10-Q 1 f10q_sept2003-pat.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ------ EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ------ EXCHANGE ACT OF 1934 Commission File Number 0-20638 PATRIOT TAX CREDIT PROPERTIES L.P., ----------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3519080 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or 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)421-5333 N/A ----------------------------- Former name, former address and former fiscal year, if changed since last report 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 whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes No X ----- ----- PART I - Financial Information Item 1. Financial Statements PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

============ ============~~====~~ ~~June~~September 30, March 31, 2003 2003 ------------ ------------ (Unaudited) ASSETS Investment in property: Land $ 4,005,633 $ 4,005,633 Buildings and improvements 75,~~758~~777,~~422~~179 75,746,346 Accumulated depreciation (2627,~~777~~271,~~636~~556) (26,237,792) ------------ ------------ Net investment in property 52,~~986~~511,~~419~~256 53,514,187 ------------ ------------ Cash and cash equivalents 1,~~671~~912,~~338~~831 1,344,954 Cash and cash equivalents held in escrow 1,~~308~~423,~~587~~113 1,318,344 Deferred financing costs, net of accumulation of $3,~~786~~857,~~870~~602 and $3,716,137 1,~~525~~455,~~918~~185 1,596,650 Other assets ~~656~~537,~~346~~404 369,394 ------------ ------------ Total assets $ 5857,~~148~~839,~~608~~789 $ 58,143,529 ============ ============

2 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)

============ ============~~====~~ ~~June~~September 30, March 31, 2003 2003 ------------ ------------ (Unaudited) LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) Liabilities: Mortgage notes payable $ 4544,~~041~~805,~~315~~620 $ 45,294,215 Accrued interest payable 2,~~201~~286,~~136~~032 2,122,418 Other accrued expenses and liabilities 2,~~815~~836,~~573~~150 2,643,043 Due to Local General Partners and affiliates of Local Partnerships 5,~~451~~917,~~967~~434 5,085,535 Development fees payable 1,151,510 1,151,510 Real estate taxes payable ~~131~~221,~~938~~589 179,876 Due to General Partner and its affiliates 89,~~943~~290,~~635~~186 8,234,527 ------------ ------------ Total liabilities 6566,~~737~~508,~~074~~521 64,711,124 ------------ ------------ Minority interest in local partnerships (12,~~968~~216,~~237~~330) (1,746,771) ------------ ------------ PARTNERS' CAPITAL (DEFICIT) Limited partners (38,125 BUC$ issued and outstanding) (67,~~340~~168,~~849~~861) (5,545,441) General partner (1 BUC$ issued and outstanding) ~~720~~716,~~620~~459 724,617 ------------ ------------ Total partners' capital (deficit) (56,~~620~~452,~~229~~402) (4,820,824) ------------ ------------ Total liabilities and partners' capital (deficit) $ 5857,~~148~~839,~~608~~789 $ 58,143,529 ============ ============

See accompanying notes to consolidated financial statements. 3 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

