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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 0-20057
WNC HOUSING TAX CREDIT FUND II, L.P.
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
California 33-0391979
WNC HOUSING TAX CREDIT FUND II, L.P.
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
Title of Securities Exchanges on which Registered
NONE NOT APPLICABLE
Securities registered pursuant to section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. Inapplicable.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
NONE
Item 1. Business
Organization
WNC Housing Tax Credit Fund II, L.P. ("HTCF II" or the "Partnership") is a
California limited partnership formed under the laws of the State of California
on January 19, 1990. The Partnership was formed to acquire limited partnership
interests in local limited partnerships ("Local Limited Partnerships") which own
multifamily apartment complexes that are eligible for low-income housing federal
income tax credits ("Low Income Housing Credits").
The general partner of the Partnership is WNC Financial Group, L.P. (the
"General Partner"). The general partners of WNC Financial Group, L.P. are WNC &
Associates, Inc. ("Associates") and Wilfred N. Cooper, Sr. The business of the
Partnership is conducted primarily through Associates as neither the General
Partner nor the Partnership has employees of its own.
On April 27, 1990, the Partnership commenced a public offering of 12,000 Units
of Limited Partnership Interests ("Units"), at a price of $1,000 per Unit. The
General Partner concluded the sale of Units on December 31, 1992. A total of
7,000 Units representing $7,000,000 had been sold. Holders of Units are referred
to herein as "Limited Partners."
Description of Business
The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner in Local Limited
Partnerships each of which will own and operate an apartment complex ("Apartment
Complex") which will qualify for the Low Income Housing Credit. In general,
under Section 42 of the Internal Revenue Code, an owner of low-income housing
can receive the Low Income Housing Credit to be used against Federal taxes
otherwise due in each year of a ten year period. In general, under Section 17058
of the California Revenue and Taxation Code, an owner of low-income housing can
receive the Low Income Housing Credit to be used against California taxes
otherwise due in each year of a four-year period. The Apartment Complex is
subject to a 15-year compliance period (the "Compliance Period").
In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by a Local Limited Partnership of any Apartment Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Apartment
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more year in the future, and (iii) the inability of the
Partnership to directly cause the sale of Apartment Complexes by the general
partners of the respective Local Limited Partnerships ("Local General
Partners"), but generally only to require such Local General Partners to use
their respective best efforts to find a purchaser for the Apartment Complexes,
it is not possible at this time to predict whether the liquidation of
substantially all of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership Agreement will be able to
be accomplished promptly at the end of the 15-year period. If a Local Limited
Partnership is unable to sell an Apartment Complex, it is anticipated that the
Local General Partner will either continue to operate such Apartment Complex or
take such other actions as the Local General Partner believes to be in the best
interest of the Local Limited Partnership. In addition, circumstances beyond the
control of the General Partner may occur during the Compliance Period which
would require the Partnership to approve the disposition of an Apartment Complex
prior to the end thereof.
2
As of December 31, 1996, HTCF II had invested in twenty seven Local Limited
Partnerships. Each of these Local Limited Partnerships own an Apartment Complex
that is eligible for the Low Income Housing Credit. All of the Local Limited
Partnerships also benefit from government programs promoting low or moderate
income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low income housing and to the
management and ownership of multifamily residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and neither the
Partnership's investments nor the Apartment Complexes owned by Local Limited
Partnerships will be readily marketable. Additionally, there can be no assurance
that the Partnership will be able to dispose of its interest in Local Limited
Partnerships at the end of the Compliance Period. The value of the Partnership's
investments will be subject to changes in national and local economic
conditions, including unemployment conditions, which could adversely impact
vacancy levels, rental payment defaults and operating expenses. This, in turn,
could substantially increase the risk of operating losses for the Apartment
Complexes and the Partnership. The Apartment Complexes could be subject to loss
through foreclosure. In addition, each Local Limited Partnership is subject to
risks relating to environmental hazards which might be uninsurable. Because the
Partnership's ability to control its operations will depend on these and other
factors beyond the control of the General Partner and the general partners of
the Local Limited Partnerships, there can be no assurance that Partnership
operations will be profitable or that the anticipated Low Income Housing Credits
will be available to Limited Partners.
As of December 31, 1996, all of the Apartment Complexes were completed and in
operation. The Apartment Complexes owned by the Local Limited Partnerships in
which HTCF II has invested were developed by the Local General Partners who
acquired the sites and applied for applicable mortgages and subsidies. HTCF II
became the principal limited partner in these Local Limited Partnerships
pursuant to arm's-length negotiations with Local General Partners. As a limited
partner, HTCF II liability for obligations of the Local Limited Partnership is
limited to its investment. The Local General Partner of the Local Limited
Partnership retains responsibility for maintaining, operating and managing the
Apartment Complex.
The following is a schedule of the status as of December 31, 1996, of the
Apartment Complexes owned by Local Limited Partnerships in which HTCF II is a
limited partner:
3
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH HTCF II HAS AN INVESTMENT
December 31, 1996
-----------------------------------------------------------------
No. Percentage of
of Units Units Total Units
Name & Location Units Completed Occupied Occupied
Airport Road Assoc. 40 40 39 98%
Slidell, Louisiana
Am-Kent Associates, Ltd. 32 32 32 100
Amite & Kentwood, Louisiana
Arizonia I 42 42 42 100
Shaw Low, Arizonia
Ashland Investment Group 40 40 39 97
Ashland, Oregon
Brantley Housing, Ltd. 19 19 16 84
Brantley, Alabama
Brian's Village Apartments, Ltd. 28 28 28 100
Mannford, Oklahoma
Candlerigde Apartments of Perry LP 23 23 21 91
Perry, Iowa
Candlerigde Apts of Runnells L.P. 15 15 13 87
Runnells, Iowa
Casa Allegre Limited Partnership 42 42 40 95
Las Vegas, New Mexico
Castroville Village, Ltd. 40 40 39 98
Castroville, Texas
Cherokee 31 31 30 97
Rogersville, Tennessee
Divall Midland Associates Limited II 32 32 30 94
Port Washington, Wisconsin
Eclectic Housing, Ltd 15 15 14 93
Electic, Alabama
Elizabeth Square 48 48 48 100
Raceland, Louisiana
Emory Capital, L.P. 16 16 16 100
Emory, Texas
Emory Manor, L.P. 24 24 24 100
Emory, Texas
Idalou Manor, L.P. 24 24 24 100
Idalou, Texas
Jefferson Capital, L.P. 30 30 28 93
Jefferson, Texas
Jefferson Manor, L.P. 32 32 32 100
Jefferson, Texas
Lake View, a Wisconsin Limited 40 40 36 90
Partnership
Littlefield Manor, L.P. 24 24 22 93
Littlefield, Texas
Perry County Housing, Ltd. 15 15 13 87
Uniontown, Alabama
Pine Hill Housing, Ltd. 19 19 18 95
Pine Hill, Alabama
Rociada Partners Limited 28 28 28 100
Hereford, Texas
Wadley Housing, Ltd. 15 15 9 60
Wadley, Alabama
Whitewater Woods, 40 40 38 95
Whitewater, Wisconsin
Willcox Investment Group 30 30 29 97
Willcox, Arizonia
---- ----------- ---------- ----------------
Totals 784 784 748 95%
==== === === ===
4
Item 2. Properties
Through its investment in Local Limited Partnerships HTCF II holds interests in
Apartment Complexes. See Item 1 for information pertaining to these Apartment
Complexes.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Units are not traded on a public exchange but were sold through a public
offering. It is not anticipated that any public market will develop for the
purchase and sale of any Unit. Units can be assigned only if certain
requirements in HTCF II's Agreement of Limited Partnership ("Partnership
Agreement") are satisfied.
