[Federal Register Volume 69, Number 90 (Monday, May 10, 2004)]
[Notices]
[Pages 25936-25938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-10559]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 26444; 812-13034]


Boston Capital Tax Credit Fund V L.P. and Boston Capital 
Associates V L.L.C.; Notice of Application

May 4, 2004.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under sections 6(c) and 
6(e) of the Investment Company Act of 1940 (the ``Act'') granting 
relief from all provisions of the Act, except sections 37 through 53 of 
the Act and the rules and regulations under those sections other than 
rule 38a-1.

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Applicants: Boston Capital Tax Credit Fund V L.P. (the ``Partnership'') 
and Boston Capital Associates V L.L.C. (the ``General Partner'').

Summary of the Application: Applicants request an order to permit the 
Partnership to invest in limited partnerships that engage in the 
ownership and operation of apartment complexes for low and moderate 
income persons.

Filing Dates: The application was filed on October 30, 2003, and 
amended on April 20, 2004.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on May 27, 2004, and should be accompanied by proof of service on 
applicants in the form of an affidavit or, for lawyers, a certificate 
of service. Hearing requests should state

[[Page 25937]]

the nature of the writer's interest, the reason for the request, and 
the issues contested. Persons may request notification by writing to 
the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 5th Street NW., Washington, DC 
20549-0609. Applicants, One Boston Place, Suite 2100, Boston, MA 02108-
4406.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, 
(202) 942-0634, or Mary Kay Frech, Branch Chief, (202) 942-0564 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. The Partnership was organized on October 15, 2003, under the 
Delaware Revised Uniform Limited Partnership Act. The Partnership is 
intended to serve as a vehicle for equity investment in apartment 
complexes expected to be qualified for the low-income housing tax 
credit under the Internal Revenue Code of 1986, as amended.
    2. The Partnership will operate as a ``two-tier'' partnership, 
i.e., the Partnership will invest as a limited partner in operating 
partnerships (the ``Operating Partnerships''), which will acquire, 
operate and maintain the apartment complexes in accordance with the 
purposes and criteria set forth in the Commission's release concerning 
two-tier real estate partnerships (the ``Release'').\1\
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    \1\ Investment Company Act Release No. 8456 (Aug. 9, 1974).
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    3. The Partnership's investment objectives are to realize (a) 
Certain tax benefits including low-income housing tax credits, (b) 
potential capital appreciation through increases in value and, to the 
extent applicable, amortization of the mortgage indebtedness of the 
apartment complexes, (c) cash distributions from liquidation, sale or 
refinancing of the apartment complexes (except with respect to certain 
non-profit Operating Partnerships), and (d) to the extent available, 
limited cash flow from operations.
    4. On October 22, 2003, the Partnership filed a registration 
statement under the Securities Act of 1933 for the sale of 
approximately 7,000,000 units of beneficial interest (``Units'') at 
$10.00 per Unit. The Partnership plans to offer a total of 15,000,000 
Units for a period of approximately twenty-four months from the 
effective date of the Partnership's registration statement. The minimum 
investment will be of $5,000.
    5. When placing an order for Units, an investor must represent in 
writing that he meets applicable suitability standards. The 
Partnership's prospectus (``Prospectus'') provides that each investor 
will meet the following suitability standards: (a) Net worth (exclusive 
of home, home furnishings and automobiles) in excess of $150,000; or 
(b) annual gross income of $45,000 and a net worth (exclusive of home, 
home furnishings and automobiles) of $45,000. In no event will the 
Partnership employ suitability standards which are less restrictive 
than these standards. The Partnership also will impose certain 
restrictions on the transfer and assignment of the Units, including 
that each proposed assignee must produce evidence of his suitability.
    6. The Partnership will be controlled by the General Partner 
pursuant to a partnership agreement (``Partnership Agreement''). The 
limited partners, consistent with their limited liability status, will 
not be entitled to participate in the control of the Partnership's 
business. However, the majority in interest of the limited partners 
will have the right (subject to certain limitations) to amend the 
Partnership Agreement, dissolve the Partnership, and remove the General 
Partner and elect a replacement. In addition, under the Partnership 
Agreement, each limited partner is entitled to review all books and 
records of the Partnership at any and all reasonable times.
    7. The Partnership Agreement provides that certain significant 
actions cannot be taken by the General Partner without the express 
consent of a majority in interest of the limited partners. Such actions 
include: (a) Sale at any one time of all or substantially all of the 
assets of the Partnership; (b) dissolution of the Partnership; (c) sale 
of a substantial portion of the apartment complexes by the Operating 
Partnerships; and (d) the admission of a successor or additional 
general partner.
    8. The Partnership will normally attempt to acquire between 90% and 
99% interest in the operating profits, losses and tax credits of each 
Operating Partnership, with the balance remaining with the general 
partner of the Operating Partnership (``Operating General Partner''). 
The Partnership will normally attempt to acquire a substantial (50% to 
99%) interest in the cash distributions of each Operating Partnership, 
with the balance remaining with the Operating General Partner. 
Regardless of the percentage interest the Partnership has in an 
Operating Partnership, the Operating Partnership's partnership 
agreement will include the right to: (a) Approve or disapprove the sale 
or refinancing of the applicable apartment complex; (b) replace the 
Operating General Partner; (c) approve or disapprove the dissolution of 
the Operating Partnership; (d) approve or disapprove amendments to the 
Operating Partnership's partnership agreement; and (e) direct the 
Operating General Partner to convene meetings and submit matters to a 
vote. The Partnership is expected to have access to the books and 
records of the Operating Partnership and to receive annual and 
quarterly reports. In addition, the Partnership will require that all 
Operating Partnerships provide to the limited partners substantially 
all of the rights required by section VII of the guidelines adopted by 
the North American Securities Administrators Association, Inc. 
(``NASAA'').
    9. Applicants state that the Partnership Agreement and Prospectus 
will contain provisions designed to ensure fair dealing by the General 
Partner with the investors. All compensation to be paid to the General 
Partner and its affiliated persons (``affiliates'') is specified in the 
Partnership Agreement and the Prospectus. The fees and other forms of 
compensation that will be paid to the General Partner and its 
affiliates will not have been negotiated through arms-length 
negotiations. Terms of all such compensation, however, are believed to 
be fair and not less favorable to the Partnership than would be the 
case if such terms had not been negotiated with independent third 
parties. Applicants state that the Partnership believes that such 
compensation meets all applicable guidelines necessary to permit the 
Units to be offered and sold in the various states which prescribe such 
guidelines. These guidelines include, without limitation, the 
statements of policy adopted by NASAA applicable to real estate 
programs in the form of limited partnerships.
    10. During the acquisition phase, Boston Capital Services, Inc. 
(``BCS'') will receive commissions up to 7% of the aggregate gross 
proceeds on the sale of Units. BCS also will receive an expense 
allowance of up to 0.5% of the gross proceeds to defray accountable due 
diligence activities, up to a 2% dealer-manager fee and up to 1% for 
sales expenses. Boston Capital Holdings, LP will receive an asset 
acquisition fee of up to 8.5%.

