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.
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 March 31, 1998, the Partnership has received $43,440,000 of Gross Proceeds of the Offering from 2,810 investors ("BACs holders"). The Offering was terminated on May 9, 1995. (Item 8, "Financial Statements and Supplementary Data," Note 1).
The Partnership's business is primarily to invest in other partnerships ("Local Partnerships") owning apartment complexes ("Apartment Complexes" or "Properties") that are eligible for the low-income housing tax credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986, some of which may also be eligible for the historic rehabilitation tax credit ("Historic Tax Credit"; together with Housing Tax Credits, "Tax Credits"). 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, 1998, the Partnership acquired interests in twenty Local Partnerships. As of March 31, 1998, approximately $34,816,000 (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 $6,148,000 remains to be paid to the Local Partnerships (including $2,399,000 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 their 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, 1998, the Partnership has 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 41.86% of the partnership interest in the subsidiary partnership (the other 58.12% limited partnership interest is owned by an affiliate 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.
Local Partnership Schedule --------------------------
*Properties still in construction phase. **Properties are in rent-up phase.
(1) Properties are in rent-up phase.
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. Rents for the residential units are determined annually by HUD and reflect increases in consumer price indices in various geographic areas.
Management continuously reviews the physical state of the properties and budgets improvements when required which are generally funded from cash flow from operations or release of replacement reserve escrows.
Management continuously 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 general partners of the Local Partnerships ("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"). 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 liquidating 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 placed into service. 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 2301 First Avenue 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, 1998, 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 such procedures will remain in effect until such time, if ever, as further revision of the Revenue Act of 1987 may permit the Partnership to lessen the scope of the restrictions.
As of June 12, 1998, the Partnership has approximately 2,818 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.
The Partnership has made no distributions to the BACs holders as of March 31, 1998. The Partnership does not anticipate providing cash distributions to its BACs holders other than from net refinancing or sales proceeds.
There has recently been an increasing number of requests for the list of BACs holders of limited partnerships such as the Partnership. Often these requests are made by a person who, only a short time before making the request, acquired merely a small number of BACs in the Partnership and seeks the list for an improper purpose, a purpose that is not in the best interests of the Partnership or is harmful to the Partnership. In order to best serve and protect the interests of the Partnership and all of its investors, the General Partner of the Partnership has adopted a policy with respect to requests for the Partnership's list of BACs holders. This policy is intended to protect investors from unsolicited and coercive offers to acquire BACs holders' interest and does not limit any other rights the General Partner may have under the Partnership Agreement or applicable law.
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 years ended March 31, 1998, 1997, 1996 and 1995, total assets and liabilities increased primarily due to the continued acquisition of Local Partnerships. For the years ended March 31, 1998, 1997, 1996 and 1995 property and equipment increased approximately $18,000,000, $11,600,000, $28,600,000 and $6,800,000 respectively, construction in progress (decreased) increased approximately $(700,000), $600,000, $4,700,000 and $800,000, respectively, and mortgage notes increased approximately $6,000,000, $4,900,000, $16,000,000 and $2,800,000, respectively. For the years ended March 31, 1996 and 1995, construction notes increased approximately $600,000 and $2,200,000, respectively. For the years ended March 31, 1996 and 1995, the increase in assets was also due to capital contributions which were not fully expended. 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, 1997, 1996 and 1995, 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, 1998.
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 include (i) interest earned on Gross Proceeds which are invested in tax-exempt money market instruments pending final payments to the Local Partnerships and (ii) working capital reserves and interest earned thereon. All these sources of funds are available to meet obligations of the Partnership.
The Partnership has 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, 1998, the Partnership has invested approximately $35,000,000 (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 $3,749,000 remains to be paid to the Local Partnerships (not including approximately $2,399,000 being held in escrow) as certain benchmarks, such as occupancy level, must be attained prior to the release of the funds. Three of the Local Partnerships were acquired during the year ended March 31, 1998, for a combined purchase price of approximately $7,256,000 not including acquisition fees of approximately $548,000, of which approximately $3,114,000 remains to be paid. In addition, there was an upward price adjustment during the year ended March 31, 1998 in the amount of $395,000 related to one Local Partnership which was purchased in the previous fiscal year. The Partnership does not intend to acquire additional properties. During the year ended March 31, 1998, approximately $8,536,000 was paid to Local Partnerships, including purchase price adjustments (of which approximately $1,035,000 was released from escrow). An additional $1,789,000 was placed into escrow for purchase price payments during the year ended March 31, 1998. 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 purchase price of approximately $151,000 during the year ended March 31, 1998.
During the year ended March 31, 1998, cash and cash equivalents decreased approximately $416,000. This decrease is primarily due to construction in progress of $10,423,000, acquisition of property and equipment of $7,935,000, a decrease in accounts payable and other liabilities of $147,000, and net cash used by operating activities of $86,000, a net increase in deferred costs of $122,000, a net increase in due to local general partners and affiliates relating to investing and financing activities of $1,761,000, a decrease in due from general partner and affiliates of $317,000, net proceeds from mortgage notes and construction loans of $4,882,000, a decrease in investments available-for-sale of $6,500,000, a decrease in cash held in escrow of $2,278,000, proceeds from HUD Grant $739,000 and an increase in capitalization of consolidated subsidiaries attributable to minority interest of $1,820,000.
A working capital reserve has 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, 1998, approximately $792,000 of this reserve remained unused The General Partner believes that these reserves, plus any cash
distributions received from the operations of the Local Partnerships, will be sufficient to fund the Partnership's ongoing operations for the foreseeable future.
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 expire within the next three years. 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, 1998, 1997 and 1996, the gross amounts of the Operating Deficit Guarantees aggregate approximately $4,597,000, $3,360,000 and $2,991,000, respectively, none of which have expired as of March 31, 1998, 1997 and 1996. All current operating deficit guarantees expire within the next three years. Management does not expect that expiration to have a material impact on liquidity, based on prior years' fundings. As of March 31, 1998, 1997 and 1996, approximately $343,000, $323,000 and $62,500, respectively, 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 have Rent-Up Guaranty Agreements, in which the Local General Partner agrees to pay liquidated damages if predetermined occupancy rates are not achieved. The terms of the Rent-Up Guaranty Agreements vary for each Local Partnership, with maximum dollar amounts to be funded for a specified period of time. As of March 31, 1998, 1997 and 1996, the gross amounts of these Rent-Up Guarantees for the Local Partnerships aggregate approximately $1,779,000, $1,326,000 and $1,326,000, respectively, of which approximately $1,755,000, $542,000 and $542,000 have expired as of March 31, 1998, 1997 and 1996, respectively. All current rent-up deficit guarantees expire within the next three years. There has not been any funding under these guaranty agreements. Amounts received under rental guaranty from the sellers of the properties purchased by the Partnership will be treated as a reduction of the asset. Management does not expect a material impact on liquidity, based on prior years' fundings.
