UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-17015
INDEPENDENCE TAX CREDIT PLUS L.P. IV
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 13-3809869
- ------------------------------------------------- ---------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- ------------------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 317-5700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests and Beneficial Assignment Certificates
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes [ ] No [X]
The approximate aggregate book value of the voting and non-voting common
equity held by non-affiliates of the Registrant as of September 30, 2004 was
$21,221,000, based on Limited Partner equity as of such date.
DOCUMENTS INCORPORATED BY REFERENCE
None
CAUTIONARY STATEMENT FOR PURPOSES OF
THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO THE "SAFE HARBOR" PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF.
2
PART I
Item 1. Business
General
- -------
Independence Tax Credit Plus L.P. IV (the "Partnership") is a limited
partnership which was formed under the laws of the State of Delaware on February
22, 1995. The general partner of the Partnership is Related Independence L.L.C.,
a Delaware limited liability company (the "General Partner"). On November 17,
2003, CharterMac, acquired Related Capital Company ("RCC"), which is the
indirect parent of RCC Manager L.L.C, the managing member of the General
Partner. Pursuant to the acquisition, CharterMac acquired controlling interests
in the General Partner. This acquisition did not affect the Partnership or its
day-to-day operations, as the majority of the General Partner's management team
remained unchanged.
On July 6, 1995, 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 July 6, 1995 (the "Prospectus").
The Partnership has received $45,844,000 of Gross Proceeds of the Offering from
2,759 investors ("BACs holders"). The solicitation for the subscription of BACs
was terminated as of May 22, 1996 and the final closing occurred on August 15,
1996.
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"). As of March 31, 2005, the
Partnership has acquired an interest in fourteen Local Partnerships, all of
which have been consolidated. The Partnership's investments in Local
Partnerships represent from 98.99% to 99.89% interests except for one investment
which is a 58.12% interest. As of March 31, 2005, the Partnership has invested
approximately $37,814,000 (including approximately $1,161,000 classified as a
loan repayable from sale/refinancing proceeds in accordance with the
Contribution Agreement and not including acquisition fees of approximately
$1,771,000) of net proceeds in fourteen Local Partnerships of which
approximately $1,391,000 remains to be paid to the Local Partnerships (including
approximately $593,000 being held in escrow) as certain benchmarks, such as
occupancy level, are attained prior to the release of the funds. The Partnership
does not anticipate acquiring additional properties, but the Partnership may be
required to fund potential purchase price adjustments based on tax credit
adjustor clauses. See Item 2, Properties, below.
The investment objectives of the Partnership are described below:
1. Entitle qualified BACs holders to Housing 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
Housing 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.
The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate and poor economic
conditions.
The tax credits ("Tax Credits") are attached to a subsidiary partnership ("Local
Partnership") for a period of 10 years (the "Tax Credit Period") and are
transferable with the property during the entirety of such 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 value to the
property on the market. However, such value declines each year and is not
included in the financial statement carrying amount. The Tax Credit periods are
scheduled to expire at various times through December 31, 2012 with respect to
the Local Partnerships depending upon when the Tax Credit Period commenced.
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 the property
investments themselves are reduced to estimated fair value (generally using the
discounted cash flow valuation method). Through March 31, 2005, the Partnership
has not recorded any loss on impairment of assets or reduction to estimated fair
value.
3
While the value of the remaining Tax Credits are a factor in calculating fair
value, the expiration of the Tax Credit Period, in and of itself, is not the
only factor in determining whether there is an impairment and generally does not
have any adverse impact on the fair value of the Local Partnerships.
Segments
- --------
The Partnership operates in one segment, which is the investment in multi-family
residential property.
Competition
- -----------
The real estate business is highly competitive and substantially all of the
properties acquired by the Partnership are expected to have active competition
from similar properties in their respective vicinities. In addition, various
other limited partnerships may, in the future, be formed by the General Partner
and/or its affiliates to engage in businesses which may be competitive with the
Partnership.
Employees
- ---------
The Partnership does not have any direct employees. All services are performed
for the Partnership by the General Partner and its affiliates. The General
Partner receives compensation in the 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").
4
Item 2. Properties
As of March 31, 2005, the Partnership has acquired an interest in fourteen Local
Partnerships, all of which have been consolidated. 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
58.12% of the partnership interest in the subsidiary partnership (the other
41.86% limited partnership interest is owned by an affiliate of the Partnership,
with the same management). Through the rights of the Partnership and/or an
affiliate of the General Partner, which affiliate has a contractual obligation
to act on behalf of the Partnership, to remove the general partner and to
approve certain major operating and financial decisions, the Partnership has a
controlling financial interest in all of the Local Partnerships it has invested.
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 the Local Partnerships
and their properties, including any encumbrances affecting the properties may be
found in Item 15. Schedule III .
Local Partnership Schedule
--------------------------
Percentage of Units
Occupied at May 1,
Name and Location --------------------------------------------
(Number of Units) Date Acquired 2005 2004 2003 2002 2001
- -------------------------------------------------------------- ---- ---- ---- ---- ----
BX-8A Team Associates, L.P. October 1995 100% 98% 93% 100% 95%
Bronx, NY (41)
Westminster Park Plaza June 1996 94% 98% 98% 99% 98%
(a California Limited Partnership)
Los Angeles, CA (130)
Fawcett Street Limited Partnership June 1996 100% 97% 100% 98% 98%
Tacoma, WA (60)
Figueroa Senior Housing Limited Partnership November 1996 97% 98% 98% 100% 99%
Los Angeles, CA (66)
NNPHI Senior Housing Limited Partnership December 1996 100% 97% 99% 100% 99%
Los Angeles, CA (75)
Belmont/McBride Apartments Limited Partnership January 1997 95% 100% 98% 95% 100%
Paterson, NJ (42)
Sojourner Douglass, L.P. February 1997 100% 100% 100% 100% 95%
Paterson, NJ (20)
New Zion Apartments Limited Partnership October 1997 94% 96% 95% 88% 100%
Shreveport, LA (100)
Bakery Village Urban Renewal Associates, L.P. December 1997 98% 98% 99% 100% 99%
Montclair, NJ (125)
Marlton Housing Partnership, L.P. May 1998 96% 96% 92% 100% 100%
(a Pennsylvania limited partnership)
Philadelphia, PA (25)
GP Kaneohe Limited Partnership July 1999 100% 100% 100% 98% 100%
Kaneohe, HI (44)
KSD Village Apartments, Phase II, Ltd. July 1999 94% 100% 94% 88% 88%
Danville, KY (16)
Kanisa Apartments, Ltd. October 1999 92% 86% 88% 86% 92%
Fayette County, KY (59)
Guymon Housing Partners, L.P. December 1999 96% 96% 100% 100% 100%
Guymon, OK (92)
Leases are generally for periods not greater than one to two years and no tenant
occupies more than 10% of the rentable square footage.
Management continuously reviews the physical state of the properties and
suggests to the respective Local General Partners budget improvements which are
generally funded from cash flow from operations or release of replacement
reserve escrows.
Management periodically 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.
5
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 less than 1% of the aggregate cost of the properties as shown in
Schedule III included herein.
Housing Tax Credits with respect to a given Apartment Complex are available for
a ten-year period that commences when the property is rented to qualified
tenants. However, the annual Tax Credits available in the year in which the
Apartment Complex is placed in service must be prorated based upon the 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. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
6
PART II
Item 5. Market for the Registrant's Common Equity and Related Security Holder
Matters
As of March 31, 2005, the Partnership had issued and outstanding 45,844 Limited
Partnership Interests, each representing a $1,000 capital contribution to the
Partnership, or an aggregate capital contribution of $45,844,000. 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 45,844 BACs to the purchasers thereof for an aggregate purchase price of
$45,844,000. 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 plans to impose 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 May 4, 2005, the Partnership has approximately 2,534 registered holders of
an aggregate of 45,844 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,
2005. The Partnership does not anticipate providing cash distributions to its
BACs holders other than from net refinancing or sales proceeds.
Item 6. Selected Financial Data
The information set forth below presents selected financial data of the
Partnership. Additional financial information is set forth in the audited
financial statements in Item 8 hereof.
Year Ended March 31,
-----------------------------------------------------------------------------
OPERATIONS 2005 2004 2003* 2002 2001
- ------------------------------------ ------------- ------------- -------------- -------------- ---------------
Revenues $ 5,968,825 $ 5,869,146 $ 5,799,931 $ 5,691,878 $ 5,848,287
Operating expenses (9,234,871) (8,956,621) (9,213,437) (9,032,990) (9,641,822)
------------ ------------ ------------- ------------- -------------
Loss before minority interest (3,266,046) (3,087,475) (3,413,506) (3,341,112) (3,793,535)
Minority interest in loss of
subsidiary
partnership 29,336 26,201 34,355 34,650 19,869
------------ ------------ ------------- ------------- -------------
Net loss $ (3,236,710) $ (3,061,274) $ (3,379,151) $ (3,306,462) $ (3,773,666)
============ ============ ============= ============= =============
Net loss per weighted average BAC $ (69.90) $ (66.11) $ (72.97) $ (71.40) $ (81.49)
============ ============ ============= ============= =============
Year Ended March 15,
-----------------------------------------------------------------------------
FINANCIAL POSITION 2005 2004 2003 2002 2001
- ------------------------------------ ------------- ------------- -------------- -------------- ---------------
Total assets $ 70,814,773 $ 73,292,160 $ 75,661,500 $ 78,765,789 $ 80,941,604
============ ============ ============= ============= =============
Total liabilities $ 49,612,903 $ 48,812,277 $ 48,094,142 $ 47,526,993 $ 46,542,781
============ ============ ============= ============= =============
Minority interest $ 1,884,360 $ 1,925,663 $ 1,951,864 $ 2,244,151 $ 2,097,716
============ ============ ============= ============= =============
Total partners' capital $ 19,317,510 $ 22,554,220 $ 25,615,494 $ 28,994,645 $ 32,301,107
============ ============ ============= ============= =============
* Reclassified for comparative purposes.
At March 31, 2005, 2004, 2003 2002 and 2001, total assets decreased
approximately $2,477,000, $2,369,000, $3,104,000, $2,176,000 and $5,446,000 due
to depreciation and amortization and a reduction in cash and cash equivalents.
At March 31, 2005, 2004, 2003, 2002 and 2001, property and equipment decreased
approximately $2,353,000, $2,358,000, $2,532,000, $1,376,000 and $1,152,000
primarily due to depreciation expense. At March 31, 2005, 2004 and 2003,
mortgage notes decreased approximately $214,000, $89,000 and $339,000,
respectively. At March 31, 2002 and 2001 mortgage notes increased approximately
$79,000 and $1,100,000, respectively.
7
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership's primary source of funds include (i) interest earned on Gross
Proceeds which are invested in tax-exempt money market instruments pending
purchase price adjustments of Local Partnerships and (ii) working capital
reserve and interest thereon. All these sources are available to meet
obligations of the Partnership.
The Partnership has received $45,844,000 in gross proceeds for BACs pursuant to
a public offering, resulting in net proceeds available for investment of
approximately $36,446,000 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, 2005, the Partnership has invested approximately $37,814,000
(including approximately $1,161,000 classified as a loan repayable from
sale/refinancing proceeds in accordance with the Contribution Agreement and not
including acquisition fees of approximately $1,771,000) of net proceeds in
fourteen Local Partnerships of which approximately $1,391,000 remains to be paid
to the Local Partnerships (including approximately $593,000 being held in
escrow) as certain benchmarks, such as occupancy level, are attained prior to
the release of the funds. During the year ended March 31, 2005, approximately
$14,000 was paid to Local Partnerships. The Partnership does not anticipate
acquiring additional properties, but the Partnership may be required to fund
potential purchase price adjustments based on tax credit adjustor clauses. There
were no such adjustments made during the year ended March 31, 2005.
As of March 31, 2005, cash and cash equivalents of the Partnership and its
fourteen consolidated Local Partnerships decreased approximately ($67,000) due
to the acquisition of property and equipment ($38,000), an increase in cash held
in escrow relating to investing activities ($64,000), repayments of mortgage
notes ($214,000), a net decrease in due to local general partners and affiliates
relating to investing activities ($375,000), an increase in deferred costs
($5,000) and a decrease in capitalization of consolidated subsidiaries
attributable to minority interest ($12,000) which exceeded cash provided by
operating activities ($641,000). Included in the adjustments to reconcile the
net loss to net cash provided by operations is depreciation and amortization of
approximately $2,448,000.
