Fill and Sign the Offering Limited Partnership Form

Offering Memorandum - Limited Partnership Issued to: _____________________________ No. : ___________ Private Offering Memorandum ____________________ (Company name) Limited Partnership, A(n) ____________ (State) limited partnership. $_____________ in Limited Partnership Interests (____ Units at $_________/Unit) THE LIMITED PARTNERSHIP UNITS OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), SINCE THEY WILL BE OFFERED ONLY TO A LIMITED NUMBER OF QUALIFIED INVESTORS. IT IS ANTICIPATED THAT THE OFFERING AND SALE OF SUCH UNITS WILL BE EXEMPT FROM REGISTRATION PURSUANT TO REGULATION D OF THE ACT. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THESE OFFERING MATERIALS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACEY OF THESE OFFERING MATERIALS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANICIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR OTHER JURISDICTION IN WHICH AN OFFER OR SOLICITATION IS NOT AUTHORIZED. NO REPRESENTATIONS OR WARRANTIES OF ANY KIND ARE INTENDED OR SHOULD BE INFERRED WITH RESPECT TO THE ECONOMIC RETURN OR THE TAX CONSEQUENCES FROM AN INVESTMENT IN THE PARTNERSHIP . NO ASSURANCE CAN BE GIVEN THAT EXISTING LAWS WILL NOT BE CHANGED OR INTERPRETED ADVERSELY TO THE PARTNERSHIP OR THE PARTNERS. PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THIS MEMORANDUM AS LEGAL OR TAX ADVICE. EACH INVESTOR SHOULD CONSULT HIS OWN COUNSEL AND ACCOUNTANT FOR ADVICE CONCERNING THE VARIOUS LEGAL, TAX AND ECONOMIC CONSIDERATIONS RELATING TO HIS INVESTMENT. A PROSPECTIVE INVESTOR SHOULD NOT SUBSCRIBE FOR THE UNITS UNLESS SATISFIED THAT HE OR HE AND HIS INVESTMENT REPRESENTATIVE HAVE ASKED FOR AND RECEIVED ALL INFORMATION WHICH WOULD ENABLE HIM OR BOTH OF THEM TO EVALUATE THE MERITS AND RISKS OF THE PROPOSED INVESTMENT. THE PARTNERSHIP SHALL MAKE AVAILABLE TO EACH INVESTOR OR HIS INVESTMENT REPRESENTATIVE OR AGENT, DURING THIS OFFERING AND PRIOR TO THE SALE OF ANY UNITS, THE OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE GENERAL PARTNER OR ITS REPRESENTATIVES CONCERNING ANY ASPECT OF THE PARTNERSHIP AND ITS PROPOSED BUSINESS AND TO OBTAIN ANY ADDITIONAL RELATED INFORMATION TO THE EXTENT THE PARTNERSHIP POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE. Table of Contents Page I. Investment Summary _____ II. Investment Objectives _____ A. General _____ B. Investment Benefits _____ C. Pricing, Adjusters and Conditions of Payment _____ D. Tax Shelter Registration _____ E. _____________ Limited Partnership Investment Benefits _____ III. The Partnership, the General Partner, and the Development Team _____ A. Structure of the Partnership and the General Partner B. Sponsor: The _____ Community Development Corporation _____ C. Architect _____ D. Contractor _____ E. Development and Syndication Consultant, Management Agent _____ F. Other Associated Professionals _____ IV. The Property _____ A. Background and Property Description _____ B. Development Plan _____ C. Municipal and Neighborhood Description _____ D. Site Location Map and Architectural Renderings _____ V. Financing, Government Subsidies, and Reserves _____ A. Sources and Uses of Development Funds _____ 1. First Mortgage Loan _____ 2. Sponsor Loan _____ 3. Acquisition Loan _____ 4. Limited Partner Capital Contributions _____ B. Sources and Uses of Operating Funds _____ 1. Rents _____ 2. Sponsor Operating Subsidy _____ 3. Operating Subsidy _____ 4. Replacement Reserves _____ C. Bridge Financing _____ D. Development Fee Loan _____ E. Project Reserves _____ VI. Summary of the Partnership Agreement _____ A. Partnership Allocations _____ B. Rights and Duties of the General Partner _____ C. Rights and Duties of the Limited Partners _____ D. Transfer of Limited Partnership Interests _____ E. Reports, Accounting, and Elections _____ VII. Risks of Investment _____ A. Tax Risks _____ B. Regulatory Risks _____ C. Financial Forecasts _____ D. Construction Risks _____ E. Operating Risks _____ F. Conflicts of Interest _____ G. Other Partnership Matters _____ VIII. Corporate Financial and Investment Considerations _____ A. Investment Suitability/Accredited Investors _____ B. Special Considerations for Corporate Investors _____ IX. Tax Opinion _____ X. Further Information _____ Appendix A: Financial Forecasts, Summary of Significant Forecast Assumptions and Accounting Policies. (Separately Bound) Appendix B: Subscription Documents. (Separately Bound) I. Investment Summary In an effort to motivate the private sector to invest in the creation and rehabilitation of affordable housing, Congress has created important tax credit incentives for certain types of investments. Originally established as part of the Tax Reform Act of 1986, low income housing tax credits represent an attractive way for corporations and other institutional investors to obtain significant after tax returns, while assisting in solving a pressing domestic priority -- affordable housing. _________________ (Company name) Limited Partnership (the "Partnership") is a(n) __________ (state) limited partnership which has been formed to acquire, develop, own, and operate the residential facilities known as ________________ (Project name) (the "Project") located in the ______________ (name) community of _________ (city) , _________________ (state) . The development of this project will result in ____ (number) rental units enclosing an open courtyard at ______________ Company) . There will be ____ (number) one bedroom units, ____ (number) two bedroom units, ___ (number) three bedroom units and ___ (number) four bedroom units. ________ (Word number) (68%) of these units will be affordable to low income families, and will qualify for the low income housing tax credit. The Project is sponsored by the ______________________ (Corporations (the "_______ (initials) " or the "Sponsor"), a tax-exempt nonprofit community development corporation serving _________ (city) 's _____________ (name/area) Area. It is the only membership-based agency organized as a community development corporation serving the Greater ____________________ (name/area) Community. Various private and governmental agencies will provide construction and permanent financing to the project. The total proposed equity investment in the Partnership (the "Investment") totals $_____________, consisting of _____ (number) units ("Units") of $___________ each, to be contributed in three installments from ______ (year) through _______ (year) . No units will be sold unless subscriptions are received and approved for all of the five units. The general partner may accept subscriptions for multiple or fractional units and may withdraw this offering at any time. The benefits of the Investment to corporate investors (referred to as "Investors," "Partners," or "Limited Partners") include approximately $____________ ($_________ per Unit) in low- income housing tax credits available over a ten year period, and annual loss deductions throughout the life of the Investment. These losses, valued using a 34% maximum Federal corporate tax rate, constitute approximately $_________ million ($___________ per Unit) in net tax savings over an approximate ____ (number) -year projected holding period. In addition, some Investors may be entitled to savings on state and local taxes, but these are not taken into account in the Financial Forecasts. No cash flow to the Investors is anticipated over the life of the Investment. As more fully described below, the Investment is expected to have an internal rate of return of approximately 15% on an after tax basis. Residual values are not expected to be a benefit of the investment to the Limited Partners. The taxes due on sale of the Project at the end of the investment period are estimated assuming a projected sale at the minimum price allowable under Section 42 