The Operating Deficit Guaranty Agreements, Rent-Up Guaranty Agreements, and Development Deficit Guaranty Agreements are 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 $200,000 and $150,000 were accrued and unpaid as of March 31, 1998 and 1997, respectively.
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 project 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, 1998, 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, 1998, 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, 1998, 1997 and 1996 (the 1997, 1996 and 1995 Fiscal Years).
The net loss for the 1997, 1996 and 1995 Fiscal Years aggregated $2,149,365, $1,417,274 and $282,867, 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 gener-
ated $3,683,727, $2,386,725 and $920,294 Housing Tax Credits and $0, $0 and $1,451,336 Historic Tax Credits during the 1997, 1996 and 1995, tax years, respectively.
1997 vs. 1996 - - -------------
As of March 31, 1998 and 1997, the Partnership had acquired an interest in twenty and seventeen Local Partnerships, respectively (zero and one of which were not consolidated and are shown on the balance sheet, at cost, as property and equipment). The Partnership does not intend to acquire additional interests in Local Partnerships.
The Partnership's results of operations for the years ended March 31, 1998 and 1997 consisted primarily of (1) approximately $287,000 and $535,000, respectively, of tax-exempt interest income earned on funds not currently invested in Local Partnerships and (2) the results of the Partnership's investment in twenty and sixteen consolidated Local Partnerships, respectively.
During the year ended March 31, 1998, rental income and all categories of expenses increased except general and administrative-related parties and the results of operations are not comparable due to the continued acquisition, construction and rent-up of properties and are not reflective of future operations of the Partnership due to uncompleted property construction and rent-up of properties and the continued utilization of the net proceeds of the offering to invest in Local Partnerships. In addition, interest income will decrease in future periods as a substantial portion of the proceeds from the Offering are invested in Local Partnerships. Other income decreased approximately $42,000 for the year ended March 31, 1998 as compared to 1997, primarily due to a decrease in interest income as a result of the acquisition of and the release of proceeds to the Local Partnerships. For the years ended March 31, 1998 and 1997, three and seven of the Partnership's twenty and sixteen consolidated properties, respectively, completed construction and were in various stages of rent up. In addition, zero and zero of the properties, respectively, had completed construction in a previous fiscal year, but were in various stages of rent up for the years ended March 31, 1998 and 1997. Also for the two years ended March 31, 1998 and 1997, thirteen and seven of the properties had completed construction and were rented up in a previous fiscal year. As of the end of the years ended March 31, 1998 and 1997, three and two of the Partnership's twenty and sixteen consolidated properties, respectively, were still under construction and three and three of the properties, respectively, had construction loans with a commitment for permanent financing.
1996 vs. 1995 - - -------------
As of March 31, 1997 and 1996, the Partnership had acquired an interest in seventeen and fifteen Local Partnerships, respectively (one and zero of which were not consolidated and are shown on the balance sheet, at cost, as property and equipment). The Partnership intends to utilize the net proceeds of the offering to acquire additional interests in Local Partnerships.
The Partnership's results of operations for the years ended March 31, 1997 and 1996 consisted primarily of (1) approximately $535,000 and $910,000, respectively, of tax-exempt interest income earned on funds not currently invested in Local Partnerships and (2) the results of the Partnership's investment in sixteen and fifteen consolidated Local Partnerships, respectively.
During the year ended March 31, 1997, rental income and all categories of expenses increased. The results of operations are not comparable due to the continued acquisition, construction and rent up of properties and are not reflective of future operations of the Partnership due to uncompleted property construction and rent-up of properties and the continued utilization of the net proceeds of the offering to invest in Local Partnerships. In addition, interest income will decrease in future periods as a substantial portion of the proceeds from the Offering are invested in Local Partnerships. Other income decreased approximately $292,000 for the year ended March 31, 1997 as compared to 1996, primarily due to a decrease in interest income as a
result of the release of proceeds to the Local Partnerships. For the years ended March 31, 1997 and 1996, seven and five of the Partnership's sixteen and fifteen consolidated properties, respectively, completed construction and were in various stages of rent up. In addition, zero and two of the properties, respectively, had completed construction in a previous fiscal year, but were in various stages of rent up for the years ended March 31, 1997 and 1996. Also for the years ended March 31, 1997 and 1996, seven and zero of the properties had completed construction and were rented up in a previous fiscal year. As of the end of the years ended March 31, 1997 and 1996, two and eight of the Partnership's sixteen and fifteen consolidated properties, respectively, were still under construction and three and five of the properties, respectively, had construction loans with a commitment for permanent financing.
Results of Operations of a Certain Local Partnership - - ----------------------------------------------------
2301 First Avenue Limited Partnership - - -------------------------------------
2301 First Avenue Limited Partnership ("2301 First Avenue") is a defendant in a lawsuit alleging personal injury. The amount of the claim may exceed 2301 First Avenue's insurance coverage limits. Accordingly, 2301 First Avenue will be liable for any judgment in excess of the building insurance carrier's limits. A lawsuit by a Class Z limited partner seeking damages, in a material amount, has been commenced against the buildings' general contractor, and the sole stockholder of the corporate general partner. The plaintiff alleges breach of agreements involving several projects including 2301 First Avenue. The action is in the discovery stage and 2301 First Avenue and the related defendants cannot estimate damages, if any. Since it is premature to make an evaluation of the amount of 2301 First Avenue's potential loss, it is management's opinion that no accrual for potential losses is currently warranted in the financial statements. The Partnership's investment in and advances to 2301 First Avenue at March 31, 1998 and 1997 was approximately $531,000 and $656,000, respectively, and the minority interest balance was zero at each date. 2301 First Avenue's net loss after minority interest amounted to approximately $135,000, $261,000 and $76,000 for the 1997, 1996 and 1995 Fiscal Years, respectively.
New Zion Apartments Limited Partnership - - ---------------------------------------
At December 31, 1997, New Zion Apartments Limited Partnership ("New Zion") current liabilities exceed its current assets by over $149,000. Although this condition could raise substantial doubt about New Zion's ability to continue as a going concern, such doubt is alleviated as follows:
1. Included in current liabilities at December 31, 1997 is $76,067 owed to related parties who do not intend to pursue collection beyond New Zion's ability to pay.