Total expenses for the years ended March 31, 2005 and 2004, excluding
depreciation and amortization, interest and general and administrative - related
parties, totaled $4,062,712 and $3,846,737, respectively. Accounts payable and
other liabilities totaled $9,075,556 and $8,239,856, respectively, which are
comprised of the following amounts:
March 31,
-------------------------------
2005 2004
-------------- --------------
Accounts payable $ 457,500 $ 540,436
Accrued interest payable 8,236,181 7,318,920
Security deposits payable 381,875 380,500
----------- ------------
Total accounts payable $ 9,075,556 $ 8,239,856
=========== ============
As indicated in the above table, accrued interest payable comprised
approximately 91% and 89% of the total accounts payable and other liabilities
amount at March 31, 2005 and 2004. Such amount represents the accrued interest
on all mortgage loans, which include primary and secondary loans. Certain
secondary loans have provisions such that interest is accrued but not payable
until a future date. The Partnership anticipates the payment of accrued interest
on the secondary loans (which make up the majority of the accrued interest
payable amount indicated in the above table and which have been accumulating
since the Partnership's investment in the respective Local Partnership) will be
made from future refinancings or sales proceeds of the respective Local
Partnerships. In addition, each Local Partnership's mortgage notes are
collateralized by the land and buildings of the respective Local Partnership,
and are without further recourse to the Partnership.
Security deposits payable are offset by cash held in security deposits, which
are included in "Cash held in escrow" on the financial statements.
Accounts payable are short term liabilities which are expected to be paid from
operating cash flows, working capital balances at the Local Partnership level,
local general partner advances and in certain circumstances advances from the
Partnership. Because the provisions of the secondary loans defer the payment of
accrued interest of the respective Local Partnerships, the Partnership believes
it (and the applicable Local Partnerships) has sufficient liquidity and ability
to generate cash and to meet existing and known or reasonably likely future cash
requirements over both the short and long term.
A working capital reserve has been designated 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, 2005, approximately $33,000 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. During the
year ended March 31, 2005, there were no distributions from Local Partnerships.
Management anticipates receiving distributions in the future, although not to a
level sufficient to permit providing cash distributions to the BACs holders.
The Partnership had negotiated Operating Deficit Guaranty Agreements with the
development stage Local Partnerships by which the general partners of such Local
Partnerships and/or their affiliates have agreed to fund operating deficits for
a specified period of time. The terms of the Operating Deficit Guaranty
Agreements vary for each of these Local Partnerships, with maximum dollar
amounts to be funded for a specified period of time, generally three years,
commencing on the break-even date. As of both March 31, 2005 and 2004, the gross
amount of the Operating Deficit Guarantees aggregate approximately $1,897,000.
As of both March 31, 2005 and 2004, $0 has been funded under the Operating
Deficit Guaranty Agreements. Amounts funded under such agreements will be
treated as non-interest bearing loans, which will be paid only out of 50% of
available cash flow or out of available net sale or refinancing proceeds.
8
Partnership management fees owed to the General Partner amounting to
approximately $1,967,000 and $1,630,000 were accrued and unpaid as of March 31,
2005 and 2004, respectively.
The Partnership has invested all of the net proceeds available for investment in
fourteen Local Partnerships, of which all will generate tax credits in 2005. Due
to increased market demand for investments in properties that were eligible to
receive tax credits at the time the Partnership was investing its capital and
limitations on the types of investments which may be obtained by the Partnership
the purchase price for interests in Local Partnerships which are qualified for
purchase by the Partnership have increased. As a result of these changes,
management does not believe that the Partnership has been able to invest the
proceeds available for investment in a manner which will enable the Partnership
to achieve tax credits in the range of $140-150 for each $1,000 BAC each year in
which the Partnership is receiving its full entitlement of tax credits.
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 from
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 tax credits will be attached to the project for a
period of ten years, and will be transferable with the property during the
remainder of such 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 value to the property on the market. However, such value
declines each year and is not included in the financial statement carrying
amount.
Tabular Disclosure of Contractual Obligations
- ---------------------------------------------
The following table summarizes the Partnership's commitments as of March 31,
2005, to make future payments under its debt agreements and other contractual
obligations.
Less than 1 - 3 3 -5 More than
Total 1 Year Years Years 5 Years
------------- ------------- ------------- ------------- --------------
Mortgage notes payable (a) $ 36,098,561 $ 637,599 $ 1,129,240 $ 1,107,031 $ 33,224,691
============ ============ ============ ============ ============
(a) The mortgage loans are payable in aggregate monthly installments of
approximately $131,000 including principal and interest with rates varying
from 0% to 9.11% per annum and have maturity dates ranging from 2008
through 2051. The loans are collateralized by the land and buildings of the
subsidiary partnerships, the assignment of certain subsidiary partnerships'
rents and leases, and are without further recourse.
Off Balance Sheet Arrangements
- ------------------------------
The Partnership has no off-balance sheet arrangements.
Critical Accounting Policies
- ----------------------------
In preparing the consolidated financial statements, management has made
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. Set forth below is a summary of the accounting policies
that management believes are critical to the preparation of the consolidated
financial statements.
a) Property and Equipment/Valuation of Long-Lived Assets
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, 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.
The Partnership complies with Statement of Financial Accounting Standards (SFAS)
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". 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, 2005, the Partnership has not recorded any loss on impairment
of assets or reductions to estimated fair value.
b) Revenue Recognition
Rental income is earned under standard residential operating leases and is
typically due the first day of each month, but can vary by property due to the
terms of the tenant leases. Rental income is recognized when earned and charged
to tenants' accounts receivable if not received by the due date. Rental payments
received in advance of the due date are deferred until earned. Rental subsidies
are recognized as rental income during the month in which it is earned.
Other revenues are recorded when earned and consist of the following items:
Interest income earned on cash and cash equivalent balances and cash held in
escrow balances, income from forfeited security deposits, late charges, laundry
and vending income and other rental related items.
9
Other revenues include the following amounts at both the Partnership and Local
Partnership level:
Years Ended March 31,
------------------------------------------------
2005 2004 2003
-------------- -------------- --------------
Interest $ 34,738 $ 41,261 $ 77,958
Other 249,548 199,750 201,559
------------ ------------ ------------
Total other revenue $ 284,286 $ 241,011 $ 279,517
============ ============ ============
c) Related Parties
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 members 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, which is incorporated herein by reference.
New Accounting Pronouncements
- -----------------------------
On December 16, 2004, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 153, Exchanges of Nonmonetary Assets - An Amendment of
APB Opinion No. 29 ("SFAS No. 153"). The amendments made by SFAS No. 153 are
based on the principle that exchanges of nonmonetary assets should be measured
based on fair value of the assets exchanged. Further, the amendments eliminate
the narrow exception for nonmonetary exchanges of similar productive assets and
replace it with a broader exception for exchanges of nonmonetary assets that do
not have "commercial substance." SFAS No. 153 is effective for nonmonetary
assets exchanges occurring in fiscal period beginning after June 15, 2005. The
Company does not believe that the adoption of SFAS No. 153 on June 15, 2005 will
have a material effect on the Company's consolidated financial statements.
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46 is applicable immediately for variable interest entities created after
January 31, 2003. For variable interest entities created before February 1,
2003, the provisions of FIN 46 were originally applicable no later than December
15, 2003. The Partnership has not created any variable interest entities after
January 31, 2003. In December 2003 the FASB redeliberated certain proposed
modifications and revised FIN 46 ("FIN 46 (R)"). The revised provisions are
applicable no later than the first reporting period ending after March 15, 2004.
The adoption of FIN 46 (R) does not have a material impact on the Partnership's
financial reporting and disclosures.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
changes the accounting for certain financial instruments that, under previous
guidance, could be classified as equity or "mezzanine" equity, by now requiring
those instruments to be classified as liabilities ( or assets in some
circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150
requires disclosure regarding the terms of those instruments and settlement
alternatives. The guidance in SFAS No. 150 generally was effective for all
financial instruments entered into or modified after May 31, 2003, and was
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003. The Partnership has evaluated SFAS No. 150 and determined that it
does not have an impact on the Partnership's financial reporting and
disclosures.
Results of Operations
- ---------------------
The net loss for the years ended March 31, 2005, 2004 and 2003 totaled
$3,236,710, $3,061,274 and $3,379,151, respectively.
The Partnership and BACs holders began recognizing 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 has gradually increased over the
first three years of the Partnership. Housing Tax Credits not recognized in the
first three years will be recognized in the 11th through 13th years. The
Partnership generated $5,356,758 of Housing Tax Credits during each of the 2004,
2003 and 2002 tax years.
The Partnership's results of operations for the years ended March 31, 2005, 2004
and 2003 consisted primarily of the results of the Partnership's investment in
fourteen consolidated Local Partnerships. The majority of Local Partnership
income continues to be in the form of rental income with the corresponding
expenses being divided among operations, depreciation and mortgage interest.
2005 vs. 2004
- -------------
Rental income increased approximately 1% for the year ended March 31, 2005 as
compared to the corresponding period ended March 31, 2004, primarily due to
rental rate increases.
Other income increased approximately $43,000 for the year ended March 31, 2005
as compared to the corresponding period ended March 31, 2004, primarily due to
the write-off of certain payables at one Local Partnership and an increase in
late charges and insufficient funds charges at a second Local Partnership.
Total expenses, excluding general and administrative-related parties and repairs
and maintenance, remained fairly consistent with an increase of approximately 1%
for the year ended March 31, 2005 as compared to the corresponding period ended
March 31, 2004.
10
General and administrative-related parties increased approximately $69,000 for
the year ended March 31, 2005, as compared to the corresponding period ended
March 31, 2004, primarily due to two Local Partnerships changing from third
party management companies in 2004 to affiliated management companies in 2005.
Repairs and maintenance increased approximately $103,000 for the year ended
March 31, 2005, as compared to the corresponding period ended March 31, 2004,
primarily due to an increase in supplies and miscellaneous maintenance expense
at one Local Partnership, the building exterior being painted and an increase in
wheelchair lift repairs at a second Local Partnership and an increase in
exterior painting expense at a third Local Partnership.
2004 vs. 2003
- -------------
Rental income increased approximately 2% for the year ended March 31, 2004 as
compared to the corresponding period ended March 31, 2003, primarily due to
rental rate increases.
Other income decreased approximately $39,000 for the year ended March 31, 2004
as compared to the corresponding period ended March 31, 2003, primarily due to a
decrease in interest earned on cash and equivalents due to smaller balances and
lower interest rates at the Local Partnerships and at the Partnership level, as
well as a decrease in interest earned on a capital installment at a Local
Partnership.
Total expenses, excluding general and administrative, repairs and maintenance,
taxes and insurance, remained fairly consistent with a decrease of approximately
4% for the year ended March 31, 2004 as compared to the corresponding period
ended March 31, 2003.
General and administrative decreased approximately $270,000 for the year ended
March 31, 2004 as compared to the corresponding period ended March 31, 2003,
primarily due to one-time administrative incentive fees at two Local
Partnerships in the prior year.
Repairs and maintenance increased approximately $101,000 for the year ended
March 31, 2004 as compared to the corresponding period ended March 31, 2003,
primarily due to tree trimming and fence replacement at one Local Partnership
and roof and gate repairs at a second Local Partnership.
Taxes decreased approximately $44,000 for the year ended March 31, 2004 as
compared to the corresponding period ended March 31, 2003, primarily due to a
payment of back property taxes by one Local Partnership in the prior year.
Insurance increased approximately $72,000 for the year ended March 31, 2004 as
compared to the corresponding period ended March 31, 2003, primarily due to
increases in insurance premiums at the Local Partnerships.
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 financial 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. Furthermore, inflation generally does not
impact the fixed long-term financing under which real property investments were
purchased. Inflation also affects the Local Partnerships adversely by increasing
operating costs as, for example, for such items as fuel, utilities and labor.
