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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: 0-23908
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
California 33-0563307
WNC CALIFORNIA HOUSING TAX CREDITS III, 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 NONE
Securities registered pursuant to section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTERESTS
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|
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 California Housing Tax Credits III, L.P. ("CHTCF III" or the "Partnership")
is a California limited partnership formed under the laws of the State of
California on October 5, 1992. 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
Federal and (in some cases) California low-income housing tax credits (the "Low
Income Housing Credit").
The general partner of the Partnership is WNC Tax Credits Partners III, L.P.
("TCP III"). The general partner of TCP III is WNC & Associates, Inc.
("Associates"). The business of the Partnership is conducted primarily through
Associates as neither TCP III nor the Partnership has employees of its own.
On February 17, 1993, the Partnership commenced a public offering of 30,000
Units of Limited Partnership Interests ("Units"), at a price of $1,000 per Unit.
The Partnership closed its Offering July 22, 1994, with a total of 17,990 Units
representing $17,990,000 sold. During 1995, an additional 10 units amounting to
$10,000 was collected on subscriptions accepted and previously deemed
uncollectible. Holders of Limited Partnership Interests 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 Partnerships each
of which will own and operate an apartment complex ("Apartment Complex") which
will qualify for the Housing Tax Credit. In general, under Section 42 of the
Internal Revenue Code, an owner of low-income housing can receive the Housing
Tax 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 years 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 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's Agreement of Limited Partnership ("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 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.
As of December 31, 1996, CHTCF III had invested in 18 Local Partnerships. Each
of these Local Partnerships owns an Apartment Complex that is eligible for the
Low Income Housing Credit. All of the Local Limited Partnerships also benefit or
will benefit from government programs promoting low- or moderate-income housing.
The Partnership's investments in Local 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 that
neither the Partnership's investments nor the Apartment Complexes owned by the
Local Limted Partnerships will be readily marketable. Additionally, there can be
no assurance that the Partnership will be able to dispose of its interest in the
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 Local General Partners, 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, the 18 Apartment Complexes acquired by CHTCF III were
completed and in operation. The Apartment Complexes were developed by the
respective Local General Partners who acquired the sites and applied for
applicable mortgages and subsidies. CHTCF III became the principal limited
partner in these Local Partnerships pursuant to arm's-length negotiations with
the Local General Partners. As a limited partner, CHTCF III's liability for
obligations of each Local Limited Partnership is limited to its investment. The
Local General Partners of the Local Limited Partnership retain 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 Partnerships in which CHTCF III was a limited
partner as of March 31, 1997.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH CHTCF III HAS AN INVESTMENT
AS OF DECEMBER 31, 1996
Percentage of
No. of Units Units Total Units
Name & Location Units Completed Occupied Occupied
- --------------- ----- --------- -------- --------
Almond Garden 34 34 33 97%
Delhi, California
Almond View 72 72 57 81
Stockton, California
Buccaneer 48 48 48 100
Fernandia Beach, Florida
Candleridge - Perry II 24 24 23 96
Perry, Iowa
Colonial Village 56 56 55 98
Roseville, California
Dallas County Housing 19 19 18 95
Dallas, North Carolina
La Paloma del Sol 38 38 38 100
Deming, New Mexico
Memory Lane 18 18 17 94
Yankton, South Dakota
Neuva Sierra Vista 35 35 35 100
Richgrove, California
Old Fort 40 40 38 95
Hidalgo, Texas
Orosi 42 42 41 98
Orosi, California
Parlier Garden 41 41 40 98
Parlier, California
Rosewood Housing 20 20 19 95
Superior, Wisconsin
Sun Manor 36 36 36 100
Itta Bena, Mississippi
Tahoe Pines 56 56 56 100
South Lake Tahoe, California
Venus Retirement 24 24 23 96
Venus, Texas
Walnut Pixlie 22 22 22 100
Orange, California
Winters Seniors 38 38 38 100
Winter, California -- -- -- ---
663 663 617 100%
==== === === ====
Item 2. Properties
Through its investment in Local Partnerships CHTCF III 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
No matters were submitted during the fourth quarter of the fiscal year covered
by this report to a vote of security holders, through the solicitaion of proxies
or otherwise.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Units are not traded on a public exchange but are being 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 CHTCF III's Agreement of Limited Partnership ("Partnership
Agreement") are satisfied.