========================== ========================== Three Months Ended ~~June~~Six Months Ended September 30, September 30, -------------------------- -------------------------- 2003 2002 2003 2002 -------------------------- -------------------------- Revenues Rental income $ 2,~~335~~369,~~076~~501 $ 2,~~339~~379,~~384~~036 $ 4,704,577 $ 4,718,420 Other income ~~161~~173,~~718~~715 ~~200~~162,~~358~~220 335,433 362,578 Interest income 1,933 2,~~351~~733 54,~~392~~284 8,125 ----------- ----------- ----------- ----------- 2,~~499~~545,~~145~~149 2,~~545~~543,~~134~~989 5,044,294 5,089,123 ----------- ----------- ----------- ----------- Expenses Interest 1,~~197~~213,~~963~~210 1,~~170~~196,~~383~~634 2,411,173 2,367,017 Depreciation and amortization ~~610~~564,~~577~~652 ~~609~~613,~~211~~709 1,175,229 1,222,920 Operating and other ~~203~~187,~~720~~631 ~~177~~195,~~170~~257 391,350 372,427 Taxes and insurance ~~342~~341,~~839~~993 ~~300~~306,~~800~~159 684,832 606,959 Repairs and maintenance ~~514~~680,~~265~~310 ~~674~~444,~~986~~734 1,194,576 1,119,720 General and administrative ~~501~~489,~~640~~883 ~~477~~441,~~787~~354 991,523 919,141 Partnership management fees 59,~~014~~718 59,~~014~~718 118,732 118,732 Property management fees 8988,~~574~~018 8492,~~066~~876 177,592 176,942 ----------- ----------- ~~Total~~----------- ~~expenses~~----------- 3,~~519~~625,~~592~~415 3,~~553~~350,~~417~~441 7,145,007 6,903,858 ----------- ----------- ----------- ----------- Loss before minority interest (1,~~020~~080,~~447~~266) (806,452) (2,100,713) (1,~~008~~814,~~283~~735) Minority interest in loss of local partnerships ~~221~~248,~~042~~093 ~~258~~150,~~841~~970 469,135 409,811 ----------- ----------- ----------- ----------- Net loss $ (~~799~~832,~~405~~173) $ (~~749~~655,~~442~~482) $(1,631,578) $(1,404,924) =========== =========== =========== =========== Net loss - limited partners $ (~~795~~828,~~408~~012) $ (~~745~~652,~~695~~204) $(1,623,420) $(1,397,899) =========== =========== =========== =========== Number of limited partnership units outstanding 38,125 38,125 38,125 38,125 =========== =========== =========== =========== Net loss per limited partnership unit $ (2021.8672) $ (1917.5611) $ (42.58) $ (36.67) =========== =========== =========== ===========

See accompanying notes to consolidated financial statements. 4 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited)

Limited General Total Partners Partner BUC$ ----------- ----------- ----------- ----------- Partners' capital (deficit) - April 1, 2003 $(4,820,824) $(5,545,441) $ 724,617 38,126 Net loss-~~Three~~Six Months ended ~~June~~September 30, 2003 (~~799~~1,~~405~~631,578) (~~795~~1,~~408~~623,420) (38,~~997~~158) 0 ----------- ----------- ----------- ----------- Partners' capital (deficit) - ~~June~~September 30, 2003 $(56,~~620~~452,~~229~~402) $(67,~~340~~168,~~849~~861) $ ~~720~~716,~~620~~459 38,126 =========== =========== =========== ===========

See accompanying notes to consolidated financial statements. 5 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

========================== ~~Three~~Six Months Ended ~~June~~September 30, -------------------------- 2003 2002* -------------------------- Cash flows from operating activities: Net loss $ (~~799~~1,~~405~~631,578) $ (~~749~~1,~~442~~404,924) ----------- ----------- Adjustments to reconcile net loss to net cash (used in) ~~provided by~~ operating activities: Depreciation and amortization ~~610~~1,~~577~~175,229 ~~609~~1,~~211~~222,920 Minority interest in loss of local partnerships (~~221~~469,~~042~~135) (~~258~~409,~~841~~811) ~~Decrease~~(Increase) decrease in cash held in escrow 9(104,~~757~~769) ~~390~~319,~~867~~839 ~~(Decrease)~~Increase ~~increase~~ in real estate taxes payable ~~(47~~41,~~938)~~713 ~~104~~101,~~561~~741 Increase in accrued interest payable 78163,~~718~~614 24151,~~432~~819 Increase in other assets (~~286~~168,~~952~~010) (1160,~~537~~508) Increase (decrease) in ~~other~~accrued expenses and liabilities ~~172~~193,~~528~~107 (~~125~~122,~~392~~854) Increase in partnership management fees 59payable 118,~~014~~732 59118,~~014~~732 Increase (decrease) in public funds payable 1526,~~489~~981 16(23,~~014~~979) Increase (decrease) in asset manage- ment fee 7payable 19,~~480~~365 (118,~~000~~250) ----------- ----------- Total adjustments ~~397~~996,~~631~~827 ~~797~~1,~~329~~289,649 ----------- ----------- Net cash (used in) ~~provided by~~ operating activities (~~401~~634,~~774~~751) 47(115,~~887~~275) ----------- ----------- Cash flows from investing activities: Investment in property (1230,~~076~~833) (11248,~~042~~234) ----------- -----------