However, continued inflation may result in appreciated values of the Local
Partnership's apartment complexes over a period of time as rental revenues and
replacement cost continue to increase.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Mortgage notes are payable in aggregate monthly installments including principal
and interest at rates varying from 0% to 9.11% per annum. The Partnership does
not believe there is a material risk associated with the various interest rates
associated with the mortgage notes as the majority of the Local Partnership
mortgage notes have fixed rates. The Partnership currently discloses in Item 8,
Note 3 of the Notes to Consolidated Financial Statements, the fair value of the
mortgage notes payable. The Partnership does not have any other market risk
sensitive instruments.
11
Item 8. Financial Statements and Supplementary Data
Sequential
Page
----------
(a)1. Consolidated Financial Statements
Report of Independent Registered Public Accounting
Firm 13
Consolidated Balance Sheets at March 31, 2005 and 2004 45
Consolidated Statements of Operations for the years
ended March 31, 2005, 2004 and 2003 46
Consolidated Statements of Changes in Partners'
Capital (Deficit) for the years ended
March 31, 2005, 2004 and 2003 47
Consolidated Statements of Cash Flows for the years
ended March 31, 2005, 2004 and 2003 48
Notes to Consolidated Financial Statements 49
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE PARTNERS OF INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheets of
INDEPENDENCE TAX CREDIT PLUS L.P. IV AND SUBSIDIARIES (a Delaware limited
partnership) as of March 31, 2005 and 2004, and the related consolidated
statements of operations, changes in partners' capital (deficit) and cash flows
for each of the years in the three-year period ended March 31, 2005. These
consolidated 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 of
fourteen, fourteen and thirteen subsidiary partnerships, whose losses aggregated
$2,682,216, $2,485,937 and $2,801,465 for the years ended March 31, 2005, 2004
and 2003, respectively, and whose assets constituted 96% of consolidated assets
at March 31, 2005 and 2004. Those statements were audited by other auditors
whose reports have been furnished to us, and our opinion, insofar as it relates
to the amounts included for these subsidiary partnerships, is based solely on
the reports of the other auditors.
We conducted our audits in accordance with the standards of the Public
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. 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 and the reports of
the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other
auditors, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of INDEPENDENCE TAX
CREDIT PLUS L.P. IV AND SUBSIDIARIES as of March 31, 2005 and 2004, and the
results of their operations and their cash flows for each of the years ended in
the three-year period ended March 31, 2005, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Friedman LLP
Friedman LLP
New York, New York
June 10, 2005
13
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
BX 8A Team Associates, L.P.
We have audited the accompanying balance sheets of BX 8A Team Associates, L.P.,
for the years ended December 31, 2004 and 2003, and the related statements of
operations, changes in partners' equity (deficit) and cash flows for the years
then ended. These financial statements are the responsibility of the
partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BX 8A Team Associates, L.P. as
of December 31, 2004 and 2003, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Reznick Group, P.C.
Atlanta, Georgia
February 1, 2005
14
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
BX 8A Team Associates, L.P.
We have audited the accompanying balance sheet of BX 8A Team Associates, L.P.
for the years ended December 31, 2003 and 2002, and the related statements of
operations, changes in partners' equity (deficit) and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BX 8A Team Associates, L.P. as
of December 31, 2003 and 2002, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Reznick Fedder & Silverman
Atlanta, Georgia
February 3, 2004
15
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Westminster Park Plaza, L.P.
We have audited the accompanying balance sheets of Westminster Park Plaza, L.P.
as of December 31, 2004 and 2003, and the related statements of operations,
partners' 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westminster Park Plaza, L.P. as
of December 31, 2004 and 2003, and the results of its operations, the changes in
partners' deficit and its cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Reznick Group, P.C.
Sacramento, California
January 18, 2005
16
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
Westminster Park Plaza
We have audited the accompanying balance sheets of Westminster Park Plaza, L.P.
as of December 31, 2003 and 2002, and the related statements of operations,
partners' 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westminster Park Plaza, L.P. as
of December 31, 2003 and 2002, and the results of its operations, the changes in
partners' deficit and its cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Reznick Fedder & Silverman
Sacramento, California
January 16, 2004
17
[LETTERHEAD OF MCDANIEL & HALLSTROM]
To the Partners
FAWCETT STREET LIMITED PARTNERSHIP
Tacoma, Washington
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2004 and 2003, 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2004 and 2003, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/ McDaniel & Hallstrom, CPA's
Belfair, Washington
January 31, 2005
18
[LETTERHEAD OF MCDANIEL & HALLSTROM]
To the Partners
FAWCETT STREET LIMITED PARTNERSHIP
Tacoma, Washington
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2003 and 2002, 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 FAWCETT STREET LIMITED
PARTNERSHIP as of December 31, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/ McDaniel & Hallstrom, CPA's
Belfair, Washington
February 6, 2004
19
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
Figueroa Senior Housing Limited Partnership
Los Angeles, California
I have audited the balance sheet of Figueroa Senior Housing Limited Partnership
at December 31, 2004, and the related statements of loss, changes in partners'
capital, and cash flow for the year then ended. These financial statements are
the responsibility of Figueroa Senior Housing Limited Partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Figueroa Senior Housing Limited
Partnership at December 31, 2004 and the results of its operations for the year
then ended in conformity with generally accepted accounting principles used in
the United States of America.
/s/ Clifford Benn, CPA
January 27, 2005
Carson, California
20
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
Figueroa Senior Housing Limited Partnership
Los Angeles, California
I have audited the balance sheet of Figueroa Senior Housing Limited Partnership
at December 31, 2003, and the related statements of loss, changes in partners'
capital, and cash flow for the year then ended. These financial statements are
the responsibility of Figueroa Senior Housing Limited Partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Figueroa Senior Housing Limited
Partnership at December 31, 2003, and the results of its operations for the year
then ended in conformity with generally accepted accounting principles used in
the United States of America.
/s/ Clifford Benn, CPA
February 12, 2004
Carson, California
21
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
Figueroa Senior Housing Limited Partnership
Los Angeles, California
I have audited the balance sheet of Figueroa Senior Housing Limited Partnership
at December 31, 2002, and the related statements of loss, changes in partners'
capital, and cash flow for the year then ended. These financial statements are
the responsibility of Figueroa Senior Housing Limited Partnership's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Figueroa Senior Housing Limited
Partnership at December 31, 2002, and the results of its operations for the year
then ended in conformity with generally accepted accounting principles used in
the United States of America.
/s/ Clifford Benn, CPA
March 3, 2003
Carson, California
22
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
NNPHI Senior Housing, L.P.
Los Angeles, California
I have audited the balance sheet of NNPHI Senior Housing, L.P. at December 31,
2004, and the related statements of loss, changes in partners' capital, and cash
flow for the year then ended. These financial statements are the responsibility
of NNPHI Senior Housing, L.P.'s management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NNPHI Senior Housing, L.P. at
December 31, 2004, and the results of its operations for the year then ended in
conformity with generally accepted accounting principles used in the United
States of America.
/s/ Clifford Benn, CPA
January 27, 2005
Carson, California
23
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
NNPHI Senior Housing, L.P.
Los Angeles, California
I have audited the balance sheet of NNPHI Senior Housing, L.P. at December 31,
2003, and the related statements of loss, changes in partners' capital, and cash
flow for the year then ended. These financial statements are the responsibility
of NNPHI Senior Housing, L.P.'s management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NNPHI Senior Housing, L.P. at
December 31, 2003, and the results of its operations for the year then ended in
conformity with generally accepted accounting principles used in the United
States of America.
/s/ Clifford Benn, CPA
February 14, 2004
Carson, California
24
[LETTERHEAD OF CLIFFORD R. BENN]
INDEPENDENT AUDITOR'S REPORT
General Partner
NNPHI Senior Housing, L.P.
Los Angeles, California
I have audited the balance sheet of NNPHI Senior Housing, L.P. at December 31,
2002, and the related statements of loss, changes in partners' capital, and cash
flow for the year then ended. These financial statements are the responsibility
of NNPHI Senior Housing, L.P.'s management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards
used in the United States of America. Those standards require that I plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of NNPHI Senior Housing, L.P. at
December 31, 2002 and the results of its operations for the year then ended in
conformity with generally accepted accounting principles used in the United
States of America.
/s/ Clifford Benn, CPA
February 17, 2003
Carson, California
25
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership
We have audited the accompanying balance sheets of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2004 and 2003,
and the related statements of operations, partners' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2004 and 2003,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Reznick Group, P.C.
Baltimore, Maryland
January 19, 2005
26
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership
We have audited the accompanying balance sheets of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2003 and 2002,
and the related statements of operations, partners' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Belmont/McBride Apartments
Urban Renewal Associates Limited Partnership as of December 31, 2003 and 2002,
and the results of its operations, the changes in partners' equity (deficit) and
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
/s/ Reznick Fedder & Silverman
Baltimore, Maryland
January 23, 2004
27
[LETTERHEAD OF KOCH GROUP & COMPANY, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Sojourner Douglas Urban Renewal Partnership, L.P.
We have audited the accompanying balance sheet of Sojourner Douglas Urban
Renewal Partnership, L.P. (A Limited Partnership) as of December 31, 2004 and
2003 and the related statements of operations, partners' equity (deficiency) 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 Sojourner Douglas Urban Renewal
Partnership, L.P. (A Limited Partnership) as of December 31, 2004 and 2003, and
the results of its operations, the changes in partners' equity (deficiency) and
its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/ Koch Group & Company, LLP
New York, New York
January, 21, 2005
28
[LETTERHEAD OF FRIEDMAN ALPREN & GREEN LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Sojourner Douglas Urban Renewal Partnership, L.P.
We have audited the accompanying balance sheet of SOJOURNER DOUGLAS URBAN
RENEWAL PARTNERSHIP, L.P. (a limited partnership) as of December 31, 2002, and
the related statements of operations, partners' capital deficiency and cash
flows for the year then ended. These financial statements are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SOJOURNER DOUGLAS URBAN RENEWAL
PARTNERSHIP, L.P. (a limited partnership) as of December 31, 2002, and the
results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Friedman Alpren & Green LLP
New York, New York
February 3, 2003
29
[LETTERHEAD OF COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION
To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited
Partnership, HUD Project No. LA48E000011, at December 31, 2004, and the related
statements of income, partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of New
Zion Apartments Limited Partnership at December 31, 2004, and the results of its
operations, changes in capital, and cash flows for the year then ended in
conformity with U.S. generally accepted accounting principles.
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 2004 taken as a whole. The
accompanying supplemental information (Schedules 1 through 8) 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 audit
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
In accordance with Government Auditing Standards, we have also issued a report
dated January 26, 2005 on our consideration of New Zion Apartments Limited
Partnership's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, grant
agreements, and other matters. The purpose of those reports is to describe the
scope of our testing of internal control over financial reporting and compliance
and the results of that testing and not to provide an opinion on the internal
control over financial reporting or on compliance. Those reports are an integral
part of an audit performed in accordance with Government Auditing Standards and
should be read in conjunction with this report in considering the results of our
audit.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
January 26, 2005
30
[LETTERHEAD OF COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION
To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited
Partnership, HUD Project No. LA48E000011, at December 31, 2003, and the related
statements of income, partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of New
Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December
31, 2003 and the results of its operations, changes in capital, and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 2003 taken as a whole. The
supplementary Schedules 1, 2 and 3 are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report
dated February 10, 2004 on our consideration of New Zion Apartments Limited
Partnership's internal control, and on its compliance with certain provisions of
laws, regulations, contracts, and grants. Those reports are an integral part of
an audit performed in accordance with Government Auditing Standards and should
be read in conjunction with this report in considering the results of our audit.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
February 10, 2004
31
[LETTERHEAD OF COLE, EVANS & PETERSON]
INDEPENDENT AUDITORS' REPORT ON THE BASIC FINANCIAL STATEMENTS AND SUPPLEMENTAL
INFORMATION
To the Partners
New Zion Apartments Limited Partnership
Shreveport, Louisiana
We have audited the accompanying balance sheet of New Zion Apartments Limited
Partnership, HUD Project No. LA48E000011, at December 31, 2002, and the related
statements of income, partners' capital and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to in the first paragraph
above present fairly, in all material respects, the financial position of New
Zion Apartments Limited Partnership, HUD Project No. LA48E000011, at December
31, 2002 and the results of its operations, changes in capital, and cash flows
for the year then ended in conformity with U.S. generally accepted accounting
principles.
