements for the year ended December 31, 1999 taken as a whole. The supplementary Schedules 1, 2 and 3 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
As discussed in Note 13 to the financial statements, the Partnership has changed its method of accounting for organization costs.
In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, we have also issued a report dated February 12, 2000 on our consideration of New Zion Apartments Limited Partnership's internal control, and reports dated February 12, 2000, on its compliance with laws and regulations, compliance with specific requirements applicable to Fair Housing and Non-Discrimination, and compliance with specific requirements applicable to major HUD-assisted programs.
/s/ Cole, Evans & Peterson Lead Auditor: Steven W. Hedgepeth Shreveport, Louisiana Federal ID No. 72-0506596 February 12, 2000
[COLE, EVANS & PETERSON LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION
To the Partners New Zion Apartments Limited Partnership Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited Partnership, HUD Project No. 059-35004, at December 31, 1998, and the related statements of income, partners' capital and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the first paragraph above present fairly, in all material respects, the financial position of New Zion Apartments Limited Partnership, HUD Project No. 059-35004, at December 31, 1998 and the results of its operations, changes in capital, and cash flows for the year then ended in conformity with generally accepted accounting principles.
Our audit was made primarily for the purpose of forming an opinion on the basic financial statements for the year ended December 31, 1998 taken as a whole. The supplementary Schedules 1, 2 and 3 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the audit procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
In accordance with Government Auditing Standards and the Consolidated Audit Guide for Audits of HUD Programs issued by the U.S. Department of Housing and Urban Development, we have also issued a report dated February 10, 1999 on our consideration of New Zion Apartments Limited Partnership's internal control, and reports dated February 10, 1999, on its compliance with laws and regulations, compliance with specific requirements applicable to Fair Housing and Non-Discrimination, and compliance with specific requirements applicable to major HUD-assisted programs.
/s/ Cole, Evans & Peterson Lead Auditor: Steven W. Hedgepeth Shreveport, Louisiana Federal ID No. 72-0506596 February 10, 1999
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Dreitzer Limited Partnership
We have audited the accompanying balance sheet of Dreitzer Limited Partnership as of December 31, 2000, and the related statements of operations, partners' defict and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Dreitzer Limited Partnership as of December 31, 2000, and the results of its operations, changes in partners' equity and cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman Atlanta, Georgia January 20, 2001
[ALAN S. CHALFIN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To The Parnters Dreitzer Limited Partnersip
I have audited the accompanying balance sheet of Dreitzer Limited Partnership as of December 31, 1999, and the related income statement and statements of partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. My responsibility is to express an opinion on these financial statements based on my audit. The financial statements of the Dreitzer Limited Partnership as of December 31, 1998 were audited by another auditor whose report dated March 2, 1999 expressed an unqualified opinion on those statements.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Dreitzer Limited Partnership as of December 31, 1999 and the results of its operations, changes in partners' equity and cash flows in the year then ended, in conformity with generally accepted accounting principles.
Alan S. Chalfin Eastchester, NY February 4, 2000
[REZNICK FEDDER & SILVERMAN LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners Dreitzer Limited Partnership
We have audited the accompanying balance sheet of Dreitzer Limited Partnership as of December 31, 1998, and the related statements of income, partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Dreitzer Limited Partnership as of December 31, 1998, and the results of its operations, changes in partners' equity and cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman Bethesda, Maryland March 2, 1999
J:\PFK\March\IND3\IND3.DOC INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2001
Independence Tax Credit Plus L.P. III (a Delaware limited partnership) (the "Partnership") was organized on December 23, 1993 and commenced the public offering on June 7, 1994. The general partner of the Partnership is Related Independence Associates III L.P., a Delaware limited partnership (the "General Partner").
The Partnership's business is to invest as a limited partner in other partnerships ("Local Partnerships," "subsidiaries" or "subsidiary partnerships") owning apartment complexes that are eligible for the low-income housing tax credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986, some of which complexes may also be eligible for the historic rehabilitation tax credit ("Historic Tax Credit"; together with Housing Tax Credits, "Tax Credits").
As of March 31, 2001, the Partnership had acquired a limited partnership interest in twenty subsidiary partnerships.