of the Code. The rental restrictions inherent in the Project financing rule out an unrestricted market sale. The forecasts estimate that the Limited Partners would have a projected net tax cost of approximately $___________ ($__________ per unit) from the sale. However, when offset by the dollar value of all the forecasted benefits achieved over the life of the investment, the Limited Partners would have achieved aggregate net benefits of $_________ ($__________ per unit). In this case, the Limited Partners would achieve an overall sale plus holding period ratio of benefits to capital contributed of 1.21 to 1 when both capital and benefits are discounted at 10%, and a net, after- tax internal rate of return of 15%. These investment materials do not constitute legal or tax advice, and the results for each Investor will depend on its own tax situation. Each Investor is urged to consult its own legal and tax advisors regarding the benefits of the Investment. The Investment involves certain risks, which should be carefully considered by each Investor (see "Risks of Investment"). THE INVESTMENT IS STRUCTURED TO PROVIDE TAX BENEFITS TO CORPORATE INVESTORS, AND ONLY ACCREDITED CORPORATIONS MAY INVEST . ACCREDITED CORPORATIONS INCLUDE BANKS, SAVINGS AND LOAN ASSOCIATIONS, INSURANCE COMPANIES, AND ANY CORPORATION WITH TOTAL ASSETS IN EXCESS OF $5,000,000. THIS INVESTMENT IS NOT APPROPRIATE FOR CORPORATIONS VHICH HAVE MADE "S" ELECTIONS OR ARE PERSONAL SERVICE CORPORATIONS OR FOR MOST CLOSELY HELD "C CORPORATIONS. The proposed investment is structured for "C corporations” which are not closely held (i.e., for which 50% or more of the stock is not held by 5 or fewer stockholders). Although closely-held "C corporations" may use passive credits and losses against both active and passive income, they may be subject to "at risk" rules that could limit the use of such tax benefits and, in any event, they will not be able to use passive losses to offset portfolio income. Subchapter S and "personal service corporations" are also restricted in their use of certain of the benefits available, and should not invest unless they expect to have substantial net passive income over an extended period of time. II. Investment Objectives A. General This Investment is structured to provide expected tax benefits in return for capital investments of qualified corporate investors. Under the Tax Reform Act of 1986, certain corporations will achieve the maximum potential benefit available from such investments in affordable housing. ALL PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX ADVISORS ON THE SUITABILITY OF THIS INVESTMENT. B. Pre-elected Investment Benefits The Investment offers several types of benefits, each of which is described briefly below. Further information concerning the amount and timing of these benefits is available in Appendix A, Financial Forecasts and Summary of Significant Forecast Assumptions and Accounting Policies (the "Financial Forecasts" or the "Forecasts"). C. Low - income housing tax credits ("Credits"), created by the Tax Reform Act of 1986 (the "Act"), are the primary benefit of the Investment. Credits are subject to the limitation on general business credits which allows a corporation to claim credit equal to the excess of its tax liability over the greater of (i) its "tentative minimum tax" or (ii) 25% of the excess of its regular tax liability over $25,000. Credits are a direct dollar for dollar reduction of taxes due, and as such, may increase the cash flow of a company but may not be used to reduce the Alternative Minimum Tax obligation. Any currently unused Credits may be carried forward for up to fifteen years and back three years. Affordable housing developments may be eligible for Credits if 20% or more of the apartments are "rent restricted" and occupied by tenants whose income is equal to or less than 50% of the area median income, or if 40% or more of the apartments are "rent restricted" and occupied by tenants earning 60% or less of the median income. Credits may be claimed on more than 20% (or 40%) of the units to the extent additional units are used to house low income families, but the initial proportion of low- income units must be sustained over a 15 year compliance period to avoid recapture The Credit is determined by multiplying Eligible Basis (ordinarily the same as the adjusted basis used for purposes of depreciation) by the lower of the percentage of total apartment units or the percentage of total apartment floor space which meet the requirements of low income status as statutorily defined. This percentage is determined annually. The resulting Qualified Basis is multiplied by the Credit Percentage to determine the Credit amount. The Credit Percentage is computed so chat the present value of the total Credits taken with respect to the Qualified Basis of a building over the ten-year Credit period will equal 70% (In the case of certain new construction and rehabilitation expenditures) or 30% (in the case of acquisition costs and other Federally subsidized costs) of such Qualified Basis. Present value calculations use a discount rate based upon 72% of the average of the Federal mid- term and long-term rates for the month in which the project is placed in service. However, a taxpayer can irrevocably elect to determine the Credit Percentage at the level of the Federal rates published for the month in which the Credit allocation is received for the project, in advance of the building's placed in service date. The Credit is then available each year during a 10-year period commencing with the taxable year in which the project is placed in service or the subsequent taxable year, at the owner's election. The Code provides that Eligible Basis may be multiplied by up to 130% if a project is located in a "qualified census tract", defined as any census tract in which at least 50% of households have an income less than 60% of the area median gross income, subject to certain limitations, or in a "difficult development area", defined as any area designated by the Secretary of the U.S. Department of Housing and Urban Development as an area which has high construction, land, and utility costs relative to the area median income. The Project is located in a "difficult development area," and accordingly. Eligible Basis for the rehabilitation has been multiplied by 130%. The Project is expected to qualify for the 70% present value Credit for rehabilitation expenditures financed by taxable debt. The Forecasts assume that the interest rates applicable to determine the Credit Percentages will result in a rate equal to approximately 9.0%, which is subject to change until the month in which the units are placed in service. As of June 1992, the rate for the 70% present value Credit was equal to 8.76%. The Partnership has entered into a Carryover Allocation Agreement with the __________________________ (Organization) and has been allocated Credits totaling $___________ based on the assumption that ____ (number) of the ____ (number) units (68%) will be tax credit eligible. The Forecasts project that $_________ of Low Income Housing Tax Credits are to be distributed annually over a ten year period. Tax losses are a deduction from all forms of income for most corporations, although closely-held C corporations may not utilize them to offset portfolio income. The tax savings available from tax losses depend on the corporation's Federal income tax bracket. For example, a corporation in the 34% Federal tax bracket having $100,000 of tax losses would achieve $34,000 in tax savings from such losses. This Investment assumes a 34% maximum Federal tax bracket in all years of the Forecast period. The benefits of these tax losses would be partially offset by any taxable income and associated tax liability anticipated upon a sale of