2. The Local General partner has agreed to fund operating deficits up to $200,000.
3. Rent subsidy payments begin January 1, 1998.
Accordingly, management believes that New Zion has the ability to continue as a going con-cern for at least one year from December 31, 1997.
Edward Hotel Limited Partnership ("Edward Hotel") - - -------------------------------------------------
Edward Hotel Limited Partnership ("Edward Hotel"), a subsidiary partnership has not been paying its debt service of interest only on its $1,175,000 loan to the State of California Department of Housing and Community Development ("HCD"). Edward Hotel is in discussions with HCD and intends to restructure the terms of the loan in 1998.
Year 2000 Compliance - - --------------------
As the year 2000 approaches, an issue has emerged regarding how existing application software programs and operating systems can accommodate this date value. Failure to adequately address this issue could have potentially serious repercussions. The General Partner is in the process of working with the Partnership's service providers to prepare for the year 2000. Based on information currently available, the Partnership does not expect that it will incur significant operating expenses or be required to incur material costs to be year 2000 compliant.
Other - - -----
The Partnership's investment as a limited partner in the Local Partnerships is subject to the risks of potential losses arising from management and ownership of improved real estate. The Partnership's investments also could be adversely affected by poor economic conditions generally, which could increase vacancy levels and rental payment defaults and by increased operating expenses, any or all of which could threaten the 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 as, for example, for such items as fuel, utilities and labor.
There has recently been an increasing number of requests for the list of BACs holders of limited partnerships such as the Partnership. Often these requests are made by a person who, only a short time before making the request, acquired merely a small number of BACs in the Partnership and seeks the list for an improper purpose, a purpose that is not in the best interests of the Partnership or is harmful to the Partnership. In order to best serve and protect the interests of the Partnership and all of its investors, the General Partner of the Partnership has adopted a policy with respect to requests for the Partnership's list of BACs holders. This policy is intended to protect investors from unsolicited and coercive offers to acquire BACs holders' interest and does not limit any other rights the General Partner may have under the Partnership Agreement or applicable law.
Item 8.
Item 8. Financial Statements and Supplementary Data.
Sequential Page ----------
(a) 1. Consolidated Financial Statements
Independent Auditors' Report 16
Consolidated Balance Sheets at March 31, 1998 and 67
Consolidated Statements of Operations for the years ended March 31, 1998, 1997 and 1996 68
Consolidated Statements of Changes in Partners' Capital for the years ended March 31, 1998, 1997 and 1996 69
Consolidated Statements of Cash Flows for the years ended March 31, 1998, 1997 and 1996 70
Notes to Consolidated Financial Statements 73
[Trien Rosenberg Rosenberg Weinberg Ciullo & Fazzari LLP Letterhead]
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, 1998 and 1997 and the related consolidated statements of operations, changes in partners' capital and cash flows for the years ended March 31, 1998, 1997 and 1996 (the 1997, 1996, and 1995 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 (1997 Fiscal Year), sixteen (1996 Fiscal Year) and fifteen (1995 Fiscal Year) subsidiary partnerships whose losses aggregated $2,083,742, $1,339,398 and $573,825 for the years ended March 31, 1998, 1997 and 1996, respectively, and whose assets constituted 89% and 75% of the Partnership's assets at March 31, 1998 and 1997, respectively, presented in the accompanying consolidated financial statements. The financial statements of these 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.
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 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, 1998 and 1997, and the results of their operations and their cash flows for the years ended March 31, 1998, 1997, and 1996 in conformity with generally accepted accounting principles.
/s/ Trien Rosenberg Rosenberg Weinberg Ciullo & Fazzari LLP
Trien Rosenberg Rosenberg Weinberg Ciullo & Fazzari LLP
New York, New York June 18, 1998
[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, 1997 and 1996, 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, 1997 and 1996, 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 February 14, 1998
[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, 1996 and 1995, and the related statements of operations, changes in partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our 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, 1996 and 1995, 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 TRIGHT LLP
Los Angeles, California February 17, 1997
[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, 1997, 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, 1997, and the results of its operations, the changes in partners' deficit and cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland January 14, 1998
[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, 1996, 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, 1996, and the results of its operations, the changes in partners' deficit and cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ REZNICK FEDDER & SILVERMAN
Bethesda, Maryland January 17, 1997
[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, 1995, 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, 1995, and the results of its operations, the changes in partners' deficit and cash flows for the year then ended, in conformity with generally accepted accounting principles.
/s/ REZNICK FEDDER & SILVERMAN
Bethesda, Maryland January 23, 1996
[BDO SEIDMAN, LLP LETTERHEAD]
Independent Auditors' Report
Overtown Development Group, Ltd. (A Limited Partnership) Miami Beach, Florida
We have audited the accompanying balance sheet of Overtown Development Group, Ltd. (A Limited Partnership) as of December 31, 1997, and the related statements of profit and loss, changes in partners' capital accounts, and cash flows for the year then ended. These financial statements are the responsibility of the management of the partnership. 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 Overtown Development Group, Ltd. at December 31, 1997, 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 Miami, Florida Certified Public Accountants February 12, 1998
[BDO SEIDMAN, LLP LETTERHEAD]
Independent Auditors' Report
Overtown Development Group, Ltd. (A Limited Partnership) Miami Beach, Florida
We have audited the accompanying balance sheet of Overtown Development Group, Ltd. (A Limited Partnership) as of December 31, 1996, and the related statements of profit and loss, changes in partners' capital accounts, and cash flows for the year then ended. These financial statements are the responsibility of the management of the partnership. 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 Overtown Development Group, Ltd. at December 31, 1996, 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 13, 1997
[BDO SEIDMAN, LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Overtown Development Group, Ltd. (A Limited Partnership) Miami Beach, Florida
We have audited the accompanying balance sheet of Overtown Development Group, Ltd. (A Limited Partnership) as of December 31, 1995, and the related statements of profit and loss, changes in partners' capital accounts, and cash flows for the year then ended. These financial statements are the responsibility of the management of the partnership. 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 Overtown Development Group, Ltd. at December 31, 1995, 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 January 25, 1996, except as to Note 3 which is as of March 28, 1996.