Our audit was made primarily for the purpose of forming an opinion on the basic
financial statements for the year ended December 31, 2002 taken as a whole. The
supplementary Schedules 1, 2 and 3 are presented for purposes of additional
analysis and are not a required part of the basic financial statements. Such
information has been subjected to the audit procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
In accordance with Government Auditing Standards, we have also issued a report
dated February 10, 2003 on our consideration of New Zion Apartments Limited
Partnership's internal control, and on its compliance with certain provisions of
laws, regulations, contracts, and grants. Those reports are an integral part of
an audit performed in accordance with Government Auditing Standards and should
be read in conjunction with this report in considering the results of our audit.
/s/ Cole, Evans & Peterson
Shreveport, Louisiana
Federal ID No. 72-0506596
Lead Auditor: Steven W. Hedgepeth
February 10, 2003
32
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Bakery Village Urban Renewal Associates, L.P.
We have audited the accompanying balance sheets of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2004 and 2003, and the related statements of
operations, partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2004 and 2003, and the results of its
operations, the changes in partners' equity (deficit) and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Reznick Group, P.C.
Baltimore, Maryland
February 28, 2005
33
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
Bakery Village Urban Renewal Associates, L.P.
We have audited the accompanying balance sheets of Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2003 and 2002, and the related statements of
operations, partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 Bakery Village Urban Renewal
Associates, L.P. as of December 31, 2003 and 2002, and the results of its
operations, the changes in partners' equity (deficit) and its cash flows for the
years then ended, in conformity with accounting principles generally accepted in
the United States of America.
/s/ Reznick Fedder & Silverman
Baltimore, Maryland
February 3, 2004
34
[LETTERHEAD OF REZNICK GROUP, P.C.]
INDEPENDENT AUDITORS' REPORT
To the Partners
Marlton Housing Partnership, L.P.
We have audited the accompanying balance sheets of Marlton Housing Partnership,
L.P. as of December 31, 2004 and 2003, and the related statements of operations,
changes in partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the 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 Marlton Housing Partnership,
L.P. at December 31, 2004 and 2003, and the results of its operations, the
changes in its partners' equity (deficit) and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
/s/ Reznick Group, P.C.
Baltimore, Maryland
January 28, 2005
35
[LETTERHEAD OF REZNICK FEDDER & SILVERMAN]
INDEPENDENT AUDITORS' REPORT
To the Partners
Marlton Housing Partnership, L.P.
We have audited the accompanying balance sheets of Marlton Housing Partnership,
L.P. as of December 31, 2003 and 2002, and the related statements of operations,
changes in partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the 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 Marlton Housing Partnership,
L.P. at December 31, 2003 and 2002, and the results of its operations, the
changes in its partners' equity (deficit) and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
/s/ Reznick Fedder & Silverman
Baltimore, Maryland
February 6, 2004
36
[LETTERHEAD OF FAVORS & ASSOCIATES, CPA's, P.S.]
INDEPENDENT AUDITORS' REPORT
To the Partners
GP Kaneohe Limited Partnership
We have audited the accompanying balance sheets of GP Kaneohe Limited
Partnership as of December 31, 2004 and 2003, 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 entity's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in 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 GP Kaneohe Limited Partnership
as of December 31, 2004 and 2003, and the results of its operations, the changes
in its partners' capital (deficit) and cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Favors & Associates, CPA's, P.S.
Fircrest, Washington
January 31, 2005
37
[LETTERHEAD OF FAVORS & ASSOCIATES, CPA's, P.S.]
INDEPENDENT AUDITORS' REPORT
To the Partners
GP Kaneohe Limited Partnership
We have audited the accompanying balance sheet of GP Kaneohe Limited
Partnership, as of December 31, 2002, and the related statements of operations,
changes in partners' capital (deficit), and cash flows for the year then ended.
These financial statements are the responsibility of the entity's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in 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 GP Kaneohe Limited Partnership
as of December 31, 2002, and the results of its operations, the changes in its
partners' capital (deficit) and cash flows for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued a report
dated March 13, 2003, on our consideration of GP Kaneohe Limited Partnership's
internal control, and our test of its compliance with certain provisions of
laws, regulations, contractors and grants. Those reports are an integral part of
an audit performed in accordance with Government Auditing Standards and should
be read in conjunction with this report in considering the results of our audit.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supporting data required by HUD shown
on pages 10 and 11 is presented for purposes of additional analysis and is not a
required part of the basic financial statements of the Partnership. 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/ Favors & Associates, CPA's, P.S.
Fircrest, Washington
March 13, 2003
38
[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
KSD Village Apartments, Phase II, Ltd,
We have audited the accompanying balance sheets of KSD Village Apartments, Phase
II, Ltd. as of December 31, 2004 and 2003 and the related statements of
operations, partners' equity (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 KSD Village Apartments, Phase
II, Ltd. as of December 31, 2004 and 2003, and the results of its operations and
its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
February 1, 2005
39
[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
KSD Village Apartments, Phase II, Ltd,
We have audited the accompanying balance sheets of KSD Village Apartments, Phase
II, Ltd. as of December 31, 2003 and 2002, and the related statements of
operations, partners' equity (deficit), and cash flows for the years then ended.
These financial statements are the responsibility of the partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 KSD Village Apartments, Phase
II, Ltd. as of December 31, 2003 and 2002, and the results of its operations,
changes in partners' equity (deficit) and its cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.
/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
January 23, 2004
40
[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Kanisa Apartments Ltd.
We have audited the accompanying balance sheets of Kanisa Apartments, Ltd.,
complex no. 083-98017, as of December 31, 2004 and 2003 and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for the years then ended. These financial statements are the responsibility of
the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kanisa Apartments, Ltd. as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a reports
dated February 8, 2005 on our consideration of Kanisa Apartments, Ltd.'s
internal control over financial reporting and on our tests of its compliance
with certain provisions of laws, regulations, contracts, grant agreements, and
other matters. The purpose of those reports is to describe the scope of our
testing of internal control over financial reporting and compliance and the
results of that testing and not to provide an opinion on the internal control
over financial reporting or on compliance. Those reports are an integral part of
an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should
be read in conjunction with this report in considering the results of our
audits.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental data
included in this report is presented for purposes of additional analysis and is
not a required part of the basic financial statements of the partnership. Such
information has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
February 8, 2005
EIN: 61-0866166
Lead Auditor: Darren C. Johnson, CPA
Audit Principal: John T. Miller, CPA
41
[LETTERHEAD OF MILLER, MAYER, SULLIVAN, & STEVENS, LLP]
INDEPENDENT AUDITORS' REPORT
To the Partners
Kanisa Apartments Ltd.
We have audited the accompanying balance sheets of Kanisa Apartments, Ltd.,
complex no. 083-98017-YHA, as of December 31, 2003 and 2002 and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for the years then ended. These financial statements are the responsibility of
the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America and the standards applicable to financial audits
contained in GOVERNMENT AUDITING STANDARDS issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kanisa Apartments, Ltd., as of
December 31, 2003 and 2002, and the results of its operations, changes in
partners' equity (deficit), and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
In accordance with GOVERNMENT AUDITING STANDARDS, we have also issued a report
dated February 13, 2004 on our consideration of Kanisa Apartments, Ltd.'s
internal controls and on our tests of its compliance with certain provisions of
laws, regulations, contracts, and grants. Those reports are an integral part of
an audit performed in accordance with GOVERNMENT AUDITING STANDARDS and should
be read in conjunction with this report in considering the results of our
audits.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental data
included in this report is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
/s/ Miller, Mayer, Sullivan, & Stevens, LLP
Lexington, Kentucky
February 13, 2004
EIN: 61-0866166
Lead Auditor: Darren C. Johnson, CPA
Audit Principal: John T. Miller, CPA
42
[LETTERHEAD OF HANKINS & COMPANY]
INDEPENDENT AUDITOR'S REPORT
Partners
Guymon Housing Partners Limited Partnership
D/B/A Blue Quail Apartments
We have audited the accompanying balance sheets of GUYMON HOUSING PARTNERS
LIMITED PARTNERSHIP, D/B/A BLUE QUAIL APARTMENTS as of December 31, 2004 and
2003, 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for my opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GUYMON HOUSING PARTNERS LIMITED
PARTNERSHIP, D/B/A BLUE QUAIL APARTMENTS as of December 31, 2004 and 2003, and
the results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Hankins & Company
February 18, 2005
Fort Smith, Arkansas
43
[LETTERHEAD OF HANKINS & COMPANY]
INDEPENDENT AUDITOR'S REPORT
Partners
Guymon Housing Partners Limited Partnership
d/b/a Blue Quail Apartments
We have audited the accompanying balance sheets of GUYMON HOUSING PARTNERS
LIMITED PARTNERSHIP, D/B/A BLUE QUAIL APARTMENTS as of December 31, 2003 and
2002, 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 audit.
We conducted my audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for my opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GUYMON HOUSING PARTNERS LIMITED
PARTNERSHIP, D/B/A BLUE QUAIL APARTMENTS as of December 31, 2003 and 2002, and
the results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Hankins & Company
February 20, 2004
Fort Smith, Arkansas
44
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31,
------------------------------
2005 2004
------------- -------------
Property and equipment - at cost, less accumulated depreciation
(Notes 2 and 4) $ 64,680,722 $ 67,033,716
Cash and cash equivalents (Notes 2 and 10) 1,663,931 1,730,897
Cash held in escrow (Note 5) 3,303,235 3,292,937
Deferred costs, less accumulated amortization (Notes 2 and 6) 654,969 706,837
Other assets 511,916 527,773
------------ ------------
Total assets $ 70,814,773 $ 73,292,160
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Mortgage notes payable (Note 7) $ 36,098,561 $ 36,312,132
Accounts payable and other liabilities 9,075,556 8,239,856
Due to local general partners and affiliates (Note 8) 1,759,198 2,116,876
Due to general partner and affiliates (Note 8) 2,679,588 2,143,413
------------ ------------
Total liabilities 49,612,903 48,812,277
------------ ------------
Minority interest 1,884,360 1,925,663
------------ ------------
Commitments and contingencies (Note 10)
Partners' capital (deficit):
Limited partners (100,000 BACs authorized; 45,844 issued and
outstanding) (Note 1) 19,531,870 22,736,212
General partner (214,360) (181,992)
------------ ------------
Total partners' capital (deficit) 19,317,510 22,554,220
------------ ------------
Total liabilities and partners' capital (deficit) $ 70,814,773 $ 73,292,160
============ ============
The accompanying notes are an integral part of these consolidated
financialstatements.
45
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended March 31,
----------------------------------------------
2005 2004 2003*
------------- ------------- -------------
Revenues
Rental income $ 5,684,539 $ 5,628,135 $ 5,520,414
Other income (principally interest income) 284,286 241,011 279,517
------------ ------------ -----------
5,968,825 5,869,146 5,799,931
------------ ------------ -----------
Expenses
General and administrative 1,559,770 1,491,281 1,761,753
General and administrative-related parties
(Note 8) 725,342 655,979 618,694
Repairs and maintenance 1,115,171 1,011,987 910,719
Operating and other 825,660 780,876 734,157
Taxes 166,518 178,046 221,980
Insurance 395,593 384,547 312,659
Interest 1,998,814 1,977,957 2,106,166
Depreciation and amortization 2,448,003 2,475,948 2,547,309
------------ ------------ -----------
Total expenses 9,234,871 8,956,621 9,213,437
------------ ------------ -----------
Net loss before minority interest (3,266,046) (3,087,475) (3,413,506)
Minority interest in loss of subsidiary
partnerships 29,336 26,201 34,355
------------ ------------ -----------
Net loss $ (3,236,710) $ (3,061,274) $ (3,379,151)
============ ============ ===========
Net loss - limited partners $ (3,204,343) $ (3,030,661) $ (3,345,359)
============ ============ ===========
Number of BACs outstanding 45,844 45,844 45,844
============ ============ ===========
Net loss per weighted average BAC $ (69.90) $ (66.11) $ (72.97)
============ ============ ===========
* Reclassified for comparative purposes.
The accompanying notes are an integral part of these consolidated financial
statements.