the Project. Tax losses are generated In this Investment primarily through depreciation of the costs of the Project, amortization of certain expenditures, and accrued interest deductions. Additional state tax savings may also be available, although they are not incorporated into the Forecasts. Cash flow is not anticipated to be a benefit of the Investment. Any excess operating income will be utilized for maintenance and operating reserve accounts for the future benefit of the Project. Residual values which would be available to Investors are significantly limited by various restrictions imposed by the Sponsor (or an affiliate) and the government agencies which have subsidized the Project. In the case of this Investment, the Sponsor will have an option to purchase the Project for the outstanding debt on the Project or the defined minimum option price as allowed under Section 42(i)(7) of the Internal Revenue Code. There is, however, no assurance that this option will be exercised. Residual values are therefore not expected to be a benefit of the Investment. The taxes due on sale of the project at the end of the investment period are estimated assuming a projected sale at the minimum price allowable under Section 42 of the Code, which for simplicity is assumed to be equivalent to the sum of the outstanding debt on the Project plus $1.00. D. Pricing, Adjusters and Conditions of Payment Pricing Pricing: The Investment is priced with the objective of achieving an internal rate of return ("IRR") of 15% on invested capital on an after tax basis. Assuming that the Investment performs in accordance with the Forecasts, this objective is met based upon the benefits currently projected for the approximately 17-year investment period. Adjusters: In the event that, as of the third capital contribution installment date (when the qualified units are placed in service), the then-projected IRR is more than 10% above or below the 15% IRR originally projected in the Forecasts the amount of the third capital contribution installment shall be increased or decreased, as the case may be, in order for the Investment to achieve a 15% IRR. If a decrease to the capital contributions is required by the adjuster, and such decrease exceeds the amount of the third capital contribution installment, the excess adjustment will be made out of proceeds of sale or refinancing. Conditions of Payment: The first payment of Limited Partner capital will be made upon admission to the Partnership, which is to occur after commitment of permanent financing, and upon closing on the construction financing. The second payment will be made within 10 days of receipt of the architect's certification in writing that the Project construction is 80% complete. The third payment will be made on the later of: when 80% of the apartment units in the Project have received a Certificate of Occupancy (C. of O.), or when stabilized occupancy has been reached for a period of three months, or ____________, 2____ (date) . Each Limited Partner's obligation to make future installments of ____% capital contribution will be evidenced by an Investor promissory note and may be secured by a security agreement pledging the Limited Partner’s Interest in the Partnership. The Limited Partner's promissory notes and security agreements may be assigned to a bridge lender who will provide interim financing for the Project. E. Tax Shelter Registration As required by the Internal Revenue Service, the Partnership is filing tax shelter registration statement with the Internal Revenue Service and the Service will issue a tax shelter registration number to the Partnership. Issuance of the registration number does not indicate that the Investment or the claimed tax benefits have been reviewed, examined or approved by the Internal Revenue Service. Each limited partner will be furnished the tax shelter registration number by the Partnership and will be required to include that number with its tax return. F. __________________ Limited Partnership Investment Benefits Investors in ________________- Limited Partnership are projected to earn the following financial benefits while assisting in solving the pressing need for affordable housing. Investors will receive 99% of the Partnership's tax benefits and 99% of any distributable cash flow. No distributable cash flow is expected. Total tax benefits currently expected to be distributed to limited partners in return for capital contributions of $__________ are as follows: $__________ ($_____ per dollar invested) of Low Income Housing Tax Credits are projected to be distributed over a ten year period. Investors can apply these Tax Credits as a dollar-for-dollar reduction against federal income taxes otherwise due. Tax Credits may be carried backward for up to three years and carried forward for up to fifteen years to offset tax liability. $___________ ($_______ per dollar invested) of annual loss deductions are projected to be distributed over a sixteen year period. Investors can apply these annual loss deductions to reduce taxable income. Assuming investors have a federal income tax rate of 34%, investors will reduce their tax liability by 34% of the annual loss deductions received, or $__________. Investors able to reduce state tax liability with these loss deductions will receive even more benefits. Annual loss deductions can also be carried backward for up to three years and carried forward for up to fifteen years. Tax savings from annual loss deductions will be partially offset by capital gains taxes estimated at $_________ which will be payable by Investors at the end of the investment period if the Sponsor exercises its option to purchase the Property from the Partnership for a price equal to a minimum option price as allowed by the Internal Revenue Code. Tax savings from annual loss deductions, net of capital gains tax, equals $___________. Total projected financial benefits are as follows: $ ________ Total tax credits over ten years + _________ Additional tax savings from annual loss deductions during sixteen years ___________ net of potential capital gains tax payable at end of sixteen years $ ________ Net Federal tax savings projected These projected benefits, offered in return for $_________ of Investors' capital contributions, are expected to earn Investors an after- tax internal rate of return of 15%. The timing of capital contributions and receipt of tax benefits is a critical factor in calculating the internal rate of return or net present value of this investment. Non-financial benefits of this investment include community goodwill, assistance in providing construction jobs in the local economy, and assistance in furthering a high domestic priority: the provision of high quality affordable housing. Investors who are banks can help meet community reinvestment objectives with this Investment. Investing in _________________ Limited Partnership offers Investors one of the few opportunities available to earn a significant potential financial return while promoting an important social good. Also see Section VII. Risks of Investment , and Section VIII, Corporate Financial and Investment Considerations below. THESE PROJECTED BENEFITS OF INVESTMENT ARE NOT GUARANTEED BY THE SPONSOR OR GENERAL PARTNER, AND ARE SUBJECT TO CIRCUMSTANCES THAT MAY BE BEYOND THEIR CONTROL. III. The Partnership, the General Partner, and Development Team A. Structure of the Partnership and the General Partner The Project will be owned by a limited partnership with a single corporate general partner, _______________ (General Partner name) Corporation (the "General Partner"), a(n) ____________ (state) business corporation, the common stock of which is owned by the Sponsor. The Sponsor anticipates that it will sell a minority stock interest (21%) in the General Partner to a non-profit