6 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)

========================== ~~Three~~Six Months Ended ~~June~~September 30, -------------------------- 2003 2002* -------------------------- Cash flows from financing activities: ~~Increase~~Payments inof ~~deferred~~mortgage ~~costs~~notes 0(488,595) (50405,~~358~~372) ~~Payments~~Increase ofin ~~mortgage~~deferred ~~notes~~costs ~~(252,900)~~0 (~~144~~50,~~016~~935) Distribution to minority interest (~~423~~424) (307) Advances from General Partner ~~627~~890,~~125~~581 1710,~~822~~072 Advances from local limited partner 505,~~113~~316 412,740 Increase in due to Local General Partners and affiliates of Local Partnerships, General Partners and its affiliates ~~366~~326,~~432~~583 ~~284,435~~0 Decrease in due to Local General Partners and affiliates of Local Partnerships, General Partner and its affiliates 0 (4282,~~435~~440) ----------- ----------- Net cash provided by financing activities ~~740,234~~ 1,~~869~~233,~~432~~461 583,758 ----------- ----------- Net increase in cash and cash equivalents ~~326~~567,~~384~~877 1220,~~906,277~~249 Cash and cash equivalents at beginning of period 1,344,954 1,005,628 ----------- ----------- Cash and cash equivalents at end of period $ 1,~~671~~912,~~338~~831 $ 21,~~911~~225,~~905~~877 =========== =========== Supplemental disclosure of cash flow information: Non-cash ~~Financing~~financing activity: Interest paid $ 12,~~119~~247,~~245~~559 $ 12,~~145~~215,~~951~~198 =========== ===========

* Reclassified for comparative purposes. See accompanying notes to consolidated financial statements. 7 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES ON CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (Unaudited) Note 1 - General The consolidated financial statements include the accounts of Patriot Tax Credit Properties L.P. ("the Partnership") and 8 subsidiary partnerships ("subsidiaries", "subsidiary partnerships" or "Local Partnerships") in which the Partnership is a Limited Partner. Through the rights of the Partnership and/or an affiliate of a General Partner, which affiliate has a contractual obligation to act on behalf of the Partnership, to remove the general partner of the Local Partnerships and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the Local Partnerships. The Partnership's fiscal quarter ends September 30. All subsidiaries have fiscal quarters ending June 30 in order to allow adequate time for the subsidiaries' financial statements to be prepared and consolidated. Accounts of the subsidiaries have been adjusted for intercompany transactions from July 1 through September 30. Occupancy rates are as of June 30, 2003. All intercompany accounts and transactions have been eliminated in consolidation. The books and records of the Partnership are maintained on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. In the opinion of the General Partner of the Partnership, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Partnership as of September 30, 2003, the results of operations for the three and six months ended September 30, 2003 and 2002 and cash flows for the six months ended September 30, 2003 and 2002. However, the operating results and cash flows for the six months ended September 30, 2003 may not be indicative of the results for the year. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted 8 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES ON CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (Unaudited) in the United States of America have been omitted or condensed. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended March 31, 2003. Note 2 - Related Parties The General Partner and its affiliates have performed and will continue to perform services for the Partnership which include, but are not limited to: accounting and financial management; registrar, transfer and assignment functions; asset management; investor communications; and printing and other administrative services. The General Partner and its affiliates receive Partnership management fees and reimbursements for general and administrative costs incurred in connection with these services, the amount of which is limited by the provisions of the Partnership Agreement. The costs and expenses incurred to the General Partner were:

Three Months Ended ~~June~~Six Months Ended September 30, September 30, ------------------- ------------------- 2003 2002 2003 2002 ------------------- ------------------- Partnership ~~Management~~Manage- ment fees (a) $ 59,~~014~~718 $ 59,~~014~~718 $118,732 $118,732 Property Management fees 27,~~380~~379 26,338 54,759 52,676 Local administrative fees 5,~~062~~063 5,~~062~~063 10,125 10,125 General and administrative 2223,~~969~~376 21,~~514~~189 46,345 42,703 Interest (b) ~~121~~120,~~122~~220 113,666 241,342 227,332 -------- -------- -------- -------- $235,~~547~~756 $225,~~594~~974 $471,303 $451,568 ======== ======== ======== ========

(a) A Partnership management fee for managing the affairs of the Partnership equal to 0.375% of invested assets is payable from operations and reserves to the General Partner and its affiliates. Partnership management fees owed to the 9 PATRIOT TAX CREDIT PROPERTIES L.P. (a limited partnership) AND SUBSIDIARIES NOTES ON CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2003 (Unaudited) General Partner amounting to approximately $782,000 and $664,000 were accrued and unpaid as of September 30, 2003 and March 31, 2003, respectively. As of September 30, 2003, the properties owned by five of the Local Partnerships are managed by a local general partner ("Local General Partner") or its affiliates and one Local Partnership is managed by an affiliate of the General Partner and Local General Partner. (b) During the six months ended September 30, 2003, the General Partner and its affiliates advanced $1,055,659 to the Partnership and as of September 30, 2003 and March 31, 2003, total advances outstanding are $9,290,186 and $8,234,527, respectively. The advances are unsecured, bear interest at prime +2% and are due on demand. Without the General Partner's continued allowance of accrual without payment of certain fees, expense reimbursements and advances the Partnership will not be in a position to meet its financial obligations. The General Partner and its affiliates have agreed to support the Partnership's operating expenses for the foreseeable future. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources ------------------------------- The Partnership invested in eight Local Partnerships that are owners of affordable multi-family residential complexes. The Local Partnerships are operated in accordance with the rules and regulations of Section 42 of the Internal Revenue Code in order to protect the housing tax credits authorized thereby (the "Housing Tax Credits"). The Partnership's primary source of funds is rental revenues, which is fully utilized at the property level. As of September 30, 2003, there was approximately $277,000 in working capital reserves available to fund Partnership level expenses. The Partnership is dependent upon the support of the General Partner and certain of its affiliates in order to meet its obligations at the Partnership level. The General Partner and these affiliates have agreed to continue such support for the foreseeable future. Without the General Partner's continued allowance of accrual without payment of certain fees, expense reimbursements and advances the Partnership will not be in a position to meet its obligations. For the six months ended September 30, 2003, cash and cash equivalents of the Partnership and its eight Local Partnerships increased approximately $568,000. The increase is primarily attributable to advances from General Partner ($891,000), advances from local limited partner ($505,000) and an increase in due to Local General Partners and affiliates of Local Partnerships, General Partner and its affiliates ($327,000) which exceeded payments of mortgage notes ($489,000), cash used in operating activities ($635,000) and investment in property ($31,000). Included in adjustments to reconcile the net loss to cash used in operating activities is depreciation and amortization of approximately $1,175,000. 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 Partnership has fully invested the proceeds of its offering in eight Local Partnerships, all of which fully have their Tax Credits 11 in place. The Tax Credits are attached to the property for a period of ten years, and are transferable with the property during the remainder of such ten-year period. If trends in the real estate market warranted a 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. Summer Creek Villas Local Partnership ("Summer Creek Villas") ------------------------------------------------------------- Summer Creek Villas has experienced lower than expected economic occupancy levels over the course of the last several years, which has resulted in recurring losses from operations and has adversely affected the liquidity of Summer Creek Villas. Despite an increase in rent levels during 2003, Summer Creek Villas' operations are impeded by its inability to raise rents sufficiently to pay for its operating and debt costs. Summer Creek Villas has been unable to obtain maximum rents as potential residents are restricted based on county median income levels, which limit the maximum income that a prospective