[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, 1997, 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 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, 1997, and the results of its operations, changes in partners' capital, 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 March 3, 1998
[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, 1996, 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 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, 1996, and the results of its operations, changes in partners' capital, 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 l2 1997
[LAWLOR, O'BRIEN & LESKOWICZ, 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, 1995, and the related statements of operations, for the period (from commencement of operations) August 1, 1995 through December 31, 1995, changes in partners' capital, and cash flows for the year ended December 31, 1995. 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, 1995, and the results of its operations for the period (from commencement of operations) August 1, 1995 through December 31, 1995, changes in partners' equity and its cash flows for the year ended December 31, 1995 in conformity with generally accepted accounting principles.
/s/ LAWLOR, O'BRIEN & LESKOWICZ, LLC
West Paterson, New Jersey February 27,1996
[KOSTIN, RUFFKESS & COMPANY, LLC LETTERHEAD]
o 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, 1997, and the related statements of operations 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, 1997, and the results of its operations and cash flows for the year then ended, in accordance with generally accepted accounting principles.
/s/ Kostin, Ruffkess & Co., LLC
West Hartford, Connecticut February 4, 1998
[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, 1996, and the related statements of operations 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, 1996 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 4, 1997
[KOSTIN, RUFFKESS & COMPANY. LLC LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To The Partners Park Housing Limited Partnership
We have audited the accompanying balance sheet of Park Housing Limited Partnership as of December 31, 1995, and the related statements of income 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, 1995 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 January 19, 1996
[ZINER & COMPANY, P.C. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Livingston Manor Urban Renewal Associates, L.P.
We have audited the accompanying balance sheet of Livingston Manor Urban Renewal Associates, L.P. as of December 31, 1997, and the related statements of operations, changes in partners' equity and cash flows for the year 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 audit. The financial statements of Livingston Manor Urban Renewal Association, L.P. as of December 31, 1996 were audited by other auditors whose report, dated February 13, 1997, expressed an unqualified opinion on those financial statements.
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 partner 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 Livingston Manor Urban Renewal Associates, L.P. at December 31, 1997, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Ziner & Company, P.C.
February 13, 1998 Boston, Massachusetts
[J. H. WILLIAMS & CO., LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Livingston Manor Urban Renewal Associates, L. P. Marlton, New Jersey
We have audited the accompanying balance sheet of Livingston Manor Urban Renewal Associates, L.P. as of December 31, 1996, and the related statements of (loss), changes in partners' equity and cash flows for the year 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 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 the Partnership's general partner 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 Livingston Manor Urban Renewal Associates, L.P. at December 31, 1996, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ J. H. WILLIAMS & CO., LLP
Kingston, Pennsylvania February 13, 1997
[J. H. WILLIAMS & CO., LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Livingston Manor Urban Renewal Associates, L.P. Marlton, New Jersey
We have audited the accompanying balance sheet of Livingston Manor Urban Renewal Associates. L.P. as of December 31, 1995, and the related statements of income, changes in partners' equity and cash flows for the year then ended. These financial statements are the responsibility of the Partnership's general partner. 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 the Partnership's general partner, 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 Livingston Manor Urban Renewal Associates, L.P. at December 31. 1995, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ J. H. WILLIAMS & CO., LLP
Kingston, Pennsylvania February 29, 1996
[ZINER & COMPANY, P.C. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Jefferis Square Housing Partnership, L.P.
We have audited the accompanying balance sheet of Jefferis Square Housing Partnership, L.P. (a Pennsylvania limited partnership) as of December 31, 1997, and the related statements of operations, changes in partners' equity and cash flows for the year 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 audit. The financial statements of Jefferis Square Housing Partnership, L.P. as of December 31, 1996 were audited by other auditors whose report, dated February 28, 1997, expressed an unqualified opinion on those financial statements.
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 Jefferis Square Housing Partnership, L.P. at December 31, 1997, and the results of its operations, changes in partners' equity and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Ziner & Company, P.C.
January 22, 1998 Boston, Massachusetts
[J. H. WILLIAMS & CO., LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Jefferis Square Housing Partnership, L. P. Philadelphia, Pennsylvania
We have audited the accompanying balance sheet of Jefferis Square Housing Partnership, L.P. as of December 31, 1996, and the related statements of (loss), changes in partners' equity and cash flows for the year 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 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 the Partnership's general partner 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 respect, the financial position of Jefferis Square Housing Partnership, L.P. at December 31, 1996, and the results of its operations, changes in its partners' equity and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ J. H. WILLIAMS & CO., LLP
Kingston, Pennsylvania February 28, 1997
[J. H. WILLIAMS & CO., LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Jefferis Square Housing Partnership, L. P. Philadelphia, Pennsylvania
We have audited the accompanying balance sheet of Jefferis Square Housing Partnership, L.P. as of December 31. 1995, and the related statements of changes in partners' equity and cash flows for the year then ended as more fully described in Note 1. These financial statements are the responsibility of the Partnership's general partner. 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 the Partnership's general partner, 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 Jefferis Square Housing Partnership, L.P. at December 31. 1995, and the changes in its partners' equity and its cash flows for the year then ended as more fully described in Note 1 in conformity with generally accepted accounting principles.
/s/ J. H. WILLIAMS & CO., LLP
Kingston, Pennsylvania March 13, 1996
[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 as of December 31, 1997 and 1996, 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, 1997 and 1996, 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
February 13, 1998 New York, New York
[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 as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' capital, and cash flows for the year ended December 31, 1996 and for the period from April 1, 1995 (date of investor entry) through December 31, 1995. 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 at December 31, 1996, and the results of its operations, changes in partners' capital and its cash flows for the year ended December 31, 1996 and for the period from April 1, 1995 (date of investor entry) through December 31, 1995 in conformity with generally accepted accounting principles.
/s/ LESHKOWITZ & COMPANY, LLP
New York, New York January 16, 1997
[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, 1997 and 1996 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, 1997 and 1996 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 20, 1998 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 20, 1998
[TOSKI, SCHAEFER & CO., P.C. LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
The Partners Lewis Street Limited Partnership:
We have audited the accompanying balance sheet of Lewis Street Limited Partnership as of December 31, 1995 and the related statement of partners' equity for the year then ended. These financial statements are the responsibility of the general partners. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted out 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 chat 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 Lewis Street Limited Partnership as of December 31, 1995, in conformity with generally accepted accounting principles.
/s/ TOSKI, SCHAEFER & CO., P.C.
Williamsville, New York February 26, 1996
[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, 1997, 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, 1997, 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 February 24, 1998
[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, 1996, 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, 1996, 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 29, 1997
[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. 1995, and the related statements of operations, changes in partners' capital and cash flows for the period from October 18, 1995 (date of investor entry) through December 31, 1995. 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, 1995, and the results of its operations, the changes in partners' capital and cash flows for the period from October 18, 1995 (date of investor entry) through December 1, 1995, in conformity with generally accepted accounting principles.