corporation not affiliated with the Sponsor. The General Partner of the Partnership will be allocated 1% of the profits, losses, tax credits, and cash flow from the Property, and 50% of the gains, losses, and proceeds from any sale or refinancing (after certain other priorities), with 99% of profits, losses, tax credits and cash flow and 50% of residual proceeds allocated to the Investors. A full statement of allocations is set forth in the First Amended and Restated Agreement and Certificate of Limited Partnership of the Partnership (the "Partnership Agreement") B. Sponsor: The _________________________________ (Sponsor name/Corporation) The Sponsor of the Project is the __________________________ (Sponsor name) of ____________ (city) , _____________ (state) . _______________ (Company initials or acronym) is a non-profit, 501(c)(3), community development corporation, organized in _______ (year) to serve ___________________ (city/area) . The development of affordable housing has been the organization's main in order to alleviate acute and persisting problems of housing shortages and overcrowding. ______________ (Sponsor) has viewed its role as the catalyst for overall housing and economic development in _______________ (area/community) and as a planning and development vehicle to address unmet local needs. _______________ (Sponsor) is a membership-based organization, with strong roots in and supported by the community at large. __________________ (Sponsor) 's twenty member Board of Directors consists of individuals with strong and varied records of professional success and community achievements. A majority of board members were born and raised in _______________ (area) . Their professional roles include: __________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________. In addition to their professional roles, all have long histories of active leadership in local community development social services and community advocacy. _______________ (Sponsor) 's Board members have held key roles in ___________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________. _______________ (Sponsor) 's Executive Director and Assistant Director devote their housing expertise and community-based experience to the development of ________________ Company name) . _______________ (Company initials or acronym) 's Executive Director has helped shape local housing policy through her tenure as the former Executive Director of the ___________________________; as an active leader in the conception and implementation of the first city-approved ____________________ Plan and as a former member and co-chair of the ______________________ Neighborhood Council. She was also the recipient of the __________ (City) Fair Housing Commission's Community Service Award. The Assistant Director for the ________________ (name) Community Development Corporation has provided consultation to CDCs and public agencies on economic development during her tenure at Policy and Management Associates. She has also analyzed and recommended housing policies for the Citizens' Housing and Planning Association and the Urban Institute. She/He is the recipient of national awards from the American Planning Association and the Urban Land Institute for her research in the field of affordable housing development. The combined vision and expertise of ____________ (Sponsor) 's Board members and staff provides a strong foundation for successful housing development. ____________ (Project name) as an organizational whole reflects a diverse collection of individuals who have extensive knowledge and expertise in community development and the various stages of the development process. For a complete list of professional credentials, ___________ (Company initials or acronym) 's List of Directors is available upon request. C. Architect __________________, Inc. of ___________ (city) and _______________, Inc., of ____________ (city) , ________________ (state) are providing architectural services to the Partnership. ________________ (name) has over ________ (number) years of experience in design and planning. Her/His prior achievements include residential, commercial and institutional projects. While at _________________ Associates, Mr./Mrs. _____________ was responsible for a number of large, multi-unit housing developments throughout _____________ (area/region) , including family housing, elderly housing, and special needs housing. She/He also designed ______________________________________________________. As a senior partner at __________________ (Organization) , Mr./Mrs. ___________ participated in projects involving _________________________________. At that time she/he was project architect for ___________________ in ____________, ____________ (city, state) , a library addition and renovation for a college in ____________ (state) , and a waterfront redevelopment plan for _________________, _____________ (city, state) . _____________________ (Organization) is also currently involved in the design of several single family residences in addition to designing __________________ (Project name) . In addition to his professional practice, Mr./Mrs. ___________ has taught architectural design and is active in _____________ (city) 's community and civic organizations. She/He has served as advisor to _______________ (city, area) and ____________ (name) neighborhoods in land use planning and housing policy matters, and as a panelist concerning various urban design issues. ________________ (name) Associates is the consulting architect for the ____________ (Company) project. Mr./Mrs. ______________’s credits include responsibility for the design and construction of many multi- family developments in the _________ (region) United States, as well as _________) (number) residential units which were part of ____________ (city) 's ___________________ (name/area) . D. Contractor The Partnership will be seeking bids from a pre-selected list of experienced and qualified contractors in the coming months. A contractor is expected to be selected by __________ (month __________ (year) . E. Development and Syndication Consultant, Management Agent _____________________, Inc. (" (initials) ") is the development and syndication consultant to the Partnership and will enter into a contract to manage the Property. TCB is a nonprofit corporation formed under Chapter 180 of the _______________ (state) General Laws, and is tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986. Since its founding in 1964, ____________ (Consultant) has both developed and assisted community based organizations in the creation of more than ________ (number) units of affordable housing. _____________ (Consultant) currently manages approximately __________ (number) units of nonprofit sponsored housing in _____ (number) developments throughout ____________ (city/area) . ___________ (Consultant) 's economic development division has assisted neighborhood-based developers in the creation of ______________ square feet of light industrial, R & D, retail and office space. In addition, _______________ (Consultant) has assisted in the design and implementation of a number of housing program initiatives. Originally based in ___________ (city) , _______ (Consultant) now works throughout the ____________ (region) , and has offices in _____________ (city) and _____________ (city) , _____________ (state) , _________ (city) , _____________ (state) , ___________ (city) , ____________ (state) , and __________ (city) , _____________ (state) . Since _________ (year) , _______________ (Consultant) has also organized ______ (number) limited partnerships to which investors have contributed over $_____ million, and which have total debt and equity financing of over $_____ million. In exchange, the investors have received the rights to share in the tax and