46
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
FOR THE YEARS ENDED MARCH 31, 2005, 2004 and 2003
Limited General
Total Partners Partners
------------ ------------ ------------
Partners' capital (deficit) - April 1, 2002 $ 28,994,645 $ 29,112,232 $ (117,587)
Net loss (3,379,151) (3,345,359) (33,792)
------------ ------------ ------------
Partners' capital (deficit) - March 31, 2003 25,615,494 25,766,873 (151,379)
Net loss (3,061,274) (3,030,661) (30,613)
------------ ------------ ------------
Partners' capital (deficit) - March 31, 2004 22,554,220 22,736,212 (181,992)
Net Loss (3,236,710) (3,204,342) (32,368)
------------ ------------ ------------
Partners' capital (deficit) - March 31, 2005 $ 19,317,510 $ 19,531,870 $ (214,360)
============ ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
47
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended March 31,
-----------------------------------------
2005 2004 2003*
----------- ----------- -----------
Cash flows from operating activities:
Net loss $(3,236,710) $(3,061,274) $(3,379,151)
----------- ----------- -----------
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 2,448,003 2,475,948 2,547,309
Minority interest in loss of subsidiary
partnerships (29,336) (26,201) (34,355)
Decrease (increase) in cash held in escrow 54,158 (11,343) (520,897)
Decrease (increase) in other assets 15,857 (34,837) (67,450)
Increase in accounts payable and other
liabilities 835,700 810,443 766,179
Increase in due from local general partners and
affiliates 17,379 16,677 28,077
Decrease in due from local general partners and
affiliates 0 (1,881) (59,574)
Increase in due to general partner and
affiliates 536,175 462,839 334,459
----------- ----------- -----------
Total adjustments 3,877,936 3,691,645 2,993,748
----------- ----------- -----------
Net cash provided by (used in) operating activities 641,226 630,371 (385,403)
----------- ----------- -----------
Cash flows from investing activities:
(Acquisition) disposition of property and equipment (37,758) (47,194) 74,938
(Increase) decrease in cash held in escrow (64,456) (320,303) 647,299
Increase in due to local general partners and affiliates 6,268 14,378 5,789
Decrease in due to local general partners and affiliates (381,325) (495,447) (168,957)
----------- ----------- -----------
Net cash (used in) provided by investing activities (477,271) (848,566) 559,069
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from mortgage notes 0 1,992,000 0
Repayments of mortgage notes (213,571) (2,080,874) (338,824)
Increase in deferred costs (5,383) 0 0
Decrease in capitalization of consolidated subsidiaries attrib-
utable to minority interest (11,967) 0 (257,932)
----------- ----------- -----------
Net cash used in financing activities (230,921) (88,874) (596,756)
----------- ----------- -----------
Net decrease in cash and cash equivalents (66,966) (307,069) (423,090)
Cash and cash equivalents at beginning of year 1,730,897 2,037,966 2,461,056
----------- ----------- -----------
Cash and cash equivalents at end of year $ 1,663,931 $ 1,730,897 $ 2,037,966
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 1,081,553 $ 1,156,624 $ 1,321,322
=========== =========== ===========
* Reclassified for comparative purposes.
The accompanying notes are an integral part of these consolidated financial
statements.
48
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 1 - General
Independence Tax Credit Plus L.P. IV (a Delaware limited partnership) (the
"Partnership") was organized on February 22, 1995 and commenced a public
offering on July 6, 1995. The general partner of the Partnership is Related
Independence L.L.C., a Delaware limited liability company (the "General
Partner"). On November 17, 2003, CharterMac, acquired Related Capital Company,
which is the indirect parent of RCC Manager L.L.C, the managing member of the
General Partner. Pursuant to the acquisition, CharterMac acquired controlling
interests in the General Partner. This acquisition did not affect the
Partnership or its day-to-day operations, as the majority of the General
Partner's management team remained unchanged.
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 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, 2005, the Partnership has acquired limited partnership interests
in fourteen subsidiary partnerships, all of which have been consolidated. The
Partnership does not anticipate acquiring limited partnership interests in
additional subsidiary partnerships. The Partnership's investments in Local
Partnerships represent from 98.99% to 99.89% interests, except for one
investment which is a 58.12% interest.
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. The solicitation for the subscription of BACs was
terminated as of May 22, 1996 and the final closing occurred on August 15, 1996.
The Partnership had raised a total of $45,844,000 representing 45,844 BACs.
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.
b) Basis of Consolidation
The consolidated financial statements include the accounts of the Partnership
and fourteen subsidiary partnerships for the years ended March 31, 2005, 2004
and 2003, respectively, in which the Partnership is a limited partner. Through
the rights of the Partnership and/or an affiliate of the General Partner, which
affiliate has a contractual obligation to act on behalf of the Partnership, to
remove the general partner of the subsidiary local partnerships and to approve
certain major operating and financial decisions, the Partnership has a
controlling financial interest in the subsidiary partnerships. All intercompany
accounts and transactions with the subsidiary partnerships have been eliminated
in consolidation.
Increases (decreases) in the capitalization of the consolidated subsidiaries
attributable to minority interests arise from cash contributions from and cash
distributions to the minority interest partners.
Losses attributable to minority interests which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated approximately $8,000, $7,000 and $7,000 for the years ended March 31,
2005, 2004 and 2003, 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) Property and Equipment
Property and equipment to be held and used are carried at cost which includes
the purchase price, acquisition fees and expenses, construction period interest
and any other costs incurred in acquiring the properties. The cost of property
and equipment is depreciated over their estimated useful lives using accelerated
and straight-line methods. Expenditures for repairs and maintenance are charged
to expense as incurred; major renewals and betterments are capitalized. At the
time property and equipment are retired or otherwise disposed of, the cost and
accumulated depreciation are eliminated from the assets and accumulated
depreciation accounts and the profit or loss on such disposition is reflected in
earnings. The Partnership complies with Statement of Financial Accounting
Standards (SFAS) No. 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets". 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
estimated future discounted net cash flows) when the property is considered to
be impaired and the depreciated cost exceeds estimated fair value.
49
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
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. There are no assets classified as property and equipment-held for
sale through March 31, 2005.
Through March 31, 2005, the Partnership has not recorded any loss on impairment
of assets or reductions to estimated fair value.
e) Revenue Recognition
Rental income is earned under standard residential operating leases and is
typically due the first day of each month, but can vary by property due to the
terms of the tenant leases. Rental income is recognized when earned and charged
to tenants' accounts receivable if not received by the due date. Rental payments
received in advance of the due date are deferred until earned. Rental subsidies
are recognized as rental income during the month in which it is earned.
Other revenues are recorded when earned and consist of the following items:
Interest income earned on cash and cash equivalent balances and cash held in
escrow balances, income from forfeited security deposits, late charges, laundry
and vending income and other rental related items.
Other revenues include the following amounts at both the Partnership and Local
Partnership level:
Years Ended March 31,
------------------------------------------------
2005 2004 2003
-------------- -------------- --------------
Interest $ 34,738 $ 41,261 $ 77,958
Other 249,548 199,750 201,559
------------ ------------ ------------
Total other revenue $ 284,286 $ 241,011 $ 279,517
============ ============ ============
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 in connection with obtaining permanent mortgage financing are
amortized over the lives of the related mortgage notes. Costs incurred to sell
BACs, including brokerage fees 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 purchase of interests
in certain subsidiary partnerships have been capitalized as property costs and
are being amortized over the lives of the related properties.
i) Loss Contingencies
The Partnership records loss contingencies as a charge to income when
information becomes available which indicates that it is probable that an asset
has been impaired or a liability has been incurred as of the date of the
financial statements and the amount of loss can be reasonably estimated.
j) Use of Estimates
The preparation of financial statements in conformity with 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 for which it is practicable to estimate that
value:
Cash and Cash Equivalents and Cash Held in Escrow
- -------------------------------------------------
The carrying amount approximates fair value due to the short-term maturity of
the instruments.
50
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
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:
March 31, 2005 March 31, 2004
------------------------- -------------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
----------- ----------- ----------- -----------
Mortgage notes payable for which it is:
Practicable to estimate fair value $27,283,559 $27,788,720 $25,506,043 $26,120,070
Not practicable $ 8,815,002 (a) $10,806,089 (a)
(a) Management believes it is not practicable to estimate the fair value of
certain mortgage notes payable because mortgage programs with similar
characteristics are not currently available to each of the subsidiary
partnerships.
The carrying amount of other assets and liabilities reported on the consolidated
balance sheets that require such disclosure approximates fair value.
Due to General Partner and Affiliates and Due to Local General Partners and
- --------------------------------------------------------------------------------
Affiliates
- ----------
Management believes it is not practical to estimate the fair value of due to
general partner and affiliates and due to local general partners and affiliates
because market information on such unique loans are not currently available.
NOTE 4 - Property and Equipment
The components of property and equipment and their estimated useful lives are as
follows:
March 31, Estimated
----------------------------- Useful Lives
2005 2004 (Years)
------------- ------------- -------------
Land $ 3,307,496 $ 3,307,496
Building and improvements 76,921,411 76,929,935 27.5
Furniture and fixtures 1,160,052 1,116,676 5-7
------------ ------------
81,388,959 81,354,107
Less: Accumulated depreciation (16,708,237) (14,320,391)
------------ ------------
$ 64,680,722 $ 67,033,716
============ ============
Included in property and equipment at March 31, 2005 and 2004, was $2,750,640 of
acquisition fees paid to the General Partner and $708,031 of third party
acquisition expenses. In addition, as of March 31, 2005 and 2004, building and
improvements includes $343,161 of capitalized interest. No interest was
capitalized during the years ended March 31, 2005, 2004 and 2003.
In connection with the rehabilitation of the properties, the subsidiary
partnerships have incurred developer's fees of $4,235,495 to the local general
partners and affiliates as of both March 31, 2005 and 2004. Such fees have been
included in the cost of property and equipment.
Depreciation expense for the years ended March 31, 2005, 2004 and 2003 amounted
to $2,390,752, $2,405,192 and $2,457,136, respectively. Accumulated depreciation
of $2,906 was written off for the year ended March 31, 2005.
51
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 5 - Cash Held in Escrow
Cash held in escrow consists of the following:
March 31,
------------------------------
2005 2004
------------- -------------
Purchase price payments* $ 593,023 $ 606,660
Real estate taxes, insurance and other 2,710,212 2,686,277
------------ -----------
$ 3,303,235 $ 3,292,937
============ ===========
* 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:
March 31,
------------------------------
2005 2004 Period
------------- -------------- -------------
Financing costs $ 1,006,807 $ 1,001,424 *
Other deferred costs 177,692 177,692
------------ ------------
1,184,499 1,179,116
Less: Accumulated amortization (529,530) (472,279)
------------ ------------
$ 654,969 $ 706,837
============ ============
* Over the life of the related mortgage note.
Amortization expense for the years ended March 31, 2005, 2004 and 2003 amounted
to $57,251, $70,756 and $90,173, respectively.
NOTE 7 - Mortgage Loans Payable
The mortgage loans are payable in aggregate monthly installments of
approximately $131,000 including principal and interest with rates varying from
0% to 9.11% per annum and have maturity dates ranging from 2008 through 2051.
The loans are collateralized by the land and buildings of the subsidiary
partnerships, the assignment of certain subsidiary partnerships' rents and
leases, and are without further recourse.
Annual principal payments on the permanent debt requirements for mortgage notes
payable for each of the next five fiscal years and thereafter are as follows:
Fiscal Year Amount
- ----------------- -------------
2005 $ 637,599
2006 578,176
2007 551,064
2008 567,976
2009 539,055
Thereafter 33,224,691
-----------
$ 36,098,561
===========
The mortgage agreements generally require monthly deposits to replacement
reserves and monthly deposits to escrow accounts for real estate taxes, hazard
and mortgage insurance and other expenses (Note 5).
Accrued interest payable amounted to approximately $8,236,000 and $7,319,000 as
of March 31, 2005 and 2004, respectively. Interest accrues on all mortgage
loans, which include primary and secondary loans. Certain secondary loans have
provisions such that interest is accrued but not payable until a future date.
The Partnership anticipates the payment of accrued interest on the secondary
loans (which make up the majority of the accrued interest payable amount
52
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
indicated in the above table and which have been accumulating since the
Partnership's investment in the respective Local Partnership) will be made from
future refinancings or sales proceeds of the respective Local Partnerships. In
addition, each Local Partnership's mortgage notes are collateralized by the land
and buildings of the respective Local Partnership, and are without further
recourse to the Partnership. Accrued interest payable is included in accounts
payable and other liabilities on the Consolidated Balance Sheets.