At December 31, 1996, there were 577 Limited Partners HTCF II. The Partnership
was not designed to provide cash distributions to Limited Partners in
circumstances other than refinancing or disposition of its investments in Local
Limited Partnerships. The Limited Partners received Low Income Housing Credits
per Unit of $145 for 1996 and 1995.
5
Item 6. Selected Financial Data
Years ended December 31,
-----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Revenues $10,157 $11,368 $9,287 $11,193 $23,054
Partnership operating
expenses (234,161) (186,417) (181,780) (176,139) (169,369)
Equity in loss of
Local Limited Partners (568,488) (602,163) (544,630) (634,893) (551,431)
-------- -------- --------- -------- --------
Net loss $(792,492) $(777,212) $(717,123) $(799,839) $(697,745)
======== ======== ======== ======== ========
Net loss per Limited
Partnership Interest $ (112) $ (110) $ (101) $ (113) $ (99)
===== ======== ======== ======== ========
Total assets $2,214,272 $2,898,812 $3,530,041 $4,189,583 $4,872,397
========= ========= ========= ========= =========
Net investment in
Local Limited Partnerships $2,005,382 $2,606,673 $3,289,100 $3,812,614 $4,220,797
========= ========= ========= ========== =========
Capital contributions
payable to
Local Limited Partnerships $ 0 $ 0 $ 0 $ 132,820 $ 105,774
========== ========== ========== ========== ==========
6
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Liquidity and Capital Resources
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash of approximately $30,200 for the period ended December 31,
1996. This decrease in cash represents cash provided by investing activities
consisting entirely of distributions from Local Limited Partnerships of
approximately $11,400, offset by operating activities of approximately $41,600.
Cash provided by operating activities consisted of interest income and payments
from affiliates. Cash used consisted primarily of payments for operating fees
and expenses. The major components of all these activities are discussed in
greater detail below.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
increase in cash of approximately $740 for the period ended December 31, 1995.
This increase in cash was provided by investing activities consisting entirely
of distributions from Local Limited Partnerships of approximately $6,190 and
uses by operating activities of approximately $5,440. Cash provided by operating
activities consisted of interest income and payment of receivable from
affiliates. Cash used consisted primarily of payments for operating fees and
expenses. The major components of all these activities are discussed in greater
detail below.
The Partnership is indebted to an affiliate of the General Partner in the amount
of approximately $758,800. The component items of such indebtedness are as
follows: accrued management fees of approximately $758,200 and amounts net of
due from the affiliate of approximately $600.
As of March 31, 1997 and December 31, 1996, the Partnership has received
approximately $7,000,000 from the sale of the Limited Partnership Interests and
and applied the Net Proceeds thereof available for investment to the payment of
Acquisition Fees and Acquisition Expenses, the establishment of Reserves, the
payment of operating expenses and the acquisition of investments in Local
Limited Partnerships which own the Apartment Complexes.
Prior to sale of the Apartment Complexes, it is not expected that any of the
Local Limited Partnerships in which the Partnership has invested or will invest
will generate cash sufficient to provide distributions to The Partnership of any
material amount. Distributions to the Partnership would first by used to meet
operating expenses of the Partnership, including the payment of the Asset
Management Fee to the General Partner. See Item 11 hereof. As a result, it is
not anticipated that the Partnership will provide distributions to the Limited
Partners prior to the same of the Apartment Complexes.
The Partnership's investments are not readily marketable and may be affected by
adverse general economic conditions which, in turn, could substantially increase
the risk of operating losses for the Apartment Complexes, the Local Limited
Partnerships and the Partnership. These problems may result from a number of
factors, many of which cannot be controlled by the General Partner.
Nevertheless, the General Partner anticipates that capital raised from the sale
of the Limited Partnership Interests is sufficient to fund the Partnership's
operations.
7
Upon completion of its public offering (in 1992) the Partnership established
working capital reserves of approximately 3.0% of the Limited Partners' capital
contributions. This amount is anticipated to be sufficient to satisfy general
working capital and administrative expense requirements of the Partnership
including payment of the asset management fee as well as expenses attendant to
the preparation of tax returns and reports to the limited partners and other
investor servicing obligations of the Partnership. Liquidity would, however, be
adversely affected by unanticipated or greater than anticipated operating costs.
To the extent that working capital reserves are insufficient to satisfy the cash
requirements of the Partnership, it is anticipated that additional funds would
be sought through bank loans or other institutional financing. The General
Partner may also apply any cash distributions received from the local limited
partnerships for such purposes or to replenish or increase working capital
reserves.
Under its partnership agreement, the Partnership does not have the ability to
assess its partners for additional capital contributions to provide capital if
needed by the Partnership or Local Limited Partnerships. Accordingly, if
circumstances arise that cause the Local Limited Partnerships to require capital
in addition to that contributed by the Partnership and any equity of the Local
General Partners, the only sources from which such capital needs will be able to
be satisfied (other than the limited reserves available at the Partnership
level) will be (i) third-party debt financing (which may not be available, if,
as expected, the Apartment Complexes owned by the Local Limited Partnerships are
already substantially leveraged), (ii) additional equity contributions or
advances of the Local General Partners, (iii) other equity sources (which could
adversely affect the Partnership's interest in tax credits, cash flow and/or
proceeds of sale or refinancing of the apartment complexes and result in adverse
tax consequences to the limited partners), or (iv) the sale or disposition of
the Apartment Complexes (which could have the same adverse effects as discussed
in (iii) above). There can be no assurance that funds from any of such sources
would be readily available in sufficient amounts to fund the capital requirement
of the Local Limited Partnerships in question. If such funds are not available,
the Local Limited Partnerships would risk foreclosure on their apartment
complexes if they were unable to renegotiate the terms of their first mortgages
and any other debt secured by the Apartment Complexes to the extent the capital
requirements of the Local Limited Partnerships relate to such debt.