/s/ REZNICK FEDDER & SILVERMAN
Bethesda, Maryland January 31, 1996
[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, 1997, 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, 1997, 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
Miami, Florida Certified Public Accountants February 16, 1998
[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, 1996, 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, 1996, 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 Miami, Florida Certified Public Accountants February 28, 1997
(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, 1995, and the related statements of profit and loss, changes in members' capital accounts, and cash flows for the period from November 1, 1995 (commencement of operations) to December 31, 1995. 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, 1995, and the results of its operations and its cash flows for the period from November 1, 1995 (commencement of operations) to December 31, 1995, in conformity with generally accepted accounting principles.
/s/ BDO SEIDMAN, LLP Certified Public Accountants Miami, Florida April 10, 1996
[ZINER & COMPANY, P.C. 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, 1997 and the related statements of operations, changes in partners' equity and cash flows for the year 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 audit. The financial statements of Mansion Court Phase II Venture as of December 31, 1996 were audited by other auditors whose report dated March 10, 1997, expressed an unqualified opinion on those financial statements.
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 Mansion Court Phase II Venture at December 31, 1997, and the results of its operations, changes in partners' equity and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Ziner & Company, P.C.
January 30, 1998 Boston, Massachusetts
[J.H. WILLIAMS & CO., LLP LETTERHEAD]
To the Partners of Mansion Court Phase II Venture (a Limited Partnership) Philadelphia, Pennsylvania
We have audited the accompanying balance sheet of Mansion Court Phase II Venture (a Limited Partnership) as of December 31, 1996, and the related statements of (loss), changes in partners' equity, and cash flows for the year 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 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 Mansion Court Phase II Venture at December 31, 1996, and the results of its operations, changes in partners' equity and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ J.H. Williams & Co., LP
Kingston, Pennsylvania March 10, 1997
(J. H. WILLIAMS & CO., LLP LETTERHEAD)
To the Partners of Mansion Court Phase II Venture Philadelphia, Pennsylvania
We have audited the accompanying balance sheet of Mansion Court Phase II Venture as of December 31, 1995, and the related statements of changes in partners' equity, and cash flows for the three months then ended as more fully explained in Note l to the financial statements. These financial statements are the responsibility of the Company'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 Mansion Court Phase II venture at December 31, 1995, and changes in partners' equity and its cash flows for the three months then ended as more fully explained in Note l to the financial statements in conformity with generally accepted accounting principles.
J. H. WILLIAMS & CO.. LLP
Kingston, Pennsylvania March 6, 1996
[RUBIN, BROWN, GORNSTEIN & CO. LLP 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, 1997 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, 1997 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 18, 1998
[RUBIN, BROWN, GORNSTEIN & CO. LLP 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, 1996 and the related statements of 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, 1996 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 14, 1997
[RUBIN, BROWN, GORNSTEIN & CO. LLP 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, 1995 and the related statements of 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, 1995 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 14, 1995
[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, 1997 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, 1997, 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 and Fischer New York, New York February 17, 1998
[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, 1996 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, 1996, 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, 1997
(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, 1995 and the related statements of operations, changes in partners' capital, and cash flows for the nine months 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, 1995, 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, 1996
[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, 1997 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-10K Partners, L.P. (A New York Limited Partnership) as of December 31, 1997, 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 and Fischer
New York, New York February 17, 1998
[RAINES AND FISCHER LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ----------------------------
To the Partners of BK-1OK Partners, L.P.:
We have audited the accompanying balance sheet of BK-1OK Partners, L.P. (A New York Limited Partnership) as of December 31, 1996 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-1OK Partners, L.P. (A New York Limited Partnership) as of December 31, 1996, 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 5, 1997
(RAINES AND FISCHER LETTERHEAD)
INDEPENDENT AUDITORS' REPORT
To the Partners of BK-IOK Partners, L.P.:
We have audited the accompanying balance sheet of BK-1OK Partners, L.P. (A New York Limited Partnership) as of December 31, 1995 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-1OK Partners, L.P. (A New York Limited Partnership) as of December 31, 1995, 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 26, 1996
[ZINER & COMPANY, P.C. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Aspen-Olive Associates Philadelphia, Pennsylvania
We have audited the accompanying balance sheet of Aspen-Olive Associates (a Pennsylvania limited partnership) as of December 31, 1997 and the related statement of operations, changes in partners' equity and cash flows for the year 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 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 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 Aspen-Olive Associates at December 31, 1997 and the results of its operations, changes in partners' equity and its cash flows for the year then ended in conformity with generally accepted accounting principles.
/s/ Ziner & Company, P.C.
February 7, 1998 Boston, Massachusetts
[J. H. WILLIAMS & CO., LLP LETTERHEAD]
INDEPENDENT AUDITORS' REPORT ----------------------------
To the Partners of Aspen-Olive Associates (a Limited Partnership) Philadelphia, Pennsylvania
We have audited the accompanying balance sheet of Aspen-Olive Associates (a Limited Partnership) as of December 31, 1996, and the related statements of changes in partners' equity and cash flows for the year then ended as more fully described in Note 1. These financial statements are the responsibility of the Partnership's general partner. 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 Aspen-Olive Associates (a Limited Partnership) at December 31, 1996, and the changes in its partners' equity and its cash flows for the year then ended as more fully described in Note 1 in conformity with generally accepted accounting principles.
/s/ J.H. Williams & Co., LLP
Kingston, Pennsylvania March 15, 1997
[ASHER & COMPANY, LTD. LETTERHEAD]
The Partners West Mill Creek Associates III T/A Jameson Court Marlton, New Jersey
We have audited the accompanying balance sheet of West Mill Creek Associates III T/A Jameson Court (A Limited Partnership), PHFA Project No. O-476, as of December 31, 1997 and the related statements of profit and loss, 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 of 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 West Mill Creek Associates III T/A Jameson Court (A Limited Partnership), PHFA Project No. O-476, as of December 31, 1997, 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.
Our audit was 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 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.
The Partners Page 2 West Mill Creek Associates III
In accordance with Government Auditing Standards, we have also issued a report dated February 2, 1998 on our consideration of West Mill Creek Associates III's T/A Jameson Court (A Limited Partnership), PHFA Project No. O-476, internal control and a report dated February 2, 1998 on its compliance with applicable laws and regulations.
/s/ Asher & Company, Ltd.
ASHER & COMPANY, Ltd.