The Partnership was authorized to issue a total of 100,000 ($100,000,000) Beneficial Assignment Certificates ("BACs") which have been registered with the Securities and Exchange Commission for sale to the public. Each BAC represents all of the economic and virtually all of the ownership rights attributable to a limited partnership interest in the Partnership. As of the termination of the offering on May 9, 1995, the Partnership had received $43,440,000 of gross proceeds of the Offering (the "Gross Proceeds") from 2,810 investors ("BACs holders").
The terms of the Partnership's Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement") provide, among other things, that net profits or losses and distributions of cash flow are, in general, allocated 99% to the limited partners and BACs holders and 1% to the general partner.
NOTE 2 - Summary of Significant Accounting Policies
a) Basis of Accounting
For financial reporting purposes the Partnership's fiscal year ends on March 31. All subsidiaries have fiscal years ending December 31. Accounts of the subsidiaries have been adjusted for intercompany transactions from January 1 through March 31. The Partnership's fiscal year ends March 31 in order to allow adequate time for the subsidiaries' financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with U.S. generally accepted accounting principles ("GAAP").
b) Basis of Consolidation
The consolidated financial statements include the accounts of the Partnership and twenty subsidiary partnerships in which the Partnership is a limited partner for the years ended March 31, 2001, 2000 and 1999, respectively, (the 2000, 1999 and 1998 Fiscal Years). Through the rights of the Partnership and/or affiliate of the General Partner, which affiliate has a contractual obligation to act on behalf of the Partnership, to remove the general partner of the subsidiary local partnerships and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the subsidiary partnerships. All intercompany accounts and transactions with the subsidiary partnerships have been eliminated in consolidation.
Increases (decreases) in the capitalization of consolidated subsidiaries attributable to minority interest arise from cash contributions and cash distributions to the minority interest partners.
(Income) losses attributable to minority interest which exceed the minority interests' investment in a subsidiary have been charged to the Partnership. Such losses aggregated approximately $22,000, $24,000 and $20,000 for the years ended March 31, 2001, 2000 and 1999, respectively. The Partnership's investment in each subsidiary is equal to the respective subsidiary's partners' equity less minority interest capital, if any. In consolidation, all subsidiary partnership losses are included in the Partnership's capital account except for losses allocated to minority interest capital.
c) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and investments in short-term highly liquid investments purchased with original maturities of three months or less.
d) Investments Available-For-Sale
At inception, the Partnership adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 115 ("SFAS No. 115"), Accounting for Certain Investments in Debt and Equity Securities. At March 31, 2001, the Partnership has classified its securities as available-for-sale.
Available-for-sale securities are carried at fair value with net unrealized gain (loss) reported as a separate component of shareholders' equity until realized. A decline in the market value of any available-for-sale security below cost that is deemed other than temporary is charged to earnings resulting in the establishment of a new cost basis for the security.
e) Property and Equipment
Property and equipment to be held and used are carried at cost which includes the purchase price, acquisition fees and expenses, construction period interest and any other costs incurred in acquiring the properties. The cost of property and equipment is depreciated over their estimated useful lives using accelerated and straight-line methods. Expenditures for repairs and maintenance are charged to expense as incurred; major renewals and betterments are capitalized. At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the assets and accumulated depreciation accounts and the profit or loss on such disposition is reflected in earnings. A loss on impairment of assets is recorded when management estimates amounts recoverable through future operations and sale of the property on an undiscounted basis are below depreciated cost. At that time, property investments themselves are reduced to estimated fair value (generally using discounted cash flows) when the property is considered to be impaired and the depreciated cost exceeds estimated fair value.
Through March 31, 2001, the Partnership has not recorded any loss on impairment of assets or reduction to estimated fair value.
At the time management commits to a plan to dispose of assets, said assets are adjusted to the lower of carrying amount or fair value less costs to sell. These assets are classified as property and equipment-held for sale and are not depreciated. Through March 31, 2001, the Partnership has not recorded or classified any property and equipment as held for sale.
f) Income Taxes
The Partnership is not required to provide for, or pay, any federal income taxes. Net income or loss generated by the Partnership is passed through to the partners and is required to be reported by them. The Partnership may be subject to state and local taxes in jurisdictions in which it operates. For income tax purposes, the Partnership has a fiscal year ending December 31 (Note 9).
g) Offering Costs
Costs incurred to sell BACs, including brokerage and the nonaccountable expense allowance, are considered selling and offering expenses. These costs are charged directly to limited partners' capital.