other benefits generated by housing developments sponsored by _____________ (Consultant) and by the corporation's nonprofit clients. _________________ (Consultant) 's development staff has specialized expertise in debt and equity finance, construction, law, and economic development. ________________ (name) its Executive Director since _________ (year) , has been with _______ (Company initials or acronym) since receiving her/his degree from _______________ (college) in _______ (year) . Mr./Mrs. _______________ formerly served as chairman of the _______________________ Committee of the _____________ (state) Housing Finance Agency, and now serves as a director of the _______________________, Inc., as a member of the ___________________ _ Council, and as a member of the ______________________________ (Organization) at _______________ (state) ___________________ (Organization or Institute) . __________________ (Consultant) provides consultation to _______________ (Sponsor) for the overall planning, structuring, financial packaging and management of the development program. F. Other Associated Professionals 1. The law firm of ___________________ of ____________, ___________ (city, state) is counsel to the Partnership. In this capacity, the firm will provide legal advice on real estate and related matters to the Partnership related to the development and financing of Project. 2. Tax Counsel: The law firm of __________________ of ____________, ___________ (city, state) is tax counsel to the Partnership. The firm will provide legal advice on tax and related matters to the Partnership in connection with the development and financing of the Project, the admission of Investors, and will render a tax opinion to the Partnership. In addition, the firm will assist in the preparation and review of the Partnership Agreement and related documentation. These attorneys will not represent the Investors, who should consult their own attorneys and financial advisors concerning the Investment. IV. The Property A. Background and Property Description ______________ (Sponsor) is currently developing _______________ (Project name) (the "Project"), located in the heart of the residential district of the _______________ (area/community) of __________, ___________ (city, state) . _______________ (Project) consists of ____ (number) units of mixed income family rental housing. The project has garnered tremendous community and official support as the first new construction of large scale affordable housing in _________________ (area/community) since 20____. Currently, the parcel is a blighted lot with a dilapidated building, posing safety risks to community residents and undermining the physical environment. The _______________ (Project name) project reflects the vision and years of successful activism by community leaders and residents to provide new affordable housing resources for the growing ____________ (Sponsor) population in ____________ (city) as well as ensure meaningful development that benefits the entire community. ______________ (Project name) is a critical development because it will be built on one of the last remaining public parcels of land in __________ (area/community) available for development. This residential housing development will be a significant asset to the community, adding vibrancy, housing resources and community life to the area. ______________ (Project name) has evolved through careful consideration of (city/area) 's needs and unique characteristics. _______________ (Project name) 's scale, affordability, bedroom mix, open spaces and design reflect ____________ (area/community) 's dire need for affordable large family-size units, recreational open space and the traditional family values of generational cohabitation. The sponsor, ______________________ (Sponsor) (" (initials) ") is proud of its large scale and affordable housing program at _______________ (Project name) . ______________ (Project) will be a family-oriented housing development where all generations can live, enjoy recreational activities and be close to the social, political and cultural activities of both ______________ (area/community) and downtown ____________ (city) . As the site is located close to _____________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________, and numerous other amenities, ___________________ (Project name) will be a very attractive site to all types of renters. B. Development Plan The project's ____ (number) rental units will enclose an open courtyard. Sixty (68%) of these units will be affordable to low income families. There will be ______ (number) one bedroom units, _____ (number) two bedroom units, _____ (number) three bedroom units and _____ (number) four bedroom units. A _______________ (building type) on ____________ Street will house ____ (number) mostly one and two bedroom units; four story, double duplex townhouses on _____________ Street and _____________ Street will house ______ (number) family units; while three story townhouses on _____________ (street) will house ____ (number) four bedroom units. One of the attractive design features is that ______ (number) family units are walk up units with separate private entrances from the street or courtyard. In addition, approximately ___________ square feet will be provided for commercial uses. The layout and design of ______________ (Project name) embody elements of traditional architecture such as an interior courtyard surrounded by dwelling units and an ______________ (Sponsor) -influenced landscaping motif. The creation of newly landscaped open space and a community garden will greatly improve the pedestrian environment and serve both the residents of the development and the community. The primary urban objective for _____________ (Sponsor) is to create housing that reinforces the strong cultural identity of ______________ (area/community) , while relating to the scale, quality and ambience of the historic ________________ (area) . The scale of the row houses to the east is maintained at the eastern edge of the site where the proposed buildings are only three and four stories high. A "signature" tower marking a gateway into ______________ (area/community) rises to ten stories at ___________ Street, where the adjacent context is of a larger scale and the street width is greater. The housing will enclose a private courtyard designed for family use. A public open space, designed to include a community garden, will create a quiet recreation space on the ______________ (Project name) edge of the project. ________________ (number) parking spaces for residents will be available offsite across from the Project on ____________________ (Street name) . Successful marketing of the ___________________ (Project name) project has been ensured through specific amenity development which complements the attractive design and location of the project. The project's amenities include central air conditioning, additional bathrooms for large-sized units, garbage disposals, washer-dryer hook-ups, and dishwashers. ________________ (Project name) will be built on a ____________ square foot parcel which formerly belonged to the _____________ (city) Development Authority ("______"). The parcel was acquired from the __________ (city) Development Authority in ____________ (month) 20_____. The Partnership expects to construct the Project over a _____ (number) - month construction period. Total acquisition and development costs are currently estimated to be approximately $_______________. The development of ______________ (Project name) is a key affordable housing development initiative for the City of ____________. In addition, the creation of ______________ (Project name) dramatically fulfills one of the major housing goals in the 20____ _______________ (area/community) Community Plan. In 