Philadelphia, Pennsylvania February 2, 1998
[ZINER & COMPANY, P.C. LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners of Universal Court Associates
We have audited the accompanying balance sheet of Universal Court Associates (a Pennsylvania limited partnership) (a development stage enterprise) as of December 31, 1997 and the related statements of changes in partners' equity and cash flows for the year then ended and for the period November 7, 1994 (Date of Inception) to December 31, 1997. These financial statements are the responsibility of the Partnership's general partners. 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 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, 1997, and changes in its partners' equity and its cash flows for the year then ended and for the period November 7, 1994 (Date of Inception) to December 31, 1997 in conformity with generally accepted accounting principles.
/s/ Ziner & Company, P.C.
January 30, 1998 Boston, Massachusetts
[COLE, EVANS & PETERSON LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Partners New Zion Apartments Limited Partnership Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited Partnership at December 31, 1997, and the related statements of income, partners' capital, and cash flows for the period 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. These 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 New Zion Apartments Limited Partnership at December 31, 1997, and the results of its operations and its cash flows for the period then ended in conformity with generally accepted accounting principles.
To the Partners Page 2 New Zion Apartments Limited Partnership
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules 1 and 2 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 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/ Cole, Evans & Peterson
Cole, Evans & Peterson February 22, 1998 Shreveport, Louisiana
[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, 1997, and the related statements of income, partners' equity and cash flows for the period from October 7, 1996 (inception) through December 31, 1997. 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, 1997, and the results of its operations, changes in partners' equity and cash flows for the period from October 7, 1996 (inception) through December 31, 1997, in conformity with generally accepted accounting principles.
/s/ Reznick Fedder & Silverman
Bethesda, Maryland April 9, 1998
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
See accompanying notes to consolidated financial statements.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
See accompanying notes to consolidated financial statements.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
See accompanying notes to consolidated financial statements.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
*Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
See accompanying notes to consolidated financial statements.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
See accompanying notes to consolidated financial statements.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
NOTE 1 - General
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 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, 1998, the Partnership has 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. As of March 31, 1998, the Partnership has raised a total of $43,440,000 representing 43,440 BACs.
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 generally accepted accounting principles ("GAAP").
b) Basis of Consolidation
The consolidated financial statements include the accounts of the Partnership and twenty, seventeen (one of which has not been consolidated and is shown on the balance sheet, at cost, as property and equipment) and fifteen subsidiary partnerships in which the Partnership is a limited partner for the years ended March 31, 1998, 1997 and 1996, respectively, (the 1997, 1996 and 1995 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
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
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.
Losses attributable to minority interest which exceed the minority interests' investment in a subsidiary have been charged to the Partnership. Such losses aggregated approximately $8,700, $10,300 and $5,200 for the years ended March 31, 1998, 1997 and 1996, 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 Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards ("SFAS") No. 115 "Accounting for Certain Investments in Debt and Equity Securities. At March 31, 1998 and 1997, the Company 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.
At March 31, 1997, the Partnership's investments classified as investments available for sale are carried at cost which approximates fair market value, have maturities of less than one year and consists of municipal bonds and municipal bond instruments. As further clarification, the maturities of the investments are approximately one month and therefore there are no material unrealized gains or losses.
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 ac-
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
counts 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, 1998, 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, 1998, 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) Organization and Offering Costs
Costs incurred to organize the Partnership, including but not limited to legal, accounting and registration fees, are considered deferred organization expenses. These costs are capitalized and are being amortized over a 60-month period. Costs incurred in connection with obtaining permanent mortgage financing are amortized over the lives of the related mortgage notes. 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.
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.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
j) Use of Estimates
The preparation of financial statements in conformity with 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 non-trading 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 the mortgage notes payable because mortgage programs with similar characteristics are not currently available to the partnerships.
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.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
NOTE 4 - Property and Equipment
The components of property and equipment and their estimated useful lives are as follows:
*Represents the Partnership's investment, at cost, as of March 31, 1997, in West Mill Creek Associates III L.P. which was acquired in January 1997 and was not consolidated in the accompanying financial statements.
Included in property and equipment at March 31, 1998 and 1997 was $2,509,717 and $1,962,092, respectively, of acquisition fees paid to the General Partner and $1,178,468 and $943,592, respectively, of acquisition expenses. In addition, as of March 31, 1998 and 1997, building and improvements and construction in progress includes $945,183 and $598,355, respectively, of capitalized interest.
In connection with the rehabilitation of the properties, the subsidiary partnerships have incurred developer's fees of $7,983,690 and $5,626,681 to the local general partners and affiliates as of March 31, 1998 and 1997, respectively. Such fees have been included in the cost of property and equipment.
Depreciation expense for the years ended March 31, 1998, 1997 and 1996 amounted to $1,862,118, $1,328,528 and $567,897, respectively.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
NOTE 5 - Cash Held in Escrow
Cash held in escrow consists of the following:
*Represents amounts to be paid to seller upon completion of properties under construction and upon meeting specified rental achievement criteria.
NOTE 6 - Deferred Costs
The components of deferred costs and their periods of amortization are as follows:
*Over the life of the related mortgages.
**Will be capitalized as part of the cost of future acquisitions.
Amortization expense for the years ended March 31, 1998, 1997 and 1996 amounted to $94,330, $56,467 and $88,371, respectively.
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 $54,000 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.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
Annual principal payment requirements, as of March 31, 1998 for each of the next five fiscal years and thereafter, are as follows:
Fiscal Year Ending Amount - - ------------------ ----------- 1998 $ 219,510 1999 242,249 2000 253,781 2001 271,304 2002 291,760 Thereafter 28,395,219 -----------
$29,673,823 ===========
The mortgage agreements require monthly deposits to replacement reserves of approximately $8,000 and monthly deposits to escrow accounts for real estate taxes, hazard and mortgage insurance and other (Note 5).
As of December 31, 1997 and 1996, three and four subsidiary partnerships have construction loan commitments totaling approximately $11,227,000 and $9,562,000, respectively. As of December 31, 1997 and 1996, such loans have an outstanding balance of approximately $7,081,000 and $8,165,000, respectively.
In addition, the U.S. Department of Housing and Urban Development ("HUD") has committed to provide an Upfront Grant totaling $4,160,000 towards the construction and development of one Local Partnership. Grant funds totaling $3,951,813 were utilized by the Local Partnership as of December 31, 1997.
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 share of profits, losses and tax credits.