In April of 1998, the Financial Accounting Standards Board issued Statement of Position 98-5 ("SOP 98-5") "Reporting on the Costs of Start-Up Activities." SOP 98-5 provides guidance on the financial reporting of start-up costs and organization costs. SOP 98-5 is effective for all fiscal quarters of fiscal years beginning after December 15, 1998. Such change in accounting principle amounted to $131,653 for the year ended March 31, 2000.
h) Deferred Acquisition Costs
Acquisition costs and fees incurred in connection with the proposed purchase of interests in certain subsidiary partnerships have been deferred. In the event these partnerships are acquired, these amounts will be capitalized as property costs. If the subsidiary partnerships are not acquired, these amounts will be charged to operations.
i) Loss Contingencies
The Partnership records loss contingencies as a charge to income when information becomes available which indicates that it is probable that an asset has been impaired or a liability has been incurred as of the date of the financial statements and the amount of loss can be reasonably estimated.
j) Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
NOTE 3 - Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instruments (all of which are held for nontrading purposes) for which it is practicable to estimate that value:
Cash and Cash Equivalents, Investments Available-for-Sale and Cash Held in Escrow The carrying amount approximates fair value.
Mortgage Notes Payable The fair value of mortgage notes payable and construction loans payable is estimated, where practicable, based on the borrowing rate currently available for similar loans.
The estimated fair values of the Partnership's mortgage notes payable and construction loans payable are as follows:
Management believes it is not practical to estimate the fair value of due to local and general partners and affiliates because market information on such unique loans are not currently available to the partnerships.
The carrying amount of other financial instruments that require such disclosure approximates fair value.
NOTE 4 - Property and Equipment
The components of property and equipment and their estimated useful lives are as follows:
Included in property and equipment is $2,509,717 of acquisition fees paid to the General Partner and $1,178,468 of acquisition expenses as of March 31, 2001 and 2000, respectively. In addition, as of March 31, 2001 and 2000, building and improvements and construction in progress includes $1,106,837 of capitalized interest.
In connection with the rehabilitation of the properties, the subsidiary partnerships have incurred developer's fees of $8,980,181 to the local general partners and affiliates as of March 31, 2001 and 2000. Such fees have been included in the cost of property and equipment.
Depreciation expense for the years ended March 31, 2001, 2000 and 1999 amounted to $2,763,153, $2,685,015 and $2,454,706, respectively.
NOTE 5 - Cash Held in Escrow
Cash held in escrow consists of the following:
NOTE 6 - Deferred Costs
The components of deferred costs and their periods of amortization are as follows:
Amortization expense for the years ended March 31, 2001, 2000 and 1999 amounted to $46,767, $64,126 and $79,311, respectively.
During the 1999 Fiscal Year, $242,454 of deferred costs and $110,801 of accumulated amortization were written off.
NOTE 7 - Mortgage and Construction Notes Payable
The mortgage and construction notes, which are collateralized by land and buildings, are payable in aggregate monthly installments of approximately $75,000 including principal and interest at rates varying from 0% to 10.5% per annum, through the year 2046. Each subsidiary partnership's mortgage note payable is collateralized by the land and buildings of the respective subsidiary partnership, the assignment of certain subsidiary partnership's rents and leases, and is without further recourse.
Annual principal payment requirements, as of March 31, 2001 for each of the next five fiscal years and thereafter, are as follows:
Fiscal Year Ending Amount
2001 $ 274,565 2002 295,166 2003 334,364 2004 357,764 2005 380,716 Thereafter 41,636,358 ----------
$43,278,933
The mortgage agreements require monthly deposits to replacement reserves of approximately $14,000 and monthly deposits to escrow accounts for real estate taxes, hazard and mortgage insurance and other (Note 5).
As of December 31, 2000, one subsidiary partnership has a construction loan commitment totaling approximately $1,300,000. As of December 31, 2000, such loan has an outstanding balance of approximately $1,289,449.
On January 26, 2000, 2301 First Avenue, L.P. ("2301 1st Avenue") converted its two construction loans payable totaling $5,491,732 into first and second mortgage notes payable totaling $5,558,352.
NOTE 8 - Related Party Transactions
An affiliate of the General Partner has a .01% interest as a special limited partner, in each of the Local Partnerships.
Pursuant to the Partnership Agreement and the Local Partnership Agreements, the General Partner and affiliate receive their pro rata shares of profits, losses and tax credits.