20____, the ___________________ (area/community) Community and the City of ____________ adopted comprehensive development and zoning guidelines for ____________ (city) ______________ (area/community) . The ________________ (area/community) Community Plan is one of _____________ (city) 's first community-based planning efforts involving collaboration between a key neighborhood and the _______________ (city) Redevelopment Authority. The goal of the plan is to ensure meaningful housing, community services, urban design, development control, historic preservation, business development, open space, and transportation planning and development. C. Municipal and Neighborhood Description ________________ (area/community) is an extremely attractive location due to the proximity to many important amenities such as _________________ food markets; bilingual services; specialized new immigrant services; employment opportunities and services; outstanding medical services; excellent transportation access; department stores; theatre and entertainment areas; fine dining facilities; and large public open spaces such as the _______________ and the ______________. The location is desirable because it is a 5-20 minute walk to popular City sites such as ___________________________________________ ______________________________________________ and many educational institutions such as the __________________________________________________________________. Abutters include the ___________________________________________________________. The _____________________ is located one block away from the proposed project, and an _________________ bus stops right in front of the ______________ Street entrance of __________________. Residents would be close to employment opportunities as well as _____________ (city) 's financial and commercial districts. The ___________________________ will also provide new resources to ____________ (area/community) through its I-C project, a new development underway just across the street from __________________ (Project name) . The _____________ square foot project will contain research space, ambulatory care, intensive care, maternity care, community services and other programs. The construction of this project will also begin this fall. The ____________________ (hospital/medical center) 's project will provide hundreds of employment opportunities and expanded health care services in ___________________ (area/community) . Despite its proximity to downtown _____________ (city) , _______________ (area/community) is one of the city's poorest neighborhoods with the highest rate of overcrowding and one of the highest ratios of deteriorated housing stock in the City of ___________. Due the tremendous need for affordable housing in _______________ (area/community) and the strength of the development team, this Project has generated tremendous community and City-wide support. On file are approximately _______ (number) letters of support written by elected officials, institutions, community groups, businesses, abutters and individuals as well as a petition signed by _______ (number) members of the _____________ (name) community endorsing ________________ (Sponsor) as the designated developer of __________________ (Project name) and supporting ________________ (Sponsor) 's funding applications. The Partnership has received a forward commitment from the AFL-CIO Housing Investment Trust to purchase the bonds. This loan will have a twenty year term and bear interest of 9 0% plus a 0.5% servicing fee. At construction completion the construction loan will be replaced with permanent first mortgage financing in the amount of $_________. The loan will bear an annual interest rate of 9.0% plus a 0.5% servicing fee. Interest payments will be paid monthly in the amount of $_________ or $________ per year based on a thirty year amortization schedule. Sponsor Loan: (Source: Community Development Action Grant and Neighborhood Housing Trust Linkage Funds) The City of ____________'s Neighborhood Housing Trust has awarded the Sponsor $________ in Linkage Funds, and the _______________ (state) Executive Office of Communities and Development has committed to the Sponsor $_________ in Community Development Action Grant funds. With these funds, the Sponsor will provide a loan to the Partnership in the amount of $__________ to be used for certain development and pre- development work. This loan will be nonrecourse, secured by a fourth mortgage, and will bear interest at 8.25% per annum. Principal and interest repayments will be deferred and will be paid upon the earlier of sale or refinancing or loan maturity in 20 years. Acquisition Loan In order to finance the acquisition of the Property, the Partnership entered into a loan agreement with the Sponsor in the amount of $___________, and assumed obligations of the Sponsor on a $__________ Mortgage Note and Security Agreement to the _____________ (city) Redevelopment Authority ("_____ (initials) ”), which sold the parcel of land to the Sponsor. Both loans will be nonrecourse, secured by a second mortgage and shall accrue interest at the rate of eight percent (8%) per annum for twenty (20) years. Neither note requires current payments from property operations, but the _____________ (city) Redevelopment Authority Mortgage Note and Security Agreement require that the property be developed as affordable housing. Principal and interest repayments will be deferred and will be paid upon the earlier of sale or refinancing or loan maturity in 20 years. Limited Partner Capital Contributions Limited Partner Capital Contributions are needed to fund Project Costs. See Section II above, and Appendix A. B. Sources and Uses of Operating Funds 1. Rents Thirty (34%) of the apartments in the Project are to be rented at below-market rates to qualifying moderate income tenants (whose incomes do not exceed 60% of the median), another thirty (34%) to low- income tenants who qualify for rental assistance under the Section 8 program (see below), whose incomes do not exceed 50% of the area median, and twenty-eight (32%) to market rate tenants The rents are projected to be sufficient to cover all the operating expenses, but not all of the debt service. Hence, the Sponsor will provide an operating subsidy to cover the remaining operating obligations of the Project. 2. Sponsor Operating Subsidy The Sponsor has an application pending for $_________ in Linkage Funds. With $_________ from the Sponsor out of the first investor, payment, a total of $_________ will be invested in a tax-free annuity- type security with an average rate of return of 7.5%. The proceeds will then be loaned by the Sponsor as an operating subsidy paid in annually as needed to satisfy operating deficits. The loan totaling $_________ will be secured by a note and a third mortgage on the Project. The outstanding loan balance will accrue interest at eleven percent (11.0%) per annum for twenty years, beginning at the close of permanent financing. 3. Operating Subsidy - Section 8 The ______________ (city) Housing Authority has allocated project-based Section 8 rental subsidy assistance for ____ (number) of _____ (number) units. This allocation is subject to the approval of the U.S. Department of Housing and Urban Development (HUD). The contract for this subsidy will be assigned to the Partnership. The initial contract will be for a term of up to five years. Historically, HUD has renewed project-based contracts in all cases in which an owner in good standing has requested renewal. Nevertheless, the Partnership will set aside funds from the second investor payment for operations totaling $_________. These funds will be invested in a tax- exempt interest bearing account, and withdrawals may be made from this account to supplement operating income in the event that the Section 8 PBA contracts are not renewed. 