Liquidity
HTCF II's primary source of funds was the proceeds of its public offering. Other
sources of liquidity include interest earned on cash balances and distributions
from Local Limited Partnerships. The Local Limited Partnerships are expected to
maintain working capital reserves independent of those maintained by the
Partnership to the extent that (i) the terms of mortgage debt encumbering the
Apartment Complexes or the terms of any government assistance program so
require, or (ii) the Local General Partner determines that such reserves are
necessary or advisable. Although reserves are to be maintained at both the
Partnership and Local Limited Partnership levels, if such reserves and other
available income, if any, are insufficient to cover the Partnership's or any
Local Limited Partnership's operating expenses and liabilities, it may be
necessary to accumulate additional funds from distributions received from Local
Limited Partnerships which would otherwise be available for distribution to the
Limited Partners, or to liquidate the Partnership's investment in one or more
Local Limited Partnerships.
8
Reserves of the Partnership and reserves of the Local Limited Partnership may be
increased or decreased from time to time by the General Partner or the Local
General Partner, as the case may be, in order to meet anticipated costs and
expenses. The amount of cash flow available for distribution and/or Sale or
Refinancing Proceeds, if any, which is available for distribution to the Limited
Partners may be affected accordingly.
Results of Operations
The Partnership was formed to provide various benefits to its Limited Partners
as discussed in Item 1. It is not expected that any of the Local Limited
Partnerships in which the Partnership has invested will generate cash flow
sufficient to provide for distributions to Limited Partners in any material
amount. The Partnership accounts for its investments in the Local Limited
Partnerships on the equity method, thereby adjusting its investment balance by
its proportionate share of the income or loss of the local limited partnerships.
Consistent with the Partnership's investment objectives, each Local Limited
Partnership is generating or is expected to generate Low Income Housing Credits
for a period of approximately ten years, commencing with completion of
construction or rehabilitation of its Apartment Complex(es) and is generating or
is expected to generate losses until sale of the Apartment Complex(es).
As reflected on its Statements of Operations, the Partnership had losses of
$792,492, $777,212, and $717,123, for the years ended December 31, 1996, 1995,
and 1994, respectively. The component items of revenue and expense are discussed
below.
Revenue. Partnership revenues consisted entirely of interest earned on cash
deposits held in financial institutions (i) as Reserves, or (ii) pending
investment in Local Limited Partnerships. Interest revenue in future years will
be a function of prevailing interest rates and the amount of cash balances.
Expenses. The most significant component of operating expenses is expected to be
the Asset Management Fee. The Asset Management Fees is equal to 0.5% of Invested
asset in local Limited Partnerships: accordingly the amount to be incurred in
the future is a function of the level of such invested assets (i.e., the sum of
the Partnerships' capital contributions to the Local Limited Partnerships plus
the Partnership's share of the debts related to the Apartment Complexes owned by
such Local Limited Partnerships). The annual management fee incurred was
$144,903, $144,903, and $144,903 for the years ended December 31, 1996, 1995,
and 1994, respectively.
Office expense consists of the Partnership's administrative expenses, such as
accounting and legal fees, bank charges and investor reporting expenses.
Equity in losses from Local Limited Partnerships. The Partnership's equity in
losses from Local Limited Partnerships is equal to 99% of the aggregate net loss
of the Local Limited Partnerships. After rent-up, the Local Limited Partnerships
have generated and are expected to continue generating losses during each year
of operations. This is so because, although rental income is generally expected
to exceed cash operating expenses, depreciation and amortization deductions
claimed by the Local Limited Partnerships are expected to exceed net rental
income.
The Partnership, as a Limited Partner in the Local Limited Partnerships in which
it has invested, is subject to the risks incident to the construction,
management, and ownership of improved real estate. The Partnership investments
are also subject to adverse general economic conditions, and accordingly, the
status of the national economy, including substantial unemployment and
concurrent inflation, could increase vacancy levels, rental payment defaults,
and operating expenses, which in turn, could substantially increase the risk of
operating losses for the Apartment Complexes.
9
Item 8. Financial Statements and Supplementary Data
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
FINANCIAL STATEMENTS
For The Years Ended
December 31, 1996, 1995 and 1994
with
INDEPENDENT AUDITORS' REPORT THEREON
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC Housing Tax Credit Fund II, L.P.
We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund
II, L.P. (a California Limited Partnership) (the "Partnership") as of December
31, 1996 and 1995, and the related statements of operations, partners' equity
(deficit) and cash flows for the years ended December 31, 1996, 1995 and 1994.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of the
limited partnerships in which WNC Housing Tax Credit Fund II, L.P. is a limited
partner. These investments, as discussed in Note 2 to the financial statements,
are accounted for by the equity method. The investments in these limited
partnerships represented 91% and 90% of the total assets of WNC Housing Tax
Credit Fund II, L.P. at December 31, 1996 and 1995, respectively. The financial
statements of the limited partnerships were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to the
amounts included for these limited partnerships, is based solely on the reports
of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund II, L.P. (A California
Limited Partnership) as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years ended December 31, 1996, 1995 and
1994 in conformity with generally accepted accounting principles.