A) Guarantees
The Partnership has negotiated development deficit guarantees with the Local Partnerships in which it has invested. The Local General Partners have agreed to fund development deficit through certain dates as defined in the Partnership Agreement of each of the Local Partnerships. Such guarantees are defined in their respective agreements and generally there is no right of repayment to such Local General Partners. All current development deficit guarantees have expired. Management does not expect their expiration to have a material impact on liquidity, based on prior years' fundings.
The Partnership has negotiated Operating Deficit Guaranty Agreements with all Local Partnerships by which the general partners of the Local Partnerships have agreed to fund operating deficits for a specified period of time. The terms of the Operating Deficit Guaranty Agreements vary for each Local Partnership, with maximum dollar amounts to be funded for a specified period of time, generally three years, commencing on the break-even date. As of March 31, 2001, 2000 and 1999, the gross amounts of the Operating Deficit Guarantees aggregate approximately $5,129,000, $1,610,000 of which has expired as of March 31, 2001. As of March 31, 2001, approximately $1,347,000 has been funded under the Operating Deficit Guaranty Agreements. Amounts funded under such agreements are treated as noninterest bearing loans, which will be paid only out of 50% of available cash flow or out of available net sale or refinancing proceeds. Management does not expect the expiration of such guarantees to have a material impact on liquidity, based on prior years' fundings.
The Operating Deficit Guaranty Agreements and Development Deficit Guaranty Agreements were negotiated to protect the Partnership's interest in the Local Partnerships and to provide incentive to the Local General Partners to generate positive cash flow.
B) Other Related Party Expenses
The General Partner and its affiliates perform services for the Partnership. The costs incurred to the General Partner and other related parties for the years ended March 31, 2000, 1999 and 1998 were as follows:
(a) The General Partner is entitled to receive a partnership management fee, after payment of all Partnership expenses, which together with the annual local administrative fees will not exceed a maximum of 0.5% per annum of invested assets (as defined in the Partnership Agreement), for administering the affairs of the Partnership. Subject to the foregoing limitation, the partnership management fee will be determined by the General Partner in its sole discretion based upon its review of the Partnership's investments. Unpaid partnership management fees for any year will be accrued without interest and will be payable only to the extent of available funds after the Partnership has made distributions to the limited partners of sale or refinancing proceeds equal to their original capital contributions plus a 10% priority return thereon (to the extent not theretofore paid out of cash flow). Partnership management fees owed to the General Partner amounting to approximately $1,199,000 and $858,000 were accrued and unpaid as of March 31, 2001 and 2000, respectively. Without the General Partner's continued accrual without payment the Partnership will not be in a position to meet its obligations. The General Partner has continued allowing the accrual without payment of these amounts but are under no obligation to continue to do so.
(b) The Partnership reimburses the General Partner and its affiliates for actual Partnership operating expenses incurred by the General Partner and its affiliates on the Partnership's behalf. The amount of reimbursement from the Partnership is limited by the provisions of the Partnership Agreement. Another affiliate of the General Partner performs asset monitoring for the Partnership. These services include site visits and evaluations of the subsidiary partnerships' performance.
(c) Property management fees incurred by Local Partnerships amounted to $384,918, $395,535 and $339,925 for the years ended March 31, 2001, 2000 and 1999, respectively. Of these fees, $235,206, $312,194 and $217,666 were incurred to affiliates of the subsidiary partnerships' general partners.
(d) Independence SLP III L.P., a limited partner of the subsidiary partnerships, is entitled to receive a local administrative fee of up to $5,000 per year from each subsidiary partnership.
D) Due to Local General Partners and Affiliates
Due to local general partners and affiliates consists of the following:
NOTE 9 - Income Taxes
A reconciliation of the financial statement net loss to the income tax loss for the Partnership and its consolidated subsidiaries follows:
NOTE 10 - Commitments and Contingencies
a) Events of Default and Going Concern
Savannah Park Housing Limited Partnership ("Savannah Park") - - ----------------------------------------- The Savannah Park's financial statements have been prepared in conformity with U.S. generally accepted accounting principles, which contemplates continuation of the partnership as a going concern. However, Savannah Park is experiencing cash flow difficulties. Due to high vacancies and a significant increase in accounts receivable, Savannah Park is unable to generate sufficient cash flow to meet its financial obligations. In addition, Savannah Park was unable to make all of the required monthly payments on the outstanding mortgage note payable. Since 1998, Savannah Park has been unable to make all of the required payments under the land lease.