The General Partner and its affiliates perform services for the Partnership. The costs incurred for the years ended March 31, 1998 and 1997 are as follows:
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
A) Acquisition Fees
The General Partner was entitled to a consulting and monitoring fee equal to 6.0% of the gross proceeds of the offering paid upon investor closings, for its services in connection with assisting the Local Partnerships in acquiring apartment complexes and supervising the construction of the complexes. Such fees have been capitalized as a cost of the investments upon closing of subsidiary partnerships acquisitions. As of both March 31, 1998 and 1997, $2,606,400 of such costs have been incurred, of which $2,509,717 and $1,962,092, respectively have been capitalized.
B) 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 expire within the next three years. 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, 1998, 1997 and 1996, the gross amounts of the Operating Deficit Guarantees aggregate approximately $4,597,000, $3,360,000 and $2,991,000, respectively, none of which have expired as of March 31, 1998, 1997 and 1996. All current operating deficit guarantees expire within the next three years. As of March 31, 1998, 1997 and 1996, approximately $343,000, $323,000 and $62,500, respectively, 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.
In addition, several Local Partnerships have Rent-Up Guaranty Agreements, in which the Local General Partner agrees to pay liquidating damages if predetermined occupancy rates are not achieved. The terms of the Rent-Up Guaranty Agreements vary for each Local Partnership, with maximum dollar amounts to be funded for a specified period of time. As of March 31, 1998, 1997 and 1996, the gross amounts of these Rent-Up Guarantees for the Local Partnerships aggregate approximately $1,779,000, $1,326,000 and $1,326,000, respectively, of which approximately $1,755,000, $542,000 and $542,000 have expired as of March 31, 1998, 1997 and 1996, respectively. All current rent-up deficit guarantees expire within the next three years. There has not been any funding under these guaranty agreements. Amounts received under rental guaranty from the sellers of the properties purchased by the Partnership will be treated as a reduction of the asset. Management does not expect a material impact on liquidity, based on prior years' fundings.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
The Operating Deficit Guaranty Agreements, Rent-Up Guaranty Agreements, and Development Deficit Guaranty Agreements are 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.
C) Other Related Party Expenses
The costs incurred to related parties for the years ended March 31, 1998, 1997 and 1996 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 $200,000 and $150,000 were accrued and unpaid as of March 31, 1998 and 1997, respectively.
(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 $262,356, $180,668 and $94,682 for the years ended March 31, 1998, 1997 and 1996, respectively. Of these fees, $178,858, $139,780 and $75,718 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.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
D) Due to Local General Partners and Affiliates
Due to local general partners and affiliates consists of the following:
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
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
2301 First Avenue Limited Partnership - - -------------------------------------
2301 First Avenue Limited Partnership ("2301 First Avenue") is a defendant in a lawsuit alleging personal injury. The amount of the claim may exceed 2301 First Avenue's insurance coverage limits. Accordingly, 2301 First Avenue will be liable for any judgment in excess of the building insurance carrier's limits. A lawsuit by a Class Z limited partner seeking damages, in a material amount, has been commenced against the buildings' general contractor, and the sole stockholder of the corporate general partner. The plaintiff alleges breach of agreements involving several projects including 2301 First Avenue. The action is in the discovery stage and 2301 First Avenue and the related defendants cannot estimate damages, if any. Since it is premature to make an evaluation of the amount of 2301 First Avenue's potential loss, it is management's opinion that no accrual for potential losses is currently warranted in the financial statements. The Partnership's investment in and advances to 2301 First Avenue at March 31, 1998 and 1997 was approximately $531,000 and $656,000, respectively, and the minority interest balance was zero at each date. 2301 First Avenue's net loss after minority interest amounted to approximately $135,000, $261,000 and $76,000 for the 1997, 1996 and 1995 Fiscal Years, respectively.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
New Zion Apartments Limited Partnership - - ---------------------------------------
At December 31, 1997, New Zion Apartments Limited Partnership ("New Zion") current liabilities exceed its current assets by over $149,000. Although this condition could raise substantial doubt about New Zion's ability to continue as a going concern, such doubt is alleviated as follows:
1. Included in current liabilities at December 31, 1997 is $76,067 owed to related parties who do not intend to pursue collection beyond New Zion's ability to pay.
2. The Local General partner has agreed to fund operating deficits up to $200,000.
3. Rent subsidy payments begin January 1, 1998.
Accordingly, management believes that New Zion has the ability to continue as a going concern for at least one year from December 31, 1997.
b) Leases
One of the subsidiary partnerships is leasing the land on which the Project is located, for a term of 50 years and monthly rent payments of $1,449. Estimated future minimum payments due under the terms of the lease are as follows:
c) 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 $4,877,000 at March 31, 1998.
d) Loan Default
Edward Hotel Limited Partnership ("Edward Hotel"), a subsidiary partnership has not been paying its debt service of interest only on its $1,175,000 loan to the State of California Department of Housing and Community Development ("HCD"). Edward Hotel is in discussions with HCD and intends to restructure the terms of the loan in 1998.
e) Other
The Partnership and BACs holders began to recognize Housing Tax Credits with respect to a Property when the Credit Period for such Property commenced. Because of the time required for the acquisition, completion and rent-up of Properties, the amount of Tax Credits per BAC
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1998
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 $3,683,727, $2,386,725 and $920,294 Tax Credits and $0, $0 and $1,451,336 Historic Tax Credits during the 1997, 1996 and 1995 tax years, respectively.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None
PART III
Item 10.
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 Related Independence Associates III L.P., the General Partner. Certain information concerning the directors and executive officers of Related Independence Associates III Inc. ("RIAI III"), the sole general partner of the General Partner, is set forth below.
Name Position - - ---- --------
Stephen M. Ross Director
J. Michael Fried President, Chief Executive Officer and Director
Alan P. Hirmes Senior Vice President
Stuart J. Boesky Vice President
Marc D. Schnitzer Vice President
Glenn F. Hopps Treasurer
Lynn A. McMahon Secretary
STEPHEN M. ROSS, 58, 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.
J. MICHAEL FRIED, 54, is the sole shareholder of one of the general partners of Related Capital Company ("Capital"), a real estate finance and acquisition affiliate of the Related General Partner. In that capacity, he is responsible for all of Capital's syndication, finance, acquisition and investor reporting activities. Mr. Fried practiced corporate law in New York City with the law firm of Proskauer Rose Goetz & Mendelsohn from 1974 until he joined Capital in 1979. Mr. Fried graduated from Brooklyn Law School with a Juris Doctor degree, magna cum laude; from Long Island University Graduate School with a Master of Science degree in Psychology; and from Michigan State University with a Bachelor of Arts degree in History.