[[Page 25938]]

    11. During the operating phase, the General Partner will receive 1% 
of profits, credits, losses and net cash flow based on the 
Partnership's share of these items from the Operating Partnerships. The 
General Partner (or its affiliates) will also receive an annual 
Partnership management fee of 0.5%. Affiliates of the General Partner 
will receive a property management fee for the apartment complexes of 
up to 5% of the gross receipts from the complexes. In addition, the 
General Partner and its affiliates may be reimbursed for the actual 
costs of goods and materials used for or by the Partnership during the 
operational phase. During the liquidation phase, the General Partner 
will receive 5% of any liquidation, sale or refinancing proceeds after 
certain priority allocations and distributions.
    12. All proceeds of the public offering of Units will initially be 
placed in an escrow account with the Wainwright Bank & Trust Company. 
The Partnership intends to apply such proceeds to the acquisition of 
Operating Partnership interests as soon as possible. Such proceeds may 
be temporarily invested in bank time deposits, certificates of deposit, 
bank money market accounts, and government securities. The Partnership 
will not trade or speculate in temporary investments. If subscriptions 
for at least 250,000 Units have not been received by one year from the 
date upon which the Partnership's registration statement is declared 
effective, no Units will be sold and funds paid by subscribers will be 
returned promptly, together with a pro rata share of any interest 
earned thereon.

Applicants' Legal Analysis

    1. Section 6(c) authorizes the Commission to grant an exemption 
from the Act to the extent necessary or appropriate in the public 
interest and consistent with the protection of investors and the 
purposes fairly intended by the policy and provisions of the Act. 
Section 6(e) permits the Commission to require companies exempted from 
the registration requirements of the Act to comply with certain 
specified provisions of the Act as though the company were a registered 
investment company. Applicants seek an order under sections 6(c) and 
6(e) exempting the Partnership from all provisions of the Act, except 
sections 37 through 53 and the rules and regulations under those 
sections, other than rule 38a-1.
    2. Applicants assert that the requested relief is consistent with 
the protection of investors and the purposes and policies underlying 
the Act. Applicants assert, among other things, that investment in low 
and moderate income housing in accordance with the national policy 
expressed in Title IX of the Housing and Urban Development Act of 1968 
is not economically suitable for private investors without the tax and 
organizational advantages of the limited partnership form.
    3. Applicants believe that the two-tier structure is consistent 
with the purposes and criteria set forth in the Release. The Release 
states that investment companies that are two-tier real estate 
partnerships that invest in limited partnerships engaged in the 
development and operation of housing for low and moderate income 
persons may qualify for an exemption from the Act pursuant to section 
6(c).
    4. The Release lists two conditions, designed for the protection of 
investors, which must be satisfied by two-tier partnerships to qualify 
for the exemption under section 6(c). First, interests in the issuer 
should be sold only to persons for whom investments in limited profit, 
essentially tax-shelter, investments would not be unsuitable. Second, 
requirements for fair dealing by the general partner of the issuer with 
the limited partners of the issuer should be included in the basic 
organizational documents of the company.
    5. Applicants assert, among other things, that the suitability 
standards set forth in the application, the requirements for fair 
dealing provided by the Partnership Agreement, and pertinent 
governmental regulations imposed on each Operating Partnership by 
various Federal, state, and local agencies provide protection to 
investors in Units.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-10559 Filed 5-7-04; 8:45 am]
BILLING CODE 8010-01-P