Savannah Park's management has been successful in reducing certain operating expenditures and is also implementing new procedures to improve collections and increase occupancy.
In view of these matters, realization of a major portion of the assets in Savannah Park's balance sheet is dependent upon continued operations of the partnership, which in turn is dependent upon the partnership's ability to meet its financing requirements, and the success of its future operations. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Partnership's investment in Savannah Park at March 31, 2001 and 2000 was zero at each date and the minority interest balance was approximately $342,000 and $342,000, respectively. Savannah Park's net loss after minority interest amounted to approximately $58,000, $85,000 and $162,000 for the 2000, 1999, and 1998 and Fiscal Years, respectively.
b) Legal Proceedings
Lewis Street L.P. Lewis Street Limited Partnership ("Lewis Street") has been informed that it is a defendant in a cause of action that has been brought by the project's original developer. This litigation will be vigorously contested by the Local Partnership. Legal counsel for the Local Partnership has indicated that the ultimate liability, if any, with respect to this possible action cannot be determined at this time. The Partnership's investment in Lewis Street at March 31, 2001 and 2000 was zero at each date and the minority interest balance was zero at each date. Lewis Street's net loss after minority interest amounted to approximately $100,000, $98,000 and $99,000 for the 2000, 1999, and 1998 Fiscal Years, respectively.
Pacific East L.P. The Pacific East L.P. was a defendant in a lawsuit filed by one of its tenants for injuries allegedly sustained as a result of an assault by an intruder in the tenant's apartment. A judgment has been rendered in favor of the plaintiff for $260,000. The Local Partnership's liability insurance will cover the judgment therefore no liability related to the litigation has been recorded.
Brannon Group L.C. On April 7, 2000, Civil Action 00 Civ 2715 (JGK) was filed and, is pending in the United States District Court for the Southern District of New York. It is styled "RubinBaum LLP, Plaintiff v. Related Corporate Partners V, L.P., Related Corporate SLP, L.P. (the "Related Defendants"), the Brannon Group, L.L.C., D. Reid Brannon and Ivan Brannon (the "Brannon Defendants"), Defendants, v. Independence SLP III, L.P., the Partnership and Keys 288, LLC, (the "Third Party Defendants"). The managing members of the Brannon Group L.C. were removed for breaching their fiduciary responsibilities and contractual obligations. An affiliate of the General Partner was admitted as the new managing member. The Related Defendants have asserted cross-claims against the Brannon Defendants for breach of fiduciary duties, breach of contract, an accounting and a declaratory judgement that, inter alia, Reid and Ivan Brannon were properly removed as Managers of the Brannon Group L.C. The Brannon Defendants have asserted claims against the Related Defendants and the Third Party Defendants for breach of contract, breach of fiduciary duty, intentional interference with advantageous business relationships, breach of the implied covenant of good faith and fair dealing, unjust enrichment, declaratory and injunctive relief. They seek to recover unspecified compensatory and punitive damages, prejudgement and post-judgement interest, costs and attorney's fees as well as injunctive and declaratory relief. The action is set for trial on the Court's August 24, 2001 docket. The discovery deadline is July 6, 2001. Discovery has just begun. Management intends to vigorously pursue their claims against the Brannon Defendants and to vigorously defend the claims alleged against the Partnership. Given the preliminary stage of these proceedings, we can express no opinion on the likely outcome.
c) Leases
One of the subsidiary partnerships is leasing the land on which the Project is located, for a term of 50 years, which commenced in August 1996, and monthly rent payments of $1,449. Estimated future minimum payments due under the terms of the lease are as follows:
2001 $ 28,334 2002 21,252 2003 21,252 2004 21,252 2005 21,252 Thereafter 871,332 ---------- $ 984,674
As of December 31, 2000, the Partnership is currently in default on the lease agreement. For the year ended December 31, 2000, $17,710 has been paid under the terms of the lease and $7,082 remains payable.
d) Uninsured Cash and Cash Equivalents
The Partnership maintains its cash and cash equivalents in various banks. The accounts at each bank are guaranteed by the Federal Deposit Insurance Corporation up to $100,000. Uninsured cash and cash equivalents approximated $1,922,000 at March 31, 2001.
e) Other
The Partnership and BACs holders began to recognize Tax Credits with respect to a Property when the Credit Period for such Property commenced. Because of the time required for the acquisition, completion and rent-up of Properties, the amount of Tax Credits per BAC have gradually increased over the first three years of the Partnership. Tax Credits not recognized in the first three years will be recognized in the 11th through 13th years. The Partnership generated $5,682,911, $5,444,802 and $4,743,808 Tax Credits during the 2000, 1999 and 1998 tax years, respectively.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Partnership has no directors or executive officers. The Partnership's affairs are managed and controlled by the General Partner. Certain information concerning the directors and executive officers of RIAI III, the sole general partner of the General Partner, is set forth below.