4. Replacement Reserves A capital replacement reserve will be established for repair and replacement of physical assets of the Property. Annual contributions are projected at $_______, or $_____ per unit, initially with 5% annual increases. Surplus operating cash, if any, will be applied to the replacement reserve and any deferred maintenance items that the Property may require to keep it in full working order. C. Bridge Financing It has been assumed in the Forecasts that bridge financing totaling approximately $____________ will be required and that principal and interest at 11% will be payable from capital contributions received by the Partnership. D. Development Fee Loan The Sponsor will be paid a total of $____________ for a development fee in the form of a note secured by a junior mortgage on the Property. Payments estimated to total $__________ will be made on this note in annual installments through 20____, and interest will be charged at a rate of 8% compounded annually. Any unpaid fee will be deferred, will accrue interest, and be paid out of the future capital installments, or upon the earlier of sale or refinancing or loan maturity in twenty years. E. Project Reserves It is anticipated that the capital contributions of the investor Limited Partners will exceed the direct development requirements and net worth requirements by an estimated $_________. A portion of the surplus will be available to fund deferred development consultant fees, and the remainder will be paid to the Sponsor for deferred developer's overhead. VI. Summary of the Partnership Agreement The following is intended to highlight some of the key elements of the Limited Partnership Agreement (the "Agreement"). This summary does not purport to be thorough, and Investors are advised to review the complete Agreement. A. Partnership Allocations Limited Partners will be entitled to 99.0% of the profits, losses and credits of the Partnership, allocated on a per unit basis with 1.0% allocated to the General Partner. Allocations of gain or loss from a capital transaction differ from allocations attributable to operations, and after certain tax related adjustments, will be allocated equally between the Limited Partners and the General Partner. On liquidation, final distributions will be made in accordance with the partners' capital account balances, as adjusted to reflect these allocations B. Rights and Duties of the General Partner The Partnership agreement will provide that the General Partner will have full, complete and exclusive rights to manage and control the business of the Partnership, subject to requirements of the regulatory agencies, and is required to make all decisions affecting the business and affairs of the Partnership to the best of its ability and use best efforts to carry out the purposes of the Partnership. In so doing and to the extent consistent with the Partnership's purposes, the General Partner is required to take all actions necessary or appropriate to protect the interests of the Limited Partners as a group and of the Partnership. It is further required to devote such time as is necessary to the affairs of the Partnership. The Partnership agreement will provide that the General Partner may not sell, assign, or encumber its general partnership interest in the Partnership or voluntarily withdraw from the Partnership without the consent of the Partners to its withdrawal and approval of the person admitted as General Partner in its place. C. Rights and Duties of the Limited Partners No Limited Partner will be required to make additional capital contributions in excess of its agreed capital contributions. The liability of the Limited Partners will be limited to the amount of their capital contributions to the Partnership made or agreed to be made, and to the amount of distributions representing a return of capital received by them. Following admission of the Limited Partners, no interest will be paid on any capital contributions and no Limited Partner will have the right to withdraw its capital. Limited Partners will have certain rights to require the General Partner to call meetings of all the partners, to approve a sale or refinancing transaction, and to approve amendments to the Agreement. Transfer of Limited Partnership Interests (See the Agreement, and Section VIII: "Corporate Financial and Investment Considerations" below.) Reports, Accounting, and Elections The General Partner shall mail to the Limited Partner all necessary tax information not later than March 15 of every year. The General Partner shall cause to be mailed to the Limited Partners not later than __________ (month) ______ (day/number) of every year, beginning ___________, 20____ (date) , an annual report of the Partnership, including (i) a report of prior calendar year, including a profit and loss statement, a balance sheet, a statement of Partner's equity, and a cash flow, statement, and (ii) an unaudited comparison of the actual results of the operations of the Partnership during the prior calendar year with projections set forth in the Financial Forecasts. The General Partner will retain a certified public accounting firm experienced in low- income housing partnerships as accountants for the Partnership. All decisions as to accounting matters, except as may otherwise be specifically provided in the Partnership Agreement, shall be made by the General Partner in accordance with the accounting methods utilized for Federal income tax purposes and otherwise in accordance with generally accepted accounting principles and procedures applied in a consistent manner. All of the elections required or permitted to be made by the Partnership under the Internal Revenue Code of 1986, as amended (the "Code") will be made by the General Partner, after consultation with the accountants for the Partnership, in such manner as will, in its sole opinion, be most advantageous to a majority in interest of the Limited Partners. The books and records of the Partnership will be maintained at the Partnership's office and each Limited Partner or its duly authorized representative will have access to them and the right to inspect and copy them at all reasonable times during normal business hours. VII. Risks of Investment In light of the risk factors discussed below, among others, the Investment is suitable only for Investors of substantial financial means who have no need for liquidity of their Investment in the Partnership. There will be no public market of the Units. (See "Corporate Financial and Investment Considerations.") Some of the major risk factors and how they may affect the business of the Partnership and the ownership of the units offered are discussed below. This discussion represents merely a summary of certain risk factors. Investors are advised to read this document in its entirety for further information concerning risk factors . RISKS OTHER THAN THOSE SET FORTH IN THIS SECTION MAY EXIST, AND IT SHOULD NOT BE INFERRED FROM THE FAILURE TO SPECIFY OR TO DISCUSS THESE OTHER RISKS IN THIS SECTION THAT SUCH RISKS MAY NOT TURN OUT TO BE SIGNIFICANT. INVESTORS MUST ACCEPT THE SUBSTANTIAL ECONOMIC RISKS INVOLVED IN THE INVESTMENT IN THIS PARTNERSHIP, INCLUDING THE POSSIBILITY OF THE LOSS OF CONTEMPLATED TAX BENEFITS AND THE LOSS OF THEIR CASH INVESTMENT. EACH INVESTOR SHOULD CONSULT ITS OWN PROFESSIONAL ADVISORS AS TO THE LEGAL, TAX OR RELATED MATTERS CONCERNING AN INVESTMENT IN THE PARTNERSHIP. A. Tax Risks The following summary of tax risks is qualified in its entirety by reference to the tax opinion which is expected to be delivered in connection with the admission of investors as Limited Partners and, a form of which will be provided to prospective Investors in advance of the date by which they will be asked to subscribe. Low Income