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.
A) Guarantees
In November 2002, FASB Interpretation No. 45, "Guarantor's Accounting and
Disclosure Requirement for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FASB Interpretation No. 45"), was issued. The
accounting recognition provisions of FASB Interpretation No. 45 are effective
January 1, 2003 on a prospective basis. They require that a guarantor recognize,
at the inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing or modifying any guarantee after December 31,
2002. Under prior accounting principles, a guarantee would not have been
recognized as a liability until a loss was probable and reasonably estimated.
The Partnership has not issued or modified any existing guarantees. The adoption
of the accounting recognition provision of FASB Interpretation No. 45 does not
have a material impact on the Partnership's future financial position or results
of operations.
The Partnership had negotiated Operating Deficit Guaranty Agreements with the
development stage Local Partnerships by which the general partners of such Local
Partnerships and/or their affiliates have agreed to fund operating deficits for
a specified period of time. The terms of the Operating Deficit Guaranty
Agreements vary for each of these Local Partnerships, with maximum dollar
amounts to be funded for a specified period of time, generally three years,
commencing on the break-even date. As of both March 31, 2005 and 2004, Operating
Deficit Guarantees aggregate approximately $1,897,000. As of both March 31, 2005
and 2004, $0 has been funded under the Operating Deficit Guaranty Agreements.
Amounts funded under such agreements will be treated as non-interest bearing
loans, which will be paid only out of 50% of available cash flow or out of
available net sale or refinancing proceeds.
B) Related Party Expenses
Expenses incurred to related parties for the years ended March 31, 2005, 2004
and 2003 were as follows:
Year Ended March 31,
-----------------------------------------------
2005 2004 2003
------------- ------------- -------------
Partnership management fees (a) $ 337,122 $ 337,120 $ 337,120
Expense reimbursements (b) 145,390 143,665 111,856
Local administrative fees (d) 60,000 62,000 53,000
------------ ------------ ------------
Total general and administrative - General Partner 542,512 542,785 501,976
Property management fees incurred to affiliates of
the subsidiary partnerships' general partners (c) 182,830 113,194 116,718
------------ ------------ ------------
Total general and administrative-
related parties $ 725,342 $ 655,979 $ 618,694
============ ============ ============
(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 previously paid out of cash flow). Partnership management fees owed
to the General Partner amounting to approximately $1,967,000 and $1,630,000 were
accrued and unpaid as of March 31, 2005 and 2004, 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.
53
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(c) Property management fees incurred by the Local Partnerships amounted to
$384,730, $371,375 and $354,672 for the years ended March 31, 2005, 2004 and
2003, respectively. Of these fees, $182,830, $113,194 and $116,718 was incurred
to affiliates of the subsidiary partnerships' general partners.
(d) Independence SLP IV L.P., a special 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.
C) Due to Local General Partners and Affiliates
Due to local general partners and affiliates consists of the following:
March 31,
--------------------------------
2005 2004
------------- --------------
Development fee payable $ 1,796,549 $ 2,071,854
General partner loan payable 40,000 40,000
General partner loan receivable (236,946) (161,602)
Construction advances 25,000 50,000
Construction costs payable 56,652 56,652
Operating advances 6,000 5,408
Management and other fees 71,943 54,564
----------- ------------
$ 1,759,198 $ 2,116,876
=========== ============
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:
Year Ended December 31,
----------------------------------------------
2004 2003 2002
------------- -------------- -------------
Financial statement net loss $ (3,236,710) $ (3,061,274) $ (3,379,151)
Differences between depreciation and amortization expense
for financial reporting purposes and income tax purposes (414,255) (373,268) (356,405)
Differences resulting from parent company having a different
fiscal year for income tax and financial reporting purposes (137,734) (101,920) (81,578)
Tax exempt interest income (10,841) (7,913) (15,073)
Other, including accruals for financial reporting purposes
not deductible for income tax purposes until paid 162,875 (19,868) (228,738)
------------ ------------ ------------
Net loss as shown on the income tax returns $ (3,636,665) $ (3,564,243) $ (4,060,945)
============ ============ ============
NOTE 10 - Commitments and Contingencies
a) Uninsured Cash and Cash Equivalents
The Partnership and its subsidiary partnerships maintain their cash and cash
equivalents in various banks. The accounts at each bank are insured by the
Federal Deposit Insurance Corporation for up to $100,000. At March 31, 2005,
uninsured cash and cash equivalents at various banking institutions approximated
$1,508,000.
b) Leases
One subsidiary partnership is leasing the land on which the Project is located,
for a term of 65 years starting on July 14, 1982. At December 31, 2004, the
subsidiary partnership is obligated to pay rent of $1 per annum.
54
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
c) Other
The Partnership is subject to the risks incident to potential losses arising
from the management and ownership of improved real estate and poor economic
conditions.
The Partnership and BACs holders will begin to recognize Housing Tax Credits
with respect to a property when the credit period for such property commences.
Because of the time required for the acquisition, completion and rent-up of
properties, it is expected that the amount of Tax Credits per BAC will gradually
increase over the first three years of the Partnership. Housing Tax Credits not
recognized in the first three years will be recognized in the 11th through 13th
years. The Partnership generated $5,356,758 of Housing Tax Credits during each
of the 2004, 2003 and 2002 tax years. The Housing Tax Credits expire at various
times through 2012.
NOTE 11 - New Accounting Pronouncements
On December 16, 2004, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 153, Exchanges of Nonmonetary Assets - An Amendment of
APB Opinion No. 29 ("SFAS No. 153"). The amendments made by SFAS No. 153 are
based on the principle that exchanges of nonmonetary assets should be measured
based on fair value of the assets exchanged. Further, the amendments eliminate
the narrow exception for nonmonetary exchanges of similar productive assets and
replace it with a broader exception for exchanges of nonmonetary assets that do
not have "commercial substance." SFAS No. 153 is effective for nonmonetary
assets exchanges occurring in fiscal period beginning after June 15, 2005. The
Company does not believe that the adoption of SFAS No. 153 on June 15, 2005 will
have a material effect on the Company's consolidated financial statements.
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46 is applicable immediately for variable interest entities created after
January 31, 2003. For variable interest entities created before February 1,
2003, the provisions of FIN 46 were originally applicable no later than December
15, 2003. The Partnership has not created any variable interest entities after
January 31, 2003. In December 2003 the FASB redeliberated certain proposed
modifications and revised FIN 46 ("FIN 46 (R)"). The revised provisions are
applicable no later than the first reporting period ending after March 15, 2004.
The adoption of FIN 46 (R) does not have a material impact on the Partnership's
financial reporting and disclosures.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150
changes the accounting for certain financial instruments that, under previous
guidance, could be classified as equity or "mezzanine" equity, by now requiring
those instruments to be classified as liabilities ( or assets in some
circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150
requires disclosure regarding the terms of those instruments and settlement
alternatives. The guidance in SFAS No. 150 generally was effective for all
financial instruments entered into or modified after May 31, 2003, and was
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003. The Partnership has evaluated SFAS No. 150 and determined that it
does not have an impact on the Partnership's financial reporting and
disclosures.
55
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
NOTE 11 - Selected Quarterly Financial Data (Unaudited)
Quarter Ended
------------------------------------------------------------
June 30, September 30, December 31, March 31,
OPERATIONS 2004 2004 2004 2005
- ---------------------------------------------- -------------- ------------- -------------- -------------
Revenues $ 1,480,858 $ 1,474,813 $ 1,447,160 $ 1,565,994
Operating expenses (2,300,584) (2,197,256) (2,308,780) (2,428,251)
------------ ------------ ------------ ------------
Loss before minority interest (819,726) (722,443) (861,620) (862,257)
Minority interest in loss of subsidiaries 5,061 6,928 4,436 12,911
------------ ------------ ------------ ------------
Net loss $ (814,665) $ (715,515) $ (857,184) $ (849,346)
============ ============ ============ ============
Net loss per weighted average BAC $ (17.59) $ (15.45) $ (18.51) $ (18.35)
============ ============ ============ ============
Quarter Ended
------------------------------------------------------------
June 30, September 30, December 31, March 31,
OPERATIONS 2003 2003 2003 2004
- ---------------------------------------------- -------------- ------------- -------------- -------------
Revenues $ 1,502,664 $ 1,494,410 $ 1,463,101 $ 1,408,971
Operating expenses (2,283,832) (2,259,346) (2,190,241) (2,223,202)
------------ ------------ ------------ ------------
Loss before minority interest (781,168) (764,936) (727,140) (814,231)
Minority interest in loss of subsidiaries 4,721 8,371 8,325 4,784
------------ ------------ ------------ ------------
Net loss $ (776,447) $ (756,565) $ (718,815) $ (809,447)
============ ============ ============ ============
Net loss per weighted average BAC $ (16.77) $ (16.34) $ (15.52) $ (17.48)
============ ============ ============ ============
56
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
Item 9A. Controls and Procedures
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Chief Executive
Officer and Chief Financial Officer of Related Independence L.L.C, the general
partner of the Partnership, has evaluated the effectiveness of the Partnership's
disclosure controls and procedures (as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange
Act") as of the end of the period covered by this report. In designing and
evaluating our disclosure controls and procedures, our management recognized
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives, and our
management necessarily applied its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Based on this evaluation, the
Chief Executive Officer and Chief Financial Officer of Related Independence
L.L.C, the general partner of the Partnership, concluded that, as of the period
covered by this report, our disclosure controls and procedures were (1) designed
to ensure that material information relating to us, including our consolidated
subsidiaries, is made known to the Chief Executive Officer and Chief Financial
Officer of Related Independence L.L.C, the general partner of the Partnership by
others within those entities, particularly during the period in which this
report was being prepared and (2) effective, in that they provide reasonable
assurance that information required to be disclosed by us in the reports we file
or submit under the Securities Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms.
(b) Changes in INTERNAL CONTROLS OVER FINANCIAL REPORTING. There have not been
any changes in the Partnership's internal control over financial reporting
during the fiscal year to which this report relates that have materially
affected, or are reasonably likely to materially affect, the Partnership's
internal control over financial reporting.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers. The Partnership's
affairs are managed and controlled by Related Independence L.L.C. ("RILLC"), the
General Partner. The members of RILLC are Related General II, L.P., a Delaware
limited partnership ("RGII), Alan P. Hirmes and Stuart J. Boesky. RCMP, Inc., a
Delaware corporation ("RCMP") is the sole general partner of RGII. The
Partnership has not adopted a separate code of ethics because the Partnership
has no directors or executive officers. However, the parent company of Related
Capital Company ("RCC"), which controls the General Partner, has adopted a code
of ethics. See http://www.chartermac.com.
On November 17, 2003, CharterMac acquired RCC, which is the indirect parent of
RCC Manager L.L.C, the managing member of the General Partner. Pursuant to the
acquisition, CharterMac acquired controlling interests in the General Partner.
Alan P. Hirmes replaced Stephen M. Ross as Director of the General Partner
effective April 1, 2004 as a result of this acquisition. This acquisition did
not affect the Partnership or its day-to-day operations, as the majority of the
General Partner's management team remained unchanged.
Certain information concerning the executive officers and directors of the
General Partner of RCMP is set forth below.
Name Position
- ---------------------- ---------------------------------------
Alan P. Hirmes Director and President of RCMP
President and Member of RILLC
Director and Executive Vice President
Michael J. Wechsler of RCMP
Senior Vice President and Member of
Stuart J. Boesky RILLC
Marc D. Schnitzer Vice President of RILLC
Denise L. Kiley (1) Vice President of RILLC
Glenn F. Hopps Treasurer of RILLC
Teresa Wicelinski Secretary of RILLC
(1) On February 25, 2005, Ms. Kiley announced her retirement as Chief Credit
Officer and trustee of CharterMac, the indirect parent of RCC Manager LLC,
the managing member of the General Partner. Upon her retirement, she will
also resign from her position as Vice President of RILLC of the General
Partner.
ALAN P. HIRMES, 50, is a Director and President of RCMP and President of RILLC.
Mr. Hirmes 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 RCC. Mr.
Hirmes graduated from Hofstra University with a Bachelor of Arts degree. Mr.