Name Position
Stephen M. Ross Director
Alan P. Hirmes President
Stuart J. Boesky Senior Vice President
Marc D. Schnitzer Vice President
Denise L. Kiley Vice President
Glenn F. Hopps Treasurer
Teresa Wicelinski Secretary
STEPHEN M. ROSS, 61, President, Director and shareholder of The Related Realty Group, Inc., the General Partner of The Related Companies, L.P. He graduated from the University of Michigan School of Business Administration with a Bachelor of Science degree and from Wayne State University School of Law with a Juris Doctor degree. Mr. Ross then received a Master of Laws degree in taxation from New York University School of Law. He joined the accounting firm of Coopers & Lybrand in Detroit as a tax specialist and later moved to New York, where he worked for two large Wall Street investment banking firms in their real estate and corporate finance departments. Mr. Ross formed the predecessor of The Related Companies, L.P. in 1972 to develop, manage, finance and acquire subsidized and conventional apartment developments. Mr. Ross also serves on the Board of Trustees of Charter Municipal Mortgage Acceptance Company.
ALAN P. HIRMES, 46, has been a Certified Public Accountant in New York since 1978. Prior to joining Related in October 1983, Mr. Hirmes was employed by Weiner & Co., Certified Public Accountants. Mr. Hirmes is also a Vice President of Capital. Mr. Hirmes graduated from Hofstra University with a Bachelor of Arts degree. Mr. Hirmes also serves on the Board of Directors of Aegis Realty, Inc. and Charter Municipal Mortgage Acceptance Company.
STUART J. BOESKY, 45, practiced real estate and tax law in New York City with the law firm of Shipley & Rothstein from 1984 until February 1986 when he joined Capital. From 1983 to 1984, Mr. Boesky practiced law with the Boston law firm of Kaye Fialkow Richard & Rothstein (which subsequently merged with Strook & Strook & Lavan LLP) and from 1978 to 1980 was a consultant specializing in real estate at the accounting firm of Laventhol & Horwath. Mr. Boesky graduated from Michigan State University with a Bachelor of Arts degree and from Wayne State School of Law with a Juris Doctor degree. He then received a Master of Laws degree in Taxation from Boston University School of Law. Mr. Boesky also serves on the Board of Directors of Aegis Realty, Inc., Charter Municipal Mortgage Acceptance Company and American Mortgage Acceptance Company.
MARC D. SCHNITZER, 40, is responsible both for financial restructuring of real estate properties and directing Related's acquisitions of properties generating Housing Tax Credits. Mr. Schnitzer received a Masters of Business Administration from The Wharton School of the University of Pennsylvania in December 1987 before joining Related in January 1988. From 1983 to January 1986, he was a financial analyst for the First Boston Corporation in New York. Mr. Schnitzer graduated summa cum laude with a Bachelor of Science in Business Administration from the School of Management at Boston University in May 1983.
DENISE L. KILEY, 41, is responsible for overseeing the due diligence and asset management of all multifamily residential properties invested in RCC sponsored corporate, public and private equity and debt funds. Prior to joining Related in 1990, Ms. Kiley had experience acquiring, financing and asset managing multifamily residential properties. From 1981 through 1985 she was an auditor with Price Waterhouse. Ms. Kiley holds a Bachelor of Science in Accounting from Boston College.
GLENN F. HOPPS, 38, joined Related in December 1990, and prior to that date was employed by Marks Shron & Company and Weissbarth, Altman and Michaelson, certified public accountants. Mr. Hopps graduated from New York State University at Albany with a Bachelor of Science Degree in Accounting.
TERESA WICELINSKI, 35, joined Related in June 1992, and prior to that date was employed by Friedman, Alpren & Green, certified public accountants. Ms. Wicelinski graduated from Pace University with a Bachelor of Arts Degree in Accounting.
Item 11. Executive Compensation.