ALAN P. HIRMES, 43, 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.
STUART J. BOESKY,42, 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) 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.
MARC D. SCHNITZER, 37, 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.
GLENN F. HOPPS, 35, 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.
LYNN A. McMAHON, 42, has, since 1983, served as Assistant to the President of Capital. From 1978 to 1983, she was employed at Sony Corporation of America in the Government Relations Department.
Item 11.
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 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.
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.
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.
Item 13.
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 and also Note 8 to the Financial Statements in Item 8 above, which is incorporated herein by reference thereto. However, there have been no direct financial transactions between the Partnership and the directors and officers of the General Partner.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
Sequential Page ----------
(a)1. Financial Statements
Independent Auditors' Report 16
Consolidated Balance Sheets at March 31, 1998 and 1997 67
Consolidated Statements of Operations for the years ended March 31, 1998, 1997 and 1996 68
Consolidated Statements of Changes in Partners' Capital for the years ended March 31, 1998, 1997 and 1996 69
Consolidated Statements of Cash Flows for the years ended March 31, 1998, 1997 and 1996 70
Notes to Consolidated Financial Statements 73
(a) 2. Consolidated Financial Statement Schedules
Independent Auditors' Report 94
Schedule I - Condensed Financial Information of Registrant 95
Schedule III - Real Estate and Accumulated Depreciation 98
All other schedules have been omitted because they are not required or because the required information is contained in the financial statements or notes thereto.
(a)3. Exhibits
(3A) Agreement of Limited Partnership of Independence Tax Credit Plus L.P. III as adopted on December 23, 1993*
(3B) Form of Amended and Restated Agreement of Limited Partnership of Independence Tax Credit Plus L.P. III, attached to the Prospectus as Exhibit A**
(3C) Certificate of Limited Partnership of Independence Tax Credit Plus L.P. III as filed on December 23, 1993*
(10A) Form of Subscription Agreement attached to the Prospectus as Exhibit B**
(10B) Escrow Agreement between Independence Tax Credit Plus L.P. III and Bankers Trust Company*
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (continued)
Sequential Page ----------
(10C) Form of Purchase and Sales Agreement pertaining to the Partnership's acquisition of Local Partnership Interests*
(10D) Form of Amended and Restated Agreement of Limited Partnership of Local Partnerships*
(21) Subsidiaries of the Registrant 91
(27) Financial Data Schedule (filed herewith) 100
*Incorporated herein as an exhibit by reference to exhibits filed with Post-Effective Amendment No. 4 to the Registration Statement on Form S-11 {Registration No. 33-37704}
**Incorporated herein as an exhibit by reference to exhibits filed with Post-Effective Amendment No. 8 to the Registration Statement on Form S-11 {Registration No. 33-37704}
(b) Reports on Form 8-K -------------------
No reports on Form 8-K were filed during the quarter.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (continued)
Jurisdiction (c) Subsidiaries of the Registrant (Exhibit 21) of Organization ------------------------------ ---------------
Edward Hotel Limited Partnership CA Pacific-East L.P. NY Overtown Development Group, Ltd. FL Sumpter Commons Associates, L.P. NY Park Housing Limited Partnership CT Livingston Manor Urban Renewal Associates, L.P. NJ Jefferis Square Housing Partnership, L.P. PA 2301 First Avenue Limited Partnership NY Lewis Street Limited Partnership NY Savannah Park Housing Limited Partnership DC Brannon Group, L.C. FL Mansion Court Phase II Venture PA Primm Place Partners, L.P. MI BK-9-A Partners L.P. NY BK-10K Partners L.P. NY Aspen-Olive Associates PA West Mill Creek Associates, III L.P. PA Universal Court Associates PA New Zion Apartments LA Dreitzer House NY
(d) Not applicable
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INDEPENDENCE TAX CREDIT PLUS L.P. III ------------------------------------- (Registrant)
By: RELATED INDEPENDENCE ASSOCIATES III L.P., General Partner
By: RELATED INDEPENDENCE ASSOCIATES III INC., General Partner
Date: June 26, 1998 By: /s/ J. Michael Fried -------------------- J. Michael Fried President, Chief Executive Officer and Director (principal executive officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
[Trien Rosenberg Rosenberg Weinberg Ciullo & Fazzari LLP Letterhead]
INDEPENDENT AUDITORS' REPORT ----------------------------
To the Partners of Independence Tax Credit Plus L.P. III and Subsidiaries (A Delaware Limited Partnership)
In connection with our audits of the consolidated financial statements of Independence Tax Credit Plus L.P. III and Subsidiaries included in the Form 10-K as presented in our opinion dated June 18, 1998 on page 16, and based on the reports of other auditors, we have also audited supporting Schedule I for the 1997, 1996 and 1995 Fiscal Years and Schedule III as of March 31, 1998. In our opinion, and based on the reports of the other auditors, these consolidated schedules present fairly, when read in conjunction with the related consolidated financial statements, the financial data required to be set forth therein.
/s/ Trien Rosenberg Rosenberg Weinberg Ciullo & Fazzari LLP
Trien Rosenberg Rosenberg Weinberg Ciullo & Fazzari LLP
New York, New York June 18, 1998
INDEPENDENCE TAX CREDIT PLUS L.P. III SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Not Including Consolidated Subsidiary Partnerships)
CONDENSED BALANCE SHEETS
ASSETS
INDEPENDENCE TAX CREDIT PLUS L.P. III SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Not Including Consolidated Subsidiary Partnerships)
CONDENSED STATEMENTS OF OPERATIONS
INDEPENDENCE TAX CREDIT PLUS L.P. III SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CONDENSED STATEMENTS OF CASH FLOWS
*Reclassified for comparative purposes.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Partnership Property Pledged as Collateral MARCH 31, 1998
(a) Depreciation is computed using primarily the straight-line method over the estimated useful lives determined by the Partnership date of acquisition. (b) Personal property is depreciated primarily by the straight-line method over the estimated useful lives of 5 - 12 years.
INDEPENDENCE TAX CREDIT PLUS L.P. III AND SUBSIDIARIES SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION Partnership Property Pledged as Collateral MARCH 31, 1998 (continued)
At the time the local partnerships were acquired by Independence Tax Credit Plus III Limited Partnership, the entire purchase price paid by Independence Tax Credit Plus III Limited Partnership was pushed down to the local partnerships as property and equipment with an offsetting credit to capital. Since the projects were in the construction phase at the time of acquisition, the capital accounts were insignificant at the time of purchase. Therefore, there are no material differences between the original cost basis for tax and GAAP.