resident can earn. Summer Creek Villas has been obligated, since 1996, to repay significant amounts of principal on its mortgage. Effective January 1, 1999, Summer Creek Villas entered into a funding agreement with Palm Beach Investor, L.P. (the Class C limited partner) which provided for a series of loans to be made to Summer Creek Villas in each of the years 1999, 2000 and 2001, in amounts not to exceed $2,000,000 in the aggregate. On September 9, 2002, Summer Creek Villas entered into a second funding agreement with the Class C limited partner which provides for a second series of loans to Summer Creek Villas in each of the years 2002, 2003 and 2004, in amounts not to exceed $1,500,000 in the aggregate. Although no formal agreements have been reached with the other partners, additional loans from the Partnership (which is the Class A limited partner) or other sources are expected to be obtained in accordance with the loans to be provided under the funding agreement. Loans made through September 30, 2003 to fund operating deficits total $11,151,322 and are comprised of $8,014,656 from the Partnership (which was eliminated in consolidation) and $3,136,666 from the Class C limited partner. Summer Creek Villas' ability to continue its operations is dependent upon management achieving the plans described in the Form 10-K and above. The accompanying consolidated financial statements do not include any adjustments 12 that might result from the outcome of this uncertainty. Any adjustments would be limited solely to Summer Creek Villas' financial statements. Hilltop Local Partnership ("Hilltop") ------------------------------------- Hilltop has experienced a decline in occupancy over the last nine months due to a reduction in Section 8 vouchers issued by the county. Hilltop was heavily dependent on vouchers to maintain occupancy. As a result, the property will operate at a deficit for 2003. Management of Hilltop has been revamping the marketing program to compensate for the loss of vouchers, but occupancy has not rebounded. Hilltop has hired a new property manager. The property expects the vacancy level to improve over the course of the year. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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. The summary should be read in conjunction with the more complete discussion of the Partnership's accounting policies included in Note 2 to the consolidated financial statements in the annual report on Form 10-K. Property and Equipment ---------------------- 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 13 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). 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. New Accounting Pronouncements ----------------------------- In January 2003, the Financial Accounting Standards Board 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 are applicable no later than December 15, 2003. The Partnership has not created any variable interest entities after January 31, 2003. The adoption of FIN 46 is not intended to 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. 14 Results of Operations --------------------- Results of operations for the Local Partnerships consolidated herein are for the three and six month periods ended September 30, 2003. Information disclosed below with respect to each Local Partnership is consistent with this method of presentation. Rental income decreased approximately $10,000 and $14,000 for the three and six months ended September 30, 2003 as compared to the corresponding periods in 2002, primarily due to a decrease in occupancy at one Local Partnership. Interest income decreased approximately $1,000 and $4,000 for the three and six months ended September 30, 2003 as compared to the corresponding periods in 2002, primarily due to a decrease in escrow interest income in 2003 at one Local Partnership. Total expenses, excluding taxes and insurance, repairs and maintenance and general and administrative, remained fairly consistent with an increase of approximately 2% and less than 1% for the three and six months ended September 30, 2003 as compared to the corresponding periods in 2002. Taxes and insurance increased approximately $36,000 and $78,000 for the three and six months ended September 30, 2003 as compared to the corresponding periods in 2002, primarily due to an increase in insurance premiums at the Local Partnerships and an increase in real estate taxes at one Local Partnership. Repairs and maintenance decreased approximately $236,000 and $75,000 for the three and six months ended September 30, 2003 as compared to the corresponding periods in 2002, primarily due to a decrease in maintenance contracts and supplies at one Local Partnership. 15 Property Information -------------------- Occupancies at the properties were as follows:

~~March~~June 3130, ---------------------- 2003 2002 ---------------------- Property Hubbard's Ridge 90% 9996% Cutler Canal II 99 9899 Diamond Street 9698 94100 Papillion Heights 83 85 96 Hill Top Homes 7367 91 Summer Creek Villas 93 9086 Brookland Park Plaza 9694 8891 Compton Townhouses ~~100~~95 97