The Partnership has no officers or directors. The Partnership does not pay or accrue any fees, salaries or other forms of compensation to directors or officers of the General Partner for their services. However, under the terms of the Partnership Agreement, the Partnership has entered into certain arrangements with the General Partner and its affiliates, which provide for compensation to be paid to the General Partner and its affiliates. Such arrangements include (but are not limited to) agreements to pay nonrecurring Acquisition Fees, a nonaccountable Acquisition Expense allowance, an accountable expense reimbursement and Subordinated Disposition Fees to the General Partner and/or its affiliates. In addition, the General Partner is entitled to a subordinated interest in Cash from Sales or Financings and a 1% interest in Net Income, Net Loss, Distributions of Adjusted Cash from Operations and Cash from Sales or Financings. Certain directors and officers of the General Partner receive compensation from the General Partner and its affiliates for services performed for various affiliated entities which may include services performed for the Partnership. The maximum annual partnership management fee paid to the General Partner is 0.5% of invested assets. See Note 8 to the Financial Statements in Item 8
Item 8 above, which is incorporated herein by reference.
Tabular information concerning salaries, bonuses and other types of compensation payable to executive officers has not been included in this annual report. As noted above, the Partnership has no executive officers. The levels of compensation payable to the General Partner and/or its affiliates is limited by the terms of the Partnership Agreement and may not be increased therefrom on a discretionary basis.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Independence SLP III L.P., a limited partnership whose general partner is the general partner of the General Partner of the Partnership and which acts as the special limited partner of each Local Partnership, holds a .01% limited partnership interest in each Local Partnership. See Note 8 to the Financial Statements in Item 8 above, which information is incorporated herein by reference thereto. The following table sets forth the number of BACs beneficially owned, as of June 1, 2001, by (i) each BACs holder known to the Partnership to be a beneficial owner of more than 5% of the BACs, (ii) each director and executive officer of the general partner of the General Partner and (iii) the directors and executive officers of the general partner of the General Partner as a group. Unless otherwise noted, all BACs are owned directly with sole voting and dispositive powers.
Except as set forth below, no person is known by the Partnership to be the beneficial owner of more than five percent of the Limited Partnership Interests and/or BACs; and neither the General Partner nor any director or officer of the General Partner beneficially owns any Limited Partnership Interests or BACs.
(1) The address for each of the persons in the table is 625 Madison Avenue, New York, New York 10022.
(2) As set forth in Schedule 13D filed by Lehigh Tax Credit Partners III L.L.C. ("Lehigh III") and Lehigh Tax Credit Partners, Inc., (the "Managing Member") on January 25, 1999 with the Securities and Exchange Commission (the "Commission") and pursuant to a letter agreement dated October 6, 1998 among the Partnership, Lehigh III and the General Partner (the "Standstill Agreement"), Lehigh III agreed that, prior to October 6, 2008 (the "Standstill Expiration Date"), it will not and it will cause certain affiliates not to (i) seek to propose to enter into, directly or indirectly, any merger, consolidation, business combination, sale or acquisition of assets, liquidation, dissolution or other similar transaction involving the Partnership, (ii) form, join or otherwise participate in a "group" (within the meaning of Section 13 (d)(3) of the Act) with respect to any voting securities of the Partnership, except that those affiliates bound by the Standstill Agreement will not be deemed to have violated it and formed a "group" solely by acting in accordance with the Standstill Agreement, (iii) disclose in writing to any third party intention, plan or arrangement inconsistent with the terms of the Standstill Agreement, or (iv) loan money to, advise, assist or encourage any person in connection with any action inconsistent with the terms of the Standstill Agreement, Lehigh III also agreed to vote its BACs in the same manner as a majority of all voting BACs holders; provided, however, Lehigh is entitled to vote its BACs as it determines with regard to any proposal (i) to remove the General Partner as a general partner of the Partnership or (ii) concerning the reduction of any fees, profits, distributions or allocations for the benefit of the General Partner or its affiliates. The addresses of each of the Partnership, Lehigh III and the General Partner is 625 Madison Avenue, New York, New York 10022.
(3) Each such party serves as a director and executive officer of the Managing Member and owns an equity interest therein except J. Michael Fried who owns only an economic interest.
Item 13. Certain Relationships and Related Transactions.
The Partnership has and will continue to have certain relationships with the General Partner and its affiliates, as discussed in Item 11