/s/ Corbin & Wertz
------------------
CORBIN & WERTZ
Irvine, California
March 24, 1997
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS 1996 1995
---------- ----------
Cash and cash equivalents $ 208,303 $ 238,482
Investments in limited partnerships
(Note 2) 2,005,382 2,606,673
Receivables from limited partnerships
(Note 3) --- 52,726
Other assets 587 931
---------- ----------
$2,214,272 $2,898,812
========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities -
Accrued fees and expenses due to
general partner and affiliates
(Note 4) $ 758,827 $ 650,875
---------- ----------
Partners' equity (deficit):
General partner (44,988) (37,063)
Limited partners (12,000 units
authorized; 7,000 units issued
and outstanding at December 31,
1996 and 1995) 1,500,433 2,285,000
---------- ----------
Total partners' equity 1,455,445 2,247,937
---------- ----------
$2,214,272 $2,898,812
========== ==========
See accompanying notes to financial statements
FS-2
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
---------- ---------- -----------
Interest income $ 10,157 $ 11,368 $ 9,287
--------- ---------- ----------
Operating expenses:
Amortization (Note 4) 21,352 23,266 23,905
Partnership management fees
(Note 4) 144,903 144,903 144,903
Other (Note 3) 67,906 18,248 12,972
---------- ---------- ----------
Total operating expenses 234,161 186,417 181,780
---------- ---------- ----------
Loss from operations (224,004) (175,049) (172,493)
Equity in losses from limited
partnerships (Note 2) (568,488) (602,163) (544,630)
---------- ---------- ----------
Net loss $ (792,492) $ (777,212) $ (717,123)
========== ========== ==========
Net loss allocated to:
General partner $ (7,925) $ (7,772) $ (7,171)
========== ========== ==========
Limited partner $ (784,567) $ (769,440) $ (709,952)
========== ========== ==========
Net loss per limited partner
unit $ (112.08) $ (109.92) $ (101.42)
========= ========= ==========
Outstanding weighted limited
partner units 7,000 7,000 7,000
========== ========== ==========
See accompanying notes to financial statements
FS-3
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended December 31, 1996, 1995 and 1994
General Limited
Partner Partners Total
--------- ---------- -------
Equity (deficit) -
January 1, 1994 $ (22,120) $ 3,764,392 $ 3,742,272
Net loss (7,171) (709,952) (717,123)
---------- ---------- ----------
Equity (deficit) -
December 31, 1994 (29,291) 3,054,440 3,025,149
Net loss (7,772) (769,440) (777,212)
---------- ---------- ----------
Equity (deficit) -
December 31, 1995 (37,063) 2,285,000 2,247,937
Net loss (7,925) (784,567) (792,492)
---------- ---------- ----------
Equity (deficit) -
December 31, 1996 $ (44,988) $ 1,500,433 $ 1,455,445
========== ========== ==========
See accompanying notes to financial statements
FS-4
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
---------- ---------- ----------
Cash flows from operating activities:
Net loss $ (792,492) $ (777,212) $ (717,123)
Write-off of receivables from
limited partnerships 52,726 --- ---
Adjustments to reconcile net loss to
net cash (used in) provided by
operating activities:
Amortization 21,352 23,266 23,905
Equity in loss of limited
partnerships 568,488 602,163 544,630
Change in other assets 344 357 (1,193)
Increase in accrued fees and
expenses due to general partner
and affiliates 107,952 145,983 190,401
---------- ---------- ----------
Net cash (used in) provided by
operating activities (41,630) (5,443) 40,620
---------- ---------- ----------
Cash flows from investing activities:
Investments in limited partnerships --- --- (131,100)
Capitalized acquisition costs and fees --- --- (44,189)
Distributions from limited partnership 11,451 6,186 ---
---------- ---------- ----------
Net cash provided by (used in) investing
activities 11,451 6,186 (175,289)
---------- ---------- ----------
Net change in cash and cash
equivalents (30,179) 743 (134,669)
Cash and cash equivalents, beginning of
year 238,482 237,739 372,408
---------- ---------- ----------
Cash and cash equivalents, end of year $ 208,303 $ 238,482 $ 237,739
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ --- $ --- $ ---
========== ========== ==========
Cash paid for taxes $ 800 $ 800 $ 800
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITY:
During 1995, the Partnership decreased its investments in partnerships and
recorded a receivable from limited partnerships amounting to $52,726. During
1996, such amounts were written-of as uncollectible (see Note 3).
During 1994, the Partnership incurred a decrease in investments in limited
partnerships of $1,720, resulting from a reduction of the purchase price. Such
reduction was offset against payables to limited partnerships.
See accompanying notes to financial statements
FS-5
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC Housing Tax Credit Fund II, L.P. (A California Limited Partnership) (the
"Partnership") was formed on January 19, 1990 under the laws of the State of
California. The Partnership was formed to invest primarily in other limited
partnerships which own and operate multifamily housing complexes that are
eligible for low income Low Income Housing Credits.
WNC Financial Group, L.P., a California partnership, is the general partner
("General Partner") of the Partnership. WNC & Associates, Inc. is the general
partner of WNC Financial Group, L.P. Other officers and key employees of WNC &
Associates, Inc. are limited partners.
The Partnership shall continue in full force and effect until December 31, 2045
unless terminated prior to that date pursuant to the partnership agreement or
law.
The Partnership Agreement authorized the sale of up to 12,000 units of Limited
Partnership Interest at $1,000 per Unit ("Units"). The offering of Units
concluded on December 31, 1992 at which time 7,000 Units, representing
subscriptions in the amount of $7,000,000, had been accepted. The General
Partner has a 1% interest in operating profits and losses of the Partnership.
The limited partners will be allocated the remaining 99% interest in proportion
to their respective investments.
After the limited partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership Agreement) and the General Partner has received a
subordinated disposition fee (as described in Note 4), and any additional sale
or refinancing proceeds will be distributed 90% to the limited partners (in
proportion to their respective investments) and 10% to the General Partner.
The Partnership's investments in limited partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate,
and include the risks that neither the Partnership's investments nor the
apartment complexes owned by the limited partnerships will be readily
marketable. Additionally there can be no assurance that the Partnership will be
able to dispose of its interest in the limited partnerships. The value of the
Partnership's investments will be subject to changes in national and local
economic conditions, including unemployment conditions, which could adversely
impact vacancy levels, rental payment defaults and operating expenses. This, in
turn, could substantially increase the risk of operating losses for the
apartment complexes and the Partnership. The apartment complexes could be
subject to loss through foreclosure. In addition, each limited partnership is
subject to risks relating to environmental hazards which might be uninsurable.
Because the Partnership's ability to control its operations will depend on these
and other factors beyond the control of the General Partner and the general
partners of the limited partnerships, there can be no assurance that Partnership
operations will be profitable or that the anticipated Low Income Housing Credits
will be available to limited partners.
Continued
FS-6
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Method of Accounting For Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of each limited partnership's results of operations and
for any distributions received. The accounting policies of the limited
partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments in limited partnerships are capitalized
as part of the investment account and are amortized over 30 years (see Note 2).
Losses from operating partnerships allocated to the Partnership are not
recognized to the extent that the investment balance would be adjusted below
zero.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents.
Organization Costs
Organization costs of $12,760 were being amortized on the straight-line method
over sixty months. Such costs were fully amortized as of December 31, 1996 and
1995.