Hirmes also serves on the Board of Trustees of Charter Municipal Mortgage
Acceptance Company ("CharterMac") and American Mortgage Acceptance Company.
MICHAEL J. WECHSLER, 66, is a Director and Executive Vice President of RCMP. Mr.
Wechsler joined the predecessor of The Related Companies, L.P. in 1987 as Chief
Operating Officer and Executive Vice President and is the Chief Operating
Officer and Executive Vice President of the Related Realty Group, Inc. Prior to
57
that, he was Senior Vice President and a Managing Director of the Real Estate
Division of Chemical Bank with overall responsibility for administration and
lending activities of the Division in 25 states and New York City. He supervised
a diversified portfolio of construction and real estate loans of over $3.5
billion. Mr. Wechsler attended the Massachusetts Institute of Technology when he
received a Bachelor of Science degree in Civil Engineering and received his
Masters in Business Administration from the Harvard Graduate School of Business
Administration.
STUART J. BOESKY, 49, is a Vice President of RILLC. Mr. Boesky 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 RCC. 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. Mr. Boesky also serves on the Board of Trustees of CharterMac and
American Mortgage Acceptance Company.
MARC D. SCHNITZER, 44, is a Vice President of RILLC. He is responsible both for
financial restructurings 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 RCC 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. Mr. Schnitzer also serves on the Board of Trustees of
CharterMac.
DENISE L. KILEY, 45, is responsible for overseeing the due diligence and asset
management of the multifamily residential properties invested in RCC sponsored
corporate, public and private equity and debt funds. Prior to joining RCC in
1990, Ms. Kiley had experience acquiring, financing and asset managing
multifamily residential properties. From 1981 through 1985 she was an auditor
with Price Waterhouse. Ms. Kiley holds a Bachelor of Science in Accounting from
Boston College. Ms. Kiley also serves on the Board of Trustees of CharterMac. As
noted above, Ms. Kiley is retiring from CharterMac.
GLENN F. HOPPS, 42, is Treasurer of RILLC. Mr. Hopps joined RCC in December
1990, and prior to that date was employed by Marks Shron & Company and
Weissbarth, Altman and Michaelson, certified public accountants. Mr. Hopps
graduated from New York State University at Albany with a Bachelor of Science
Degree in Accounting.
TERESA WICELINSKI, 39, is Secretary of RILLC. Prior to joining RCC in June 1992,
Ms. Wicelinski was employed by Friedman LLP formally Friedman, Alpren & Green
LLP, certified public accountants. Ms. Wicelinski graduated from Pace University
with a Bachelor of Arts Degree in Accounting.
Item 11. Executive Compensation.
The Partnership has no officers or directors. The Partnership does not pay or
accrue any fees, salaries or other forms of compensation to members 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 members 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. Security Ownership of Certain Beneficial Owners and Management
Name and address of Amount and Nature of Percentage
Title of Class Beneficial Ownership Beneficial Ownership of Class
- --------------------- ------------------------- -------------------------------------- -----------
General Partnership Related Independence L.L.C. $1,000 capital contribution - directly 100%
Interest in the 625 Madison Avenue owned
Partnership New York, NY 10022
Independence SLP IV L.P., a limited partnership whose general partner is 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 the
Local Partnerships. See Note 8 to the Financial Statements in Item 8 above,
which information is incorporated herein by reference thereto.
Except as set forth below no person is known by the Partnership to be the
beneficial owner of more than five percent of the Limited Partnership Interests
and/or BACs; and neither the General Partner nor any director or officer of the
General Partner beneficially owns any Limited Partnership Interests or BACs. The
following table sets forth the number of BACs beneficially owned as of May 4,
58
2005 by (i) each BACs holder known to the Partnership to be a beneficial owner
of more than 5% of the BACs, (ii) each director and executive officer of the
General Partner of RCMP and (iii) the directors and executive officers of the
General Partners of RCMP as a group. Unless otherwise noted, all BACs are owned
directly with sole voting and dispositive powers.
Amount and Nature of Percentage
Name of Beneficial Owner (1) Beneficial Ownership of Class
- --------------------------------- --------------------- -------------------
Lehigh Tax Credit Partners, Inc. 2,868.06(2) 6.3%
J. Michael Fried 2,868.06(2)(3) 6.3%
Michael J. Wechsler - -
Alan P. Hirmes 2,868.06(2)(3) 6.3%
Stuart J. Boesky 2,868.06(2)(3) 6.3%
Stephen M. Ross 2,868.06(2)(3) 6.3%
Marc D. Schnitzer 2,868.06(2)(3) 6.3%
Glenn F. Hopps - -
Teresa Wicelinski - -
All directors and executive
officers of the general
partner of the Related
General Partner as a group
(eight persons) 2,868.06(2)(3) 6.3%
(1) The address for each of the persons in the table is 625 Madison Avenue, New
York, New York 10022.
(2) As set forth in Schedule 13D filed by Lehigh Tax Credit Partners III L.L.C.
("Lehigh III") and Lehigh Tax Credit Partners, Inc. (the "Managing Member") on
January 25, 1999 with the Securities and Exchange Commission (the "Commission")
and pursuant to a letter agreement dated October 6, 1998 among the Partnership,
Lehigh III and Related Independence Associates IV L.P. ("RIA") (the "Standstill
Agreement"), Lehigh III agreed that, prior to October 6, 2008 (the "Standstill
Expiration Date"), it will not and it will cause certain affiliates not to (i)
seek to propose to enter into, directly or indirectly, any merger,
consolidation, business combination, sale or acquisition of assets, liquidation,
dissolution or other similar transaction involving the Partnership, (ii) form,
join or otherwise participate in a "group" (within the meaning of Section
13(d)(3) of the Act) with respect to any voting securities of the Partnership,
except that those affiliates bound by the Standstill Agreement will not be
deemed to have violated it and formed a "group" solely by acting in accordance
with the Standstill Agreement, (iii) disclose in writing to any third party any
intention, plan or arrangement inconsistent with the terms of the Standstill
Agreement, or (iv) loan money to, advise, assist or encourage any person in
connection with any action inconsistent with the terms of the Standstill
Agreement, Lehigh III also agreed to vote its BACs in the same manner as a
majority of all voting BACs holders; provided, however, Lehigh is entitled to
vote its BACs as it determines with regard to any proposal (i) to remove RIA as
a general partner of the Partnership or (ii) concerning the reduction of any
fees, profits, distributions or allocations for the benefit of RIA or its
affiliates. The discussion herein of the Standstill Agreement is subject to and
qualified in its entirety by reference to such agreement, a copy of which is
attached hereto as an exhibit and incorporated herein by reference. The
addresses of each of the Partnership, Lehigh III and RIA is 625 Madison Avenue,
New York, New York 10022.
(3) Each such party serves as a director and executive officer of the Managing
Member and owns an equity interest therein except J. Michael Fried who owns only
an economic interest.
Item 13. Certain Relationships and Related Transactions
The Partnership has and will continue to have certain relationships with the
General Partner and its affiliates, as discussed in Item 11 and also Note 8 to
the Financial Statements in Item 8 above, which are incorporated herein by
reference thereto. However, there have been no direct financial transactions
between the Partnership and the members and officers of the General Partner.
Item 14. Principal Accountant Fees and Services
Audit Fees
- ----------
The aggregate fees by Friedman LLP and their respective affiliates
(collectively, "Friedman") for professional services rendered for the audit of
our annual financial statements for the years ended March 31, 2005 and 2004 and
for the reviews of the financial statements included in the Partnership's
Quarterly Reports on Form 10-Q for those years were $52,000 and $52,000,
respectively.
Audit Related Fees
- ------------------
None.
Tax Fees
- --------
The aggregate fees by Weiser LLP (formerly, Rubin and Katz LLP) and their
respective affiliates (collectively, "Weiser") for professional services
rendered for the preparation of our annual tax returns for the years ended
December 31, 2004 and 2003 were $8,700 and $8,300, respectively.
All Other Fees
- --------------
None.
The Partnership is not required to have, and does not have a stand alone audit
committee.
59
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Sequential
Page
-----------
(a) 1. Financial Statements
--------------------
Report of Independent Registered Public Accounting Firm 13
Consolidated Balance Sheets at March 31, 2005 and 2004 45
Consolidated Statements of Operations for the years ended March 31, 2005, 2004 and 2003 46
Consolidated Statements of Changes in Partners' Capital (Deficit) for the years ended
March 31, 2005, 2004 and 2003 47
Consolidated Statements of Cash Flows for the years ended March 31, 2005, 2004 and 2003 48
Notes to Consolidated Financial Statements 49
(a) 2. Consolidated Financial Statement Schedules
------------------------------------------
Report of Independent Registered Public Accounting Firm 66
Schedule I - Condensed Financial Information of Registrant 67
Schedule III - Real Estate and Accumulated Depreciation 70
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
--------
Agreement of Limited Partnership of Independence Tax Credit Plus L.P. IV as adopted on
(3A) February 22, 1995*
Form of Amended and Restated Agreement of Limited Partnership of Independence Tax
(3B) Credit Plus L.P. IV, attached to the Prospectus as Exhibit A**
Certificate of Limited Partnership of Independence Tax Credit Plus L.P. IV as filed on
(3C) February 22, 1995*
(10A) Form of Subscription Agreement attached to the Prospectus as Exhibit B**
Escrow Agreement between Independence Tax Credit Plus L.P. IV and Bankers Trust
(10B) Company*
Form of Purchase and Sales Agreement pertaining to the Partnership's acquisition of
(10C) Local Partnership Interests*
(10D) Form of Amended and Restated Agreement of Limited Partnership of Local Partnerships*
(21) Subsidiaries of the Registrant 61
* 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. 33-89968}
** 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. 33-89968}
(31.1) Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a)
64
(32.1) Certification Pursuant to Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Title
18 of the United States Code (18 U.S.C. 1350) 65
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter
60
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (continued)
Jurisdiction of
(c) Subsidiaries of Registrant (Exhibit 21) Organization
-------------------------- -------------
BX-8A Team Associates, L.P. NY
Westminster Park Plaza CA
Fawcett Street Limited Partnership WA
Figueroa Senior Housing Limited Partnership CA
NNPHI Senior Housing Limited Partnership CA
Belmont/McBride Apartments Limited Partnership NJ
New Zion Apartments Limited Partnership LA
Bakery Village Urban Renewal Associates, L.P. NJ
Sojourner Douglass, L.P. NJ
Marlton Housing Partnership, L.P. PA
GP Kaneohe Limited Partnership HI
KSD Village Apartments, Phase II, Ltd. KY
Kanisa Apartments, Ltd. KY
Guymon Housing Partners, L.P. OK
(d) Not applicable
61
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. IV
------------------------------------
(Registrant)
By: RELATED INDEPENDENCE L.L.C.,
a General Partner
Date: June 10, 2005 By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
President, Member, Chief Executive Officer
and Chief Financial 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:
Signature Title Date
- ----------------------- ------------------------------------------------------------------ ------------
President and Chief Executive Officer
Director and President of RCMP, Inc.,
the general partner of Related General II L.P., a Member of
/s/ Alan P. Hirmes Related Independence L.L.C.
- ------------------ President and Member of Related Independence L.L.C.
Alan P. Hirmes President, Chief Executive Officer and Chief Financial Officer June 10, 2005
/s/ Glenn F. Hopps
- ------------------
Glenn F. Hopps Treasurer of Related Independence L.L.C. (principal accounting officer) June 10, 2005
Exhibit 31.1
CERTIFICATION PURSUANT TO RULE
13a-14(a) OR RULE 15d-14(a)
I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of
Related Independence L.L.C. (the "General Partner"), which is the General
Partner of Independence Tax Credit Plus L.P. IV (the "Partnership"), hereby
certify that:
1) I have reviewed this annual report on Form 10-K for the period ending
March 31, 2005 of the Partnership;
2) Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;
3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Partnership as of, and for, the periods presented in
this report;
4) I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Partnership and
have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under my supervision,
to ensure that material information relating to the Partnership
including its consolidated subsidiaries, is made known to me by others
within those entities, particularly during the period in which this
report is being prepared;
b) designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the Partnership's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the Partnership's internal
control over financial reporting that occurred during the Partnership's
fourth fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Partnership's internal control over
financial reporting; and
5) I have disclosed, based on my most recent evaluation of internal
control over financial reporting, to the Partnership's auditors and to
the boards of directors of the General Partners:
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Partnership's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Partnership's
internal control over financial reporting.