(Occupancies are calculated by dividing occupied units by total available units.) The Partnership holds a 66.5% interest in Summer Creek Villas, a 98% interest in Hubbard's Ridge, Hill Top Homes and Compton Townhouses and a 98.99% interest in Cutler Canal II, Diamond Street, Papillion Heights and Brookland Park Plaza. Item 3. Quantitative and Qualitative Disclosures about Market Risk None. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures ------------------------------------------------ The Chief Executive Officer and Chief Financial Officer of RCC Partners 96, L.L.C., which is the general partner of Patriot Tax Credit Plus L.P. (the "Partnership"), has evaluated 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 (the "Exchange Act") as of September 30, 2003 (the "Evaluation Date"). Based on such evaluation, such officer has concluded that, as of the Evaluation Date, the Partnership's disclosure controls and procedures are effective in alerting him, on a timely basis, to material information relating to the Partnership required to be included in the Partnership's reports filed or submitted under the Exchange Act . 16 Changes in Internal Control Over Financial Reporting ---------------------------------------------------------- There has been no significant change in the Partnership's internal control over financial reporting during the Partnership's fiscal quarter ended September 30, 2003 which has materially affected, or is reasonably likely to materially affect, such internal control over financial reporting. 17 PART II. OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities and Use of Proceeds - None Item 3. Defaults Upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other Information - None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Description: 3.1 Amendment to Certificate of Limited Partnership dated October 1, 1997 (3) 4.1 Agreement of Limited Partnership as adopted on May 3, 1989 and Amendments thereto dated May 25, 1989 and December21, 1989 (1) 4.2 Amendment Number 1 to Prudential-Bache Tax Credit Properties L.P. Amended and Restated Agreement of Limited Partnership, dated October 1, 1997 (3) 10.1 Form of Purchase and Sale Agreement pertaining to the Partnership's Acquisition of Local Partnership Interests (2) 10.2 Form of Amended and Restated Agreement of Local Limited Partnership of Local Partnerships (2) 31.1 Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a). 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). (1) Filed as an exhibit to Pre-Effective Amendment No. 1 to Form S-11 Registration Statement (No. 33-28571) (the "Registration Statement") and incorporated herein by reference. 18 (2) Filed as an exhibit to Pre-Effective Amendment No. 2 to Form S-11 Registration Statement and incorporated herein by reference. (3) Filed as an exhibit to Registrant's Current Report on Form 8-K dated October 1, 1997 and incorporated herein by reference. (b) Reports on Form 8-K - None. 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PATRIOT TAX CREDIT PROPERTIES L.P. (Registrant) By: RCC PARTNERS 96, L.L.C., General Partner Date: November 3, 2003 By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Member, President and Chief Executive and Financial Officer Date: November 3, 2003 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps Treasurer and Chief Accounting Officer 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 RCC Partners 96 L.L.C. (the "General Partner"), the General Partner of Patriot Tax Credit Plus L.P. (the "Partnership"), hereby certify that: 1) I have reviewed this quarterly report on Form 10-Q for the period ending September 30, 2003 of the Partnership; 2) Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order 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 quarterly report; 3) Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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 Rues 13a-15(f) and 15d-15(f)) for the Partnership and I 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 quarterly report was 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; and 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 quarterly report based on such evaluation; and d) disclosed in this quarterly report any change in the Partnership's internal control over financial reporting that occurred during the period ending September 30, 2003 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: November 3, 2003 ---------------- 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 Quarterly Report of Independence Tax Credit Plus L.P. III (the "Partnership") on Form 10-Q for the period ending September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Alan P. Hirmes, Chief Executive Officer and Chief Financial Officer of Related Independence Associates III Inc. a general partner of Related Independence Associates III L.P., the general partner of the Partnership, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 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. By: /s/ Alan P. Hirmes ------------------ Alan P. Hirmes Chief Executive Officer and Chief Financial Officer November 3, 2003

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