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. The General Partner is obligated to
pay all offering and organization costs in excess of 15% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of limited partners' capital. As of December 31, 1996 and 1995, the
Partnership had incurred offering expenses and selling expenses of $1,036,840
which are reflected as a reduction of partners' equity.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
Net Loss Per Limited Partner Unit
Net loss per limited partner unit was computed by dividing the limited partners'
share of net loss by the weighted number of limited partner units outstanding.
Continued
FS-7
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of December 31, 1996 and 1995, the Partnership has acquired limited
partnership interests in twenty-seven limited partnerships which own and operate
apartment complexes consisting of 784 apartment units. The respective general
partners of the limited partnerships manage the day-to-day operations of the
limited partnerships. Significant limited partner business decisions, as
defined, require the approval of the Partnership. The Partnership, as a limited
partner, is generally entitled to 99% of the operating profits and losses of the
limited partnerships.
The Partnership's investment in limited partnerships as shown in the
accompanying balance sheets at December 31, 1996 and 1995 are approximately
$503,000 and $529,000, respectively, greater than the Partnership's equity as
shown in the limited partnerships' combined financial statements. This
difference is due primarily to acquisition and other costs related to the
acquisition of the limited partnerships which were capitalized to the
Partnership's investment account. Such costs are being amortized over 30 years
(see Note 4).
The following is a summary of the equity method activity of the investments in
limited partnerships for the years ended December 31:
1996 1995
---------- ----------
Investments per balance sheet,
beginning of year $ 2,606,673 $ 3,289,100
Accrued reduction in capital contributions
(Note 3) --- (52,726)
Equity in losses of limited partnerships (568,488) (602,163)
Distributions (11,451) (6,186)
Amortization of capitalized acquisition
costs and fees (21,352) (21,352)
---------- ----------
Investments per balance sheet, end of year $ 2,005,382 $ 2,606,673
========== ==========
Continued
FS-8
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
Approximate combined condensed financial information from the individual
financial statements of the limited partnerships as of December 31 and for the
years then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
1996 1995
---------- ----------
Assets
- ------
Buildings and improvements, net of
accumulated depreciation for 1996 and
1995 of $5,308,000 and $4,440,000,
respectively $23,499,000 $24,286,000
Land 1,354,000 1,354,000
Other assets 1,780,000 1,711,000
---------- ----------
Total assets $26,633,000 $27,351,000
========== ==========
Liabilities
- -----------
Mortgage loans payable $23,640,000 $23,702,000
Other liabilities 695,000 751,000
---------- ----------
Total liabilities 24,335,000 24,453,000
---------- ----------
Partners' Capital
- -----------------
WNC Housing Tax Credit Fund II, L.P. 1,502,000 2,078,000
Other partners 796,000 820,000
---------- ----------
Total partners' capital 2,298,000 2,898,000
---------- ----------
Total liabilities and partners'
capital $26,633,000 $27,351,000
========== ==========
COMBINED CONDENSED STATEMENTS OF OPERATIONS
1996 1995 1994
---------- ---------- ----------
Total revenues $ 3,068,000 $ 3,275,000 $ 3,004,000
---------- ---------- ----------
Expenses:
Operating expenses 1,837,000 1,724,000 1,628,000
Interest expense 937,000 1,262,000 1,011,000
Depreciation and amort-
ization 868,000 897,000 914,000
---------- ---------- ----------
Total expenses 3,642,000 3,883,000 3,553,000
---------- ---------- ----------
Net loss $ (574,000) $ (608,000) $ (549,000)
========== ========== ==========
Net loss allocable to the
Partnership $ (568,000) $ (602,000) $ (545,000)
========== ========== ==========
Continued
FS-9
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
During 1996, 1995 and 1994, certain limited partnerships incurred operating
losses and had working capital deficiencies. In the event these limited
partnerships incur significant operating losses in the future, additional
capital contributions by the Partnership may be required to sustain the
operations of such limited partnerships. If additional capital contributions are
not made when they are required, the Partnership's investment in certain of such
limited partnerships could be impaired.
NOTE 3 - RECEIVABLES FROM LIMITED PARTNERSHIPS
Receivables from limited partnerships represented amounts due to the Partnership
for payments made in excess of required contributions, as defined. Such amounts
are non-interest bearing and due on demand. During 1996, it was determined by
management of the Partnership that such amounts would not be collected.
Accordingly, such amounts were written-off and are included in other operating
expenses on the accompanying 1996 statement of operations.
NOTE 4 - RELATED PARTY TRANSACTIONS
Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partner or its affiliates for the following items:
Selection fees equal to 9% of the gross proceeds from the sale of
partnership units as compensation to the General Partner for services
rendered to the Partnership in connection with the acquisition of
limited partnerships. As of December 31, 1996 and 1995, selection fees
of $630,000 have been incurred and included in the Partnership's
investment in limited partnerships. Accumulated amortization amounted
to $118,731 and $97,731 as of December 31, 1996 and 1995,
respectively.
Reimbursement of costs incurred by an affiliate of the General Partner
in connection with the acquisition of limited partnerships. These
reimbursements have not exceeded 1.7% of the gross proceeds. As of
December 31, 1996 and 1995, the Partnership incurred acquisition costs
of $10,581 which have been included in limited partnership investment.
Accumulated amortization amounted to $2,444 and $2,092 as of December
31, 1996 an 1995, respectively.
An annual management fee equal to 0.5% of the invested assets of the
limited partnerships, including the Partnership's allocable share of
the mortgages. Management fees of $144,903, $144,903 and $144,903 were
incurred for 1996, 1995 and 1994, respectively, of which $35,000 and
$103,269 were paid in 1996 and 1995, respectively. No amounts were
paid in 1994.
A subordinated disposition fee in an amount equal to 1% of the sales
price of any property sold. Payment of this fee to the General Partner
is subordinated to the limited partners who receive a 6% preferred
return (as defined in the Partnership Agreement) and is payable only
if the General Partner or its affiliates render services.
Continued
FS-10
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 4 - RELATED PARTY TRANSACTIONS, continued
Accrued fees and expenses due to general partner and affiliates consist of the
following at December 31:
December 31,
------------
1996 1995
---------- ----------
Annual management fee $ 758,211 $ 606,953
Reimbursement due on expenses paid
by affiliate 616 43,922
----------- -----------
Total related party payables $ 758,827 $ 650,875
=========== ===========
NOTE 5 - INCOME TAXES
No provision for income taxes has been recorded in the accompanying financial
statements as any liability for income taxes is the obligation of the partners
of the Partnership.