Date: June 10, 2005
-------------
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Chief Executive Officer and
Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT
TO RULE 13a-14(b) OR RULE 15d-14(b)
AND SECTION 1350 OF TITLE 18
OF THE UNITED STATES CODE (18 U.S.C. 1350)
In connection with the Annual Report of Independence Tax Credit Plus L.P. IV
(the "Partnership") on Form 10-K for the period ended March 31, 2005 as filed
with the Securities and Exchange Commission ("SEC") on the date hereof (the
"Report"), I, Alan P. Hirmes, Chief Executive Officer and Chief Financial
Officer of Related Independence L.L.C. which is the general partner of the
Partnership, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Partnership.
A signed original of this written statement required by Section 906 has been
provided to the Partnership and will be retained by the Partnership and
furnished to the SEC or its staff upon request.
By: /s/Alan P. Hirmes
-----------------
Alan P. Hirmes
Chief Executive Officer and Chief Financial Officer
June 10, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULES
TO THE PARTNERS OF
INDEPENDENCE TAX CREDIT PLUS L.P. IV AND SUBSIDIARIES
In connection with our audits of the consolidated financial statements of
INDEPENDENCE TAX CREDIT PLUS L.P. IV AND SUBSIDIARIES included in the Form 10-K
as presented in our opinion dated June 10, 2005, which is based in part on the
reports of other auditors, we have also audited supporting Schedule I as of
March 31, 2005 and 2004 and for the years ended 2005, 2004 and 2003 and Schedule
III as of March 31, 2005 and for the years ended March 31, 2005, 2004 and 2003.
In our opinion, based on our audits, the reports of the other auditors, these
schedules present fairly, when read in conjunction with the related financial
statements, the financial data required to be set forth therein.
/s/ Friedman LLP
Friedman LLP
New York, New York
June 10, 2005
66
INDEPENDENCE TAX CREDIT PLUS L.P. IV
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Not Including Consolidated Subsidiary Partnerships)
CONDENSED BALANCE SHEETS
ASSETS
2005 2004
-------------- -------------
Cash and cash equivalents $ 831,573 $ 908,650
Investment in subsidiary partnerships 18,379,444 21,062,714
Cash held in escrow 593,023 606,660
Other assets 1,824,502 1,809,297
------------ -----------
Total assets $ 21,628,542 $ 24,387,321
============ ===========
LIABILITIES AND PARTNERS' CAPITAL
Due to general partner and affiliates $ 2,261,813 $ 1,779,161
Other liabilities 49,219 53,940
------------ -----------
Total liabilities 2,311,032 1,833,101
Partners' capital 19,317,510 22,554,220
------------ -----------
Total liabilities and partners' capital $ 21,628,542 $ 24,387,321
============ ===========
67
INDEPENDENCE TAX CREDIT PLUS L.P. IV
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Not Including Consolidated Subsidiary Partnerships)
CONDENSED STATEMENTS OF OPERATIONS
Year Ended March 31,
----------------------------------------------
2005 2004 2003
------------- -------------- -------------
Revenues
Interest income $ 12,530 $ 6,849 $ 13,751
----------- ------------ -----------
Expenses
Administrative and management 83,459 97,212 114,727
Administrative and management-related parties 482,511 480,785 448,976
----------- ------------ -----------
Total expenses 565,970 577,997 563,703
----------- ------------ -----------
Loss from operations (553,440) (571,148) (549,952)
Equity in loss of subsidiary partnerships (2,683,270) (2,490,126) (2,829,199)
----------- ------------ -----------
Net loss $ (3,236,710) $ (3,061,274) $ (3,379,151)
=========== ============ ===========
68
INDEPENDENCE TAX CREDIT PLUS L.P. IV
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(Not Including Consolidated Subsidiary Partnerships)
CONDENSED STATEMENTS OF CASH FLOWS
Year Ended March 31,
------------------------------------------
2005 2004 2003
----------- ----------- -----------
Cash flows from operating activities:
Net loss $(3,236,710) $(3,061,274) $(3,379,151)
----------- ----------- -----------
Adjustments to reconcile net loss to net cash used in
operating activities:
Equity in loss of subsidiary partnerships 2,683,270 2,490,126 2,829,199
Increase in other assets (15,205) (8,476) (194,420)
Increase (decrease) in liabilities:
Due to general partner and affiliates 482,652 440,808 299,480
Other liabilities (4,721) 3,530 1,781
----------- ----------- -----------
Total adjustments 3,145,996 2,925,988 2,936,040
----------- ----------- -----------
Net cash used in operating activities (90,714) (135,286) (443,111)
----------- ----------- -----------
Cash flows from investing activities:
Decrease in cash held in escrow 13,637 8,475 126,324
(Decrease) increase in investments in
subsidiary partnerships 0 (180,000) 22,408
----------- ----------- -----------
Net cash provided by (used in) provided
by investing activities 13,637 (171,525) 148,732
----------- ----------- -----------
Net decrease in cash and cash equivalents (77,077) (306,811) (294,379)
Cash and cash equivalents, beginning of
year 908,650 1,215,461 1,509,840
----------- ----------- -----------
Cash and cash equivalents, end of year $ 831,573 $ 908,650 $ 1,215,461
=========== =========== ===========
69
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2005
Initial Cost to Partnership
---------------------------- Cost
Capitalized
Subsequent to
Buildings and Acquisition:
Description Encumbrances Land Improvements Improvements
- ---------------------------------------------- ------------ ------------ ------------- -------------
Apartment Complexes
BX-8A Team Associates, L.P.
Bronx, NY $ 1,805,691 $ 5,467 $ 2,667,819 $ 311,594
Westminster Park Plaza
Los Angeles, CA 7,623,247 1,197,697 8,093,774 1,970,048
Fawcett Street Limited Partnership
Tacoma, WA 1,985,310 390,654 4,247,465 188,181
Figueroa Senior Housing Limited Partnership
Los Angeles, CA 2,997,213 279,000 4,978,250 548,825
NNPHI Senior Housing Limited Partnership
Los Angeles, CA 3,916,838 709,657 6,135,419 391,893
Belmont/McBride Apartments Limited Partnership
Paterson, NJ 2,802,187 154,934 5,627,693 2,512,963
Sojourner Douglass, L.P.
Paterson, NJ 1,977,352 141,297 2,573,950 122,477
New Zion Apartments Limited Partnership
Shreveport, LA 953,943 20,000 2,688,770 76,839
Associates, L.P.
Montclair, NJ 4,466,053 50,000 14,912,416 2,731,224
Marlton Housing Partnership, L.P.
Philadelphia, PA 1,849,000 2,648 1,547,121 1,714,007
GP Kaneohe Limited Partnership
Kaneohe, HI 1,998,488 0 3,306,828 51,113
KSD Village Apartments, Phase II Ltd.
Danville, KY 401,823 0 887,539 31,659
Kanisa Apartments Ltd. 1,398,032 106,592 4,846,543 102,813
Fayette County, KY
Guymon Housing Partners, L.P. 1,923,284 84,918 4,238,907 739,965
Guymon, OK ------------ ------------ ------------- -------------
$ 36,098,561 $ 3,142,864 $ 66,752,494 $ 11,493,601
============ ============ ============= =============
Gross Amount at which Carried at Close of Period
------------------------------------------------
Buildings and Accumulated
Description Land Improvements Total Depreciation
- ---------------------------------------------- ------------ ------------- ------------ ------------
Apartment Complexes
BX-8A Team Associates, L.P.
Bronx, NY $ 11,579 $ 2,973,301 $ 2,984,880 $ 925,099
Westminster Park Plaza
Los Angeles, CA 1,292,427 9,969,092 11,261,519 2,019,618
Fawcett Street Limited Partnership
Tacoma, WA 396,383 4,429,917 4,826,300 1,345,126
Figueroa Senior Housing Limited Partnership
Los Angeles, CA 291,377 5,514,698 5,806,075 1,446,279
NNPHI Senior Housing Limited Partnership
Los Angeles, CA 715,387 6,521,582 7,236,969 1,550,456
Belmont/McBride Apartments Limited Partnership
Paterson, NJ 182,633 8,112,957 8,295,590 1,920,000
Sojourner Douglass, L.P.
Paterson, NJ 143,996 2,693,728 2,837,724 765,291
New Zion Apartments Limited Partnership
Shreveport, LA 22,699 2,762,910 2,785,609 813,489
Associates, L.P.
Montclair, NJ 52,699 17,640,941 17,693,640 2,896,774
Marlton Housing Partnership, L.P.
Philadelphia, PA 4,355 3,259,421 3,263,776 486,005
GP Kaneohe Limited Partnership
Kaneohe, HI 613 3,357,328 3,357,941 545,618
KSD Village Apartments, Phase II Ltd.
Danville, KY 612 918,585 919,197 148,119
Kanisa Apartments Ltd. 107,205 4,948,743 5,055,948 699,381
Fayette County, KY
Guymon Housing Partners, L.P. 85,531 4,978,260 5,063,791 1,146,982
Guymon, OK ------------ ------------- ------------ ------------
$ 3,307,496 $ 78,081,463 $ 81,388,959 $ 16,708,237
============ ============= ============ ============
Life on which
Depreciation in
Latest Income
Construction/ Date Statements are
Description Renovation Acquired Computed (a)
- ---------------------------------------------- ------------- ------------ ---------------
Apartment Complexes
BX-8A Team Associates, L.P.
Bronx, NY 1995-96 Oct. 1995 27.5 years
Westminster Park Plaza
Los Angeles, CA 1996-97 June 1996 27.5 years
Fawcett Street Limited Partnership
Tacoma, WA 1996-97 June 1996 27.5 years
Figueroa Senior Housing Limited Partnership
Los Angeles, CA 1996-97 Nov. 1996 27.5 years
NNPHI Senior Housing Limited Partnership
Los Angeles, CA 1996-97 Dec. 1996 27.5 years
Belmont/McBride Apartments Limited Partnership
Paterson, NJ 1997-98 Jan. 1997 27.5 year
Sojourner Douglass, L.P.
Paterson, NJ 1997-98 Feb. 1997 27.5 years
New Zion Apartments Limited Partnership
Shreveport, LA 1997-98 Oct. 1997 27.5 years
Associates, L.P.
Montclair, NJ 1997-98 Dec. 1997 27.5 years
Marlton Housing Partnership, L.P.
Philadelphia, PA 1998-99 May 1998 27.5 years
GP Kaneohe Limited Partnership
Kaneohe, HI 1999-00 July 1999 7-40 years
KSD Village Apartments, Phase II Ltd.
Danville, KY 1999-00 July 1999 10-40 years
Kanisa Apartments Ltd. 1998-99 Oct. 1999 5-40 years
Fayette County, KY
Guymon Housing Partners, L.P. 1998-99 Dec. 1999 27.5 years
Guymon, OK
(a) Depreciation is computed using primarily the straight-line method over the
estimated useful lives determined by the Partnership date of acquisition
70
INDEPENDENCE TAX CREDIT PLUS L.P. IV
AND SUBSIDIARIES
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Partnership Property Pledged as Collateral
MARCH 31, 2005
Cost of Property and Equipment Accumulated Depreciation
------------------------------------------- ------------------------------------------
Year Ended March 31,
-----------------------------------------------------------------------------------------
2005 2004 2003 2005 2004 2003
------------ ------------ ------------ ------------ ------------ ------------
Balance at beginning of year $ 81,354,107 $ 81,306,913 $ 81,381,851 $ 14,320,391 $ 11,915,199 $ 9,458,063
(Adjustment to) additions during year:
Land, building and improvements 34,852 47,194 (74,938)
Accumulated deprecation on dispositions (2,906) 0 0
Depreciation expense 2,390,752 2,405,192 2,457,136
------------ ------------ ------------ ------------ ------------ ------------
Balance at close of year $ 81,388,959 $ 81,354,107 $ 81,306,913 $ 16,708,237 $ 14,320,391 $ 11,915,199
============ ============ ============ ============ ============ ============
At the time the Local Partnerships were acquired by Independence Tax Credit Plus
L.P. IV, the entire purchase price paid by Independence Tax Credit Plus L.P. IV
was pushed down to the Local Partnerships as property and equipment with an
offsetting credit to capital.
71