Housing Tax Credit: There are certain risks associated with the use of the Credits. The provisions of the tax laws governing the Credits are complicated and many provisions have not yet been interpreted or clarified in Treasury regulations or rulings. There is a general risk that clarifications or modifications of the Act may alter the treatment of the Credit or other tax positions which have been used to form the basis of the Financial Forecasts Increases in tenant's income over time could cause his/her income to exceed the maximum permissible income for the Credits. When this occurs, the next available apartment of the same size would have to be rented to a low income tenant. Failure to do so could result in recapture of Credits with interest and penalties. Furthermore, if the initial percentage of low income units is not sustained over the 15-year Compliance Period, the "accelerated portion" of the Credits taken is subject to recapture. The accelerated portion is the difference between the Credits taken over a 10-year period and the same total Credit amount as if it were taken over a 15-year period. Only the accelerated portion of Credits taken on the eligible basis of the units lost is recaptured. Moreover, if the minimum 40% eligibility threshold is not sustained, the accelerated portion of all Credits taken will be recaptured. The Partnership has entered into a 20___ Carryover Allocation Agreement with the ______________________ (Organization) . The requirements of such Agreement are that 10% of the Project's anticipated basis plus land must have been incurred prior to ______________, 20____ (date) , and that the Project must be placed in service by _______________, 20____ (date) . The Partnership has met the former requirement. Investors should note that the Credit may not be used to offset the Alternative Minimum Tax but can be carried forward and back. Tax Treatment of Various Costs and Fees: The Summary of Significant Forecast Assumptions and Accounting Policies describe the tax treatment of the various syndication and development costs and fees. The treatment assumed could be questioned and possibly adjusted by the Internal Revenue Service ("IRS") if an audit should occur. This could result in a reduction of the tax benefits of the Investment. Risk of Audit: Investments in the Partnership, because it is classified as a tax- sheltered investment, could increase the likelihood of an IRS audit of the Partnership and of the individual Investors. Other Federal Income Tax Risks: There are several Federal income tax risks and considerations in connection with an Investment. These risks and considerations include the following:  If the Partnership is classified as an association taxable as a corporation for Federal income tax purposes, rather than as a partnership, substantially all of the tax benefits of the Investment would be eliminated, and otherwise tax-free distributions from the Partnership may be taxable to Investors,  If the Development Fee or Sponsor Loans were considered to be equity rather than debt for Federal income tax purposes,  Interest on such loans would not be deductible,  Credits and losses attributable to such loans would be reallocated for the Investors to the General Partner, thus reducing the deductions and credits allocable to Investors and  Some or all of the Project would be tax-exempt use property, causing the recovery period over which the Project is depreciated to be increased from 27.5 to 40 years;  If the Development Fee or Sponsor Loans were classified as recourse debt, the Limited Partners might not be able to include some or all of such loans in their basis and there would be a reallocation of Credits and losses as set forth in above;  If the allocations of profit, loss, or credit among the Partners are not respected, such items may be reallocated among the Partners in accordance with their interests in the Partnership, thus possibly reducing the tax benefits allocable to the Investors, or reducing their basis for their Partnership interests, and triggering income; and  If at any time during the compliance period the fair market value of the Project, considering all of the facts and circumstances, including the Sponsor's option to acquire the Project, is less than the liabilities to which the Project is subject, then the Partnership might not be viewed as being able to deduct the accrued interest of the Project for tax purposes, resulting in the loss of some of the tax benefits. B. Regulatory Risks The use of city, state and Federal subsidies imposes numerous regulatory requirements on the Project. Failure to comply with such requirements can subject the Project to a range of penalties. Furthermore, rent increases will be restricted by the requirements of the Credit and various regulatory agreements C. Financial Forecasts The economic and tax results to the Limited Partners set forth in the Financial Forecasts are based upon the assumptions described in this document and the Summary of Significant Forecast Assumptions and Accounting Policies. Such Forecasts are hypothetical and based upon the Partnership operations contemplated for the future and upon assumptions and estimates which are subject to the uncertainties of future events beyond the control of the Partnership. The timing of certain events, including the admission of the Limited Partners, may have a substantial impact on actual results. While the General Partner believes that the Forecasts reflect the most likely set of conditions and the most probable outcome of the economic and tax consequences of the Partnership's business operations, the results can in no manner be guaranteed. THE FINANCIAL FORECASTS INCLUDED IN APPENDIX A ARE FOR PURPOSES OF ILLUSTRATION ONLY, AND NO ASSURANCE IS GIVEN THAT THE ACTUAL RESULTS WILL CORRESPOND WITH THE RESULTS CONTEMPLATED IN THE FINANCIAL FORECASTS. ACTUAL RESULTS CAN AND WILL VARY, PERHAPS MATERIALLY. D. Construction Risks Construction risks include the potential for construction cost overruns which could not be funded through existing resources, delays in and/or failure to complete construction as a result of natural disaster, strikes or other causes, and/or poor management or poor workmanship resulting in an inferior product. E. Operating Risks Operating risks include the potential for mismanagement, underestimation or rapid inflation of operating costs, overestimation of rents or excessive vacancy levels. Assumptions concerning operating budgets are described in the Financial Forecasts. F. Conflicts of Interest Substantial fees, expenses and reimbursements are payable to the Sponsor, an affiliate of the General Partner, out of the proceeds of this offering. The General Partner and the Sponsor and their respective officers are not required to, and will not, devote their full time to the affairs of the Partnership. The General Partner may be involved in the future in the development and management of other ventures, including ventures similar to that described in this document, or in other transactions with its affiliates. Furthermore, the officers, directors and employees of the General Partner and/or the Sponsor may be officers, directors and partners of corporations and partnerships to be formed in the future which may be engaged in making or arranging investments, including investments which may be similar to the business of the Partnership. Conflicts may arise regarding the allocation of time of the officers, directors and employees of the General Partner and/or the Sponsor between the Partnership and those other corporations and partnerships; and other conflicts may arise in connection with the business of the Partnership and of the other ventures. Other Partnership Matters; Restriction on Transfer Units will not be registered under the Securities Act of 1933, as amended, or