FS-11
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers of its own. The following
biographical information is presented for the directors and executive officers
of Associates which has principal responsibility for the Partnership's affairs.
Directors and Executive Officers of WNC & Associates, Inc.
WILFRED N. COOPER, SR., age 65, has been the principal shareholder and a
Director of WNC & ASSOCIATES, INC. since its organization in 1971, of SHELTER
RESOURCE CORPORATION since its organization in 1981 and of WNC RESOURCES, INC.
from its organization in 1988 through its acquisition by WNC & ASSOCIATES, INC.
in 1991, serving as President of those companies until 1992 and as Chief
Executive Officer since 1992, and has been a Director of WNC CAPITAL CORPORATION
since its organization. He is also a general partner with WNC & ASSOCIATES, INC.
in WNC FINANCIAL GROUP, L.P. and WNC TAX CREDIT PARTNERS, L.P. During 1970 and
1971 he was a principal of Creative Equity Development Corporation, a
predecessor of WNC & ASSOCIATES, INC., and of Creative Equity Corporation, a
real estate investment firm. For 12 years prior to that, Mr. Cooper was employed
by Rockwell International Corporation, last serving as its manager of housing
and urban developments. Previously, he had responsibility for new business
development including factory-built housing evaluation and project management in
urban planning and development. Mr. Cooper is a Director and a member of the
Executive Committee of the National Association of Home Builders (NAHB) and a
Chairman of the NAHB's Rural Housing Council, a Director of the National Housing
Conference, a Director of the Affordable Housing Tax Credit Coalition, a past
President of the Rural Builders Council of California (RBCC) and a past
President of Southern California Chapter II of the Real Estate Syndication and
Securities Institute (RESSI) of the National Association of Realtors (NAR). Mr.
Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree.
JOHN B. LESTER, JR., age 62, has been a shareholder, a Director and Secretary of
WNC & ASSOCIATES, INC. since 1986, Executive Vice President from 1986 to 1992,
and President and Chief Operating Officer since 1992, and has been a Director of
WNC CAPITAL CORPORATION since its organization. He was a shareholder, Executive
Vice President, Secretary and a Director of WNC RESOURCES, INC. from 1988
through its acquisition by WNC & ASSOCIATES, INC. in 1991. From 1973 to 1986 he
was Chairman of the Board and Vice President or President of E & L Associates,
Inc., a provider of engineering and construction services to the oil refinery
and petrochemical industries which he co-founded in 1973. Mr. Lester is a former
Director of the Los Angeles Chapter of the Associated General Contractors of
California. His responsibilities at WNC & ASSOCIATES, INC. include property
acquisitions and company operations. Mr. Lester graduated from the University of
Southern California in 1956 with a Bachelor of Science degree in Mechanical
Engineering.
DAVID N. SHAFER, age 44, has been a Senior Vice President of WNC & ASSOCIATES,
INC. since 1992 and General Counsel since 1990, and served as Asset Management
Director from 1990 to 1992. Previously he was employed as an associate attorney
by the law firms of Morinello, Barone, Holden & Nardulli from 1987 until 1990,
Frye, Brandt & Lyster from 1986 to 1987 and Simon and Sheridan from 1984 to
1986. Mr. Shafer is a Director and President of RBCC, a member of NAHB's Rural
Housing Council, a past President of Southern California Chapter II of RESSI, a
past Director of the Council of Affordable and Rural Housing and Development and
a member of the State Bar of California. Mr. Shafer graduated from the
University of California at Santa Barbara in 1978 with a Bachelor of Arts
degree, from the New England School of Law in 1983 with a Juris Doctor degree
and from the University of San Diego in 1986 with a Master of Law degree in
Taxation.
WILFRED N. COOPER, JR., age 33, has been employed by WNC & ASSOCIATES, INC.
since 1988 and has been a Senior Vice President or Vice President since 1992.
Mr. Cooper heads the Acquisition Origination department at WNC and has been
President of and a registered principal with WNC CAPITAL CORPORATION, a member
firm of the NASD, since its organization. Previously, he was employed as a
government affairs assistant by Honda North America from 1987 to 1988, and as a
legal assistant with respect to Federal legislative and regulatory matters by
the law firm of Schwartz, Woods and Miller from 1986 to 1987. Mr. Cooper is a
member of NAHB's Rural Housing Council and serves as Chairman of its Membership
Committee. Mr. Cooper graduated from The American University in 1985 with a
Bachelor of Arts degree.
THEODORE M. PAUL, age 40, has been Vice President - Finance of WNC & ASSOCIATES,
INC. since 1992 and Chief Financial Officer since 1990. Previously, he was a
Vice President and Chief Financial Officer of National Partnership Investments
Corp., a sponsor and general partner of syndicated partnerships investing in
affordable rental housing qualified for tax credits, from 1986 until 1990, and
was employed as an associate by the accounting firms of Laventhol & Horwath,
during 1985, and Mann & Pollack Accountants, from 1979 to 1984. Mr. Paul is a
member of the California Society of Certified Public Accountants and the
American Institute of Certified Public Accountants. His responsibilities at WNC
& ASSOCIATES, INC. include supervision of investor partnership accounting and
tax reporting matters and monitoring the financial condition of the Local
Limited Partnerships in which the Partnership will invest. Mr. Paul graduated
from the University of Illinois in 1978 with a Bachelor of Science degree and is
a Certified Public Accountant in the State of California.
THOMAS J. RIHA, age 41, has been Vice President - Asset Management of WNC &
ASSOCIATES, INC. since 1994. He has more than 17 years' experience in commercial
and multi-family real estate investment and management. Previously, Mr. Riha was
employed by Trust Realty Advisor, a real estate acquisition and management
company, from 1988 to 1994, last serving as Vice President - Operations. His
responsibilities at WNC & ASSOCIATES, INC. include monitoring the operations and
financial performance of, and regulatory compliance by, properties in the WNC
portfolio. Mr. Riha graduated from the California State University, Fullerton in
1977 with a Bachelor of Arts degree (cum laude) in Business Administration with
a concentration in Accounting and is a Certified Public Accountant in the State
of California and a member of the California Society of Certified Public
Accountants and the American Institute of Certified Public Accountants.
SY GARBAN, age 50, has 19 years' experience in the real estate securities and
syndication industry. He has been associated with WNC & ASSOCIATES, INC., since
1989, serving as National Sales Director through 1992 and as Vice President -
National Sales since 1992. Previously, he was employed by MRW, Inc., Newport
Beach, California from 1980 to 1989, a real estate acquisition, development and
management firm. Mr. Garban is a member of the International Association of
Financial Planners. Mr. Garban graduated from Michigan State University in 1967
with a Bachelor of Science degree in Business Administration.
CARL FARRINGTON, age 50, has been associated with WNC & ASSOCIATES, INC. since
1993, currently serving as Director - Originations since 1994. Mr. Farrington
has more than 12 years' experience in finance and real estate acquisitions.
Previously, he served as Acquisitions Director for The Arcand Company from 1991
to 1993, and as Treasurer and Director of Finance and Administrator for Polytron
Corporation from 1988 to 1991. Mr. Farrington is a member and Director of the
Council of Affordable and Rural Housing and Development. Mr. Farrington
graduated from Yale University with a Bachelor of Arts degree in 1966 and from
Dartmouth College with a Master of Business Administration in 1970.
MICHELE M. TAYLOR, age 41, has been employed by WNC & ASSOCIATES, INC. since
1986, serving as a paralegal and office manager, and currently is the Investor
Services Director. Previously she was self-employed between 1982 and 1985 in
non-financial services activities and from 1978 to 1981 she was employed as a
paralegal by a law firm which specialized in real estate limited partnership
transactions. Ms. Taylor graduated from the University of California, Irvine in
1976 with a Bachelor of Arts degree.
THERESA I. CHAMPANY, age 38, has been employed by WNC & ASSOCIATES, INC., since
1989 and currently is the Marketing Services Director and a registered principal
with WNC CAPITAL CORPORATION. Previously, she was employed as Manager of
Marketing Services by August Financial Corporation from 1986 to 1989 and as
office manager and Assistant to the Vice President of Real Estate Syndications
by McCombs Securities Co., Inc. from 1979 to 1986. Ms. Champany attended
Manchester (Conn.) Community College from 1976 to 1978.
KAY L. COOPER, age 59, has been an officer and Director of WNC & ASSOCIATES,
INC. since 1971 and of WNC RESOURCES, INC. from 1988 through its acquisition by
WNC & ASSOCIATES, INC. in 1991. Mrs. Cooper has also been the sole proprietor of
Agate 108, a manufacturer and retailer of home accessory products, since 1975.
She is the wife of Wilfred N. Cooper, Sr., the mother of Wilfred N. Cooper, Jr.
and the sister of John B. Lester, Jr. Mrs. Cooper graduated from the University
of Southern California in 1958 with a Bachelor of Science degree.
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or Associates for the following fees:
(a) An annual asset management fee in an amount equal to 0.5% of invested assets
(the sum of the Partnership's Investment in Local Limited Partnership Interests
and the Partnership's allocable share of the amount of the mortgage loans on and
other debts related to, the Apartment Compleses owned by such Local Limited
Partnerships.). Fees of $144,903 were incurred for 1996.
(b) A subordinated disposition fee in an amount equal to 1% of the sale price
received in connection with the sale or disposition of an Apartment Complex or
Local Limited Partnership Interest. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital contributions
and payment of the Return on Investment to the Limited Partners. "6% Preferred
Return" means a 6% annual, cumulative but not compounded, "return" to the
Limited Partners (including Low Income Housing Credits) as a class on their net
capital contributions. For this purpose, the net capital contributions of the
Limited Partners shall be equal to their Capital Contributions, reduced by the
amount treated as returned to the Limited Partners.
(c) The General Partner was allocated Low Income Housing Credits of $10,257
1996.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Centain Beneficial Owners (a) No person is known to own
beneficially in excess of 5% of the outstanding Limited Partnership Interests.
(b) Security Ownership of Management
Neither the General Partner, Associates nor any of the officers or directors of
Associates own directly or beneficially any limited partnership interests in
HTCF II.
(c) Changes in Control
The management and control of the General Partners may be changed at any time in
accordance with their respective organizational documents, without the consent
or approval of the Limited Partners. In addition, the Partnership Agreement
provides for the admission of one or more additional and successor General
Partners in certain circumstances.
First, with the consent of any other General Partners and a majority-in-interest
of the Limited Partners, any General Partner may designate one or more persons
to be successor or additional General Partners. In addition, any General Partner
may, without the consent of any other General Partner or the Limited Partners,
(I) substitute in its stead as General Partner any entity which has, by merger,
consolidation or otherwise, acquired substantially all of its assets, stock or
other evidence of equity interest and continued its business, or (ii) cause to
be admitted to the Partnership an additional General Partner or Partners if it
deems such admission to be necessary or desirable so that the Partnership will
be classified a partnership for Federal income tax purposes. Finally, a
majority-in-interest of the Limited Partners may at anytime remove the General
Partner of the Partnership and elect a successor General Partner
Item 13. Certain Relationships and Related Transactions
All of the Partnership's affairs are managed by the General Partner, through
Associates. The transactions with the General Partner and Associates are
primarily in the form of fees paid by the Partnership for services rendered to
the Partnership, as discussed in Item 11 and in the notes to the accompanying
financial statements.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Financial Statements:
Report of independent public accountants.
Balance sheet as of December 31, 1996 and 1995.
Statements of Operations for the years ended December 31, 1996, 1995, and 1994.
Statement of Partners' Equity for the years ended December 31, 1996, 1995, and
1994.
Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994.
Notes to Financial Statements.
Financial Statement Schedules:
N/A
Exhibits
(3): Articles of incorporation and by-laws: The registrant is not incorporated.
The Partnership Agreement is included as Exhibit B to the Prospectus, filed as
Exhibit 28.1 to Form 10 K for the year ended December 31, 1994.
(10) Material contracts::
10.1 Amended and Restated Agreement of Limited Partnership of DiVall Midland
Associates Limited Partnership II filed as exhibit 10.3 to Post-Effective
Amendment No. 1 to the Registration Statement on Form S-11 of the Partnership
dated July 30, 1990 (File No. 33-33371) is hereby incorporated herein by
reference as exhibit 10.1.
10.2 First Amended and Restated Articles of Partnership of Airport Road
Associates, Limited filed as exhibit 10.4 to Post-Effective Amendment No. 1 to
the Registration Statement on Form S-11 of the Partnership dated July 30, 1990
(File No. 33-33371) is hereby incorporated herein by reference as exhibit 10.2.
10.3 Third Amended and Restated Agreement of Limited Partnership of Arizona I
Limited Partnership filed as exhibit 10.5 to Post-Effective Amendment No. 1 to
the Registration Statement on Form S-11 of the Partnership dated July 30, 1990
(File No. 33-33371) is hereby incorporated herein by reference as exhibit 10.3.
10.4 Amended and Restated Agreement of Limited Partnership of Cherokee Square,
L.P. filed as exhibit 10.7 to Post-Effective Amendment No. 2 to the Registration
Statement on Form S-11 of the Partnership dated September 17, 1990 (File No.
33-33371) is hereby incorporated herein by reference as exhibit 10.4.
10.5 Amended and Restated Agreement of Limited Partnership of Ashland Investment
Group filed as exhibit 10.8 to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-11 of the Partnership dated October 30, 1990
(File No. 33-33371) is hereby incorporated herein by reference as exhibit 10.5.
10.6 Second Amended and Restated Agreement of Limited Partnership of Brian's
Village Apartments filed as exhibit 10.9 to Post-Effective Amendment No. 3 to
the Registration Statement on Form S-11 of the Partnership dated October 30,
1990 (File No. 33-33371) is hereby incorporated herein by reference as exhibit
10.6.
10.7 Second Amended and Restated Agreement of Limited Partnership of Emory
Capital, L.P. filed as exhibit 10.10 to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-11 of the Partnership dated October 30, 1990
(File No. 33-33371) is hereby incorporated herein by reference as exhibit 10.7.
10.8 Third Amended and Restated Agreement of Limited Partnership of Emory Manor,
L.P. filed as exhibit 10.11 to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-11 of the Partnership dated October 30, 1990
(File No. 33-33371) is hereby incorporated herein by reference as exhibit 10.8.
10.9 Second Amended and Restated Agreement of Limited Partnership of Jefferson
Capital, L.P. filed as exhibit 10.12 to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-11 of the Partnership dated October 30, 1990
(File No. 33-33371) is hereby incorporated herein by reference as exhibit 10.9.
10.10 Second Amended and Restated Agreement of Limited Partnership of Jefferson
Manor, L.P. filed as exhibit 10.13 to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-11 of the Partnership dated October 30, 1990
(File No. 33-33371) is hereby incorporated herein by reference as exhibit 10.10.
10.11 Second Amended and Restated Agreement of Limited Partnership of Rociada
Partners, Ltd. filed as exhibit 10.14 to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-11 of the Partnership dated October 30, 1990
(File No. 33-33371) is hereby incorporated herein by reference as exhibit 10.11.
10.12 Second Amended and Restated Agreement of Limited Partnership of Wilcox
Investment Group filed as exhibit 10.15 to Post-Effective Amendment No. 4 to the
Registration Statement on Form S-11 of the Partnership dated December 21, 1990
(File No. 33-33371) is hereby incorporated herein by reference as exhibit 10.12.
10.13 Second Amended and Restated Agreement and Certificate of Limited
Partnership of Casa Allegre Limited Partnership filed as exhibit 10.16 to
Post-Effective Amendment No. 4 to the Registration Statement on Form S-11 of the
Partnership dated December 21, 1990 (File No. 33-33371) is hereby incorporated
herein by reference as exhibit 10.13.
10.14 Amended and Restated Agreement of Lakeview Limited Partnership filed as
exhibit 10.17 to Post-Effective Amendment No. 5 to the Registration Statement on
Form S-11 of the Partnership dated March 18, 1991 (File No. 33-33371) is hereby
incorporated herein by reference as exhibit 10.14.
10.15 Amended and Restated Agreement of Whitewater Woods Limited Partnership
filed as exhibit 10.18 to Post-Effective Amendment No. 5 to the Registration
Statement on Form S-11 of the Partnership dated March 18, 1991 (File No.
33-33371) is hereby incorporated herein by reference as exhibit 10.15.
10.16 Amended and Restated Agreement of Limited Partnership of Castroville
Village, Ltd. dated November 10, 1991 is included herein for filing.
10.17 Second Amended and Restated Agreement of Limited Partnership of Idalou
Manor, L.P. dated January 1, 1992 is included herein for filing.
10.18 First Amended and Restated Agreement of Limited Partnership of Littlefield
Manor, L.P. dated January 1, 1992 is included herein for filing.
10.19 Amendment to and Restatment of the Articles of Partnership of Am-Kent
Associates, Ltd. dated January 2, 1992 is included herein for filing.
10.20 Amended and Restated Agreement of Limited Partnership of Brantley Housing,
Ltd. dated January 1, 1992 is included herein for filing.
10.21 Amended and Restated Agreement of Limited Partnership of Candleridge of
Perry, L.P. dated January 1, 1992 is included herein for filing.
10.22 Amended and Restated Agreement of Limited Partnership of Candleridge of
Runnells, L.P. dated January 1, 1992 is included herein for filing.
10.23 Amended and Restated Agreement of Limited Partnership of Perry County
Housing, Ltd. dated January 1, 1992 is included herein for filing.
10.24 Amended and Restated Agreement of Limited Partnership of Eclectic Housing,
Ltd. dated February 15, 1992 is included herein for filing.
10.25 Amended and Restated Agreement of Limited Partnership of Pine Hill
Housing, Ltd. dated February 15, 1992 is included herein for filing.
10.26 Amended and Restated Agreement of Limited Partnership of Wadley Housing,
Ltd. dated February 15, 1992 is included herein for filing.
10.27 Amendment to and Entire Restatment of Articles of Partnership of Elizabeth
Square Associates, LTD. filed as exhibit 10.1 to Form 10-K dated December 31,
1994 is hereby incorporated herein by reference as exhibit 10.27.
Reports on Form 8-K
No reports of Form 8-K were filed during the fourth quarter ended December 31,
1996.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND II, L.P.
By: WNC Financial Group, L.P. General Partner of the Registrant
By: WNC & Associates, Inc. General Partner of WNC Financial Group, L.P.
By: /s/ John B. Lester, Jr.
_____________________________________________________
John B. Lester, Jr. President and Chief Operating Officer of WNC & Associates,
Inc.
Date: May 8, 1997
By: /s/ Theodore M. Paul
_____________________________________________________
Theodore M. Paul Vice-President Finance and Chief Financial Officer of WNC &
Associates, Inc.
Date: May 8, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Wilfred N. Cooper
_____________________________________________________
Wilfred N. Cooper, Sr. Director and Chairman of the Board WNC & Associates, Inc.
Date: May 8, 1997
By: /s/ John B. Lester, Jr.
_____________________________________________________
John B. Lester, Jr. Director and Secretary of the Board WNC & Associates, Inc.
Date: May 8, 1997