At December 31, 1996, there were 947 registered holders of Limited Partnership
Interests in CHTCF III ("Limited Partners"). The Partnership was not designed to
provide cash distributions to Limited Partners in circumstances other than
refinancing or disposition of its investments in Local Partnerships. The Limited
Partners invested in the Partnership for the full years of 1996 and 1995
received Low Income Housing Credits per Unit as follows:
1996 1995
------ ------
Federal $113 $95
California 85 85
------- -------
$198 $180
==== ====
Item 6. Selected Financial Data
Period from
Years ended December 31, October 5, 1992
----------------------- to December 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Revenues $ 74,947 $145,959 $156,271 $ 22,885 $ 0
------ ------- ------- ------ --
Partnership operating
expenses (272,670) (251,382) (128,063) (7,204) (11)
Equity in losses from
limited partnerships (1,132,216) (1,155,114) (352,511) (33,260)
---------- ---------- -------- ------- ------
Net loss $(1,329,939) $(1,260,537) $(324,303) $ (17,579) $ (11)
========= ======== ======= ====== ===
Net loss per weighted
limited partner $ (73) $ (69) $ (49) $ (4) $ (1)
=== === === == ==
Total assets $12,951,383 $14,948,952 $19,495,570 $11,068,449 $ 1,089
========== ========== ========== ========== ======
Investments in
limited partnerships $11,447,928 $13,032,752 $14,368,908 $6,639,387 $ 0
========== ========== ========== ========= ===
Payable to
limited partnerships $ 16,836 $651,094 $4,400,927 $4,205,150 $ 0
====== ======= ========= ========= ===
The Partnership was organized on October 5, 1992 and had only minimal activity
until July 19, 1993, the date the Partnership's minimum offering requirement was
satisfied. The Partnership's Offering of Units commenced on February 17, 1993.
Due to these factors and the nature of the Partnership's business (i.e., raising
capital and acquiring Local Limited Partnership Interests over the first several
years of its term), the data provided above will not be directly comparable from
year to year. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
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 and cash equivalents of $418,000 for the year ended December
31, 1996. This decrease in cash consists of cash (used in) and provided by the
Partnership's operating activities, investing activities and financing
activities of approximately $(143,000), $(248,000) and $(27,000), respectively.
Cash provided from investing activities consisted of distributions from Local
Partnerships of approximately $6,000 and cash used consisted primarily of
capital contributions to Local Partnerships of approximately $221,000. Cash used
by financing activities consisted of payment of offering costs of $27,000. Cash
provided by operating activities consisted primarily of interest earned on cash
balances. Cash used in operating activities 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
decrease in cash and cash equivalents of $883,287 for the year ended December
31, 1995. This decrease in cash consists of cash (used in) and provided by the
Partnership's operating activities, investing activities and financing
activities of approximately $437,400, $(1,535,700) and $215,000, respectively.
Cash provided from investing activities consisted of distributions from Local
Partnerships of approximately $9,900 and cash used consisted primarily of
capital contributions to Local Partnerships of approximately $1,545,600, net of
amounts released from escrow.. Cash provided from financing activities consisted
of collection of notes receivable of $215,000. Cash provided by operating
activities consisted primarily of 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.
At December 31, 1996, the Partnership is indebted to an affiliate of the General
Partner in the amount of approximately $233,400 consisting almost entirely of
accrued management fees.
As of March 31, 1997 and December 31, 1996, the Partnership has received
approximately $18,000,000 from the sale of the Limited Partnership Interests and
approximately $14,300,000 (79%) of which has been committed to the purchase
price and acquisition fees and costs of investments in 18 local Limited
Partnership Interests.
The Partnership had made capital contributions to Local Limited Partnerships in
the amount of approximately $12,520,000 as of December 31, 1996 and March 31,
1997.
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 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 Units is sufficient
to fund the Partnership's operations.
Upon completion of its public offering (July 22, 1994) the Partnership
established working capital reserves of approximately 3% 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. The Partnership's liquidity could also be affected by defaults
or delays in payment of the Limited Partners' promissory notes, from which a
portion of the working capital reserves is expected to be funded. 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 Partnerships for such
purposes or to replenish or increase working capital reserves.
As part of its application for government assistance, each Local Limited
Partnership must establish to the satisfaction of the agency providing the
government assistance that the Local Limited Partnership will have sufficient
funds to complete construction or rehabilitation of its apartment complex. None
of the Local Partnerships has any material capital commitments other than the
completion of its Apartment Complex.
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 Partnerships. Accordingly, if circumstances
arise that cause the Local 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 as 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 Low Income Housing 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 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.
The Partnership's capital needs and resources are expected to undergo major
changes at least through 1994 as a result of the completion of its offering of
Units and its acquisition of investments. Thereafter, the Partnership's capital
needs and resources are expected to be relatively stable over the holding
periods of the investments.
Item 8. Financial Statements and Supplementary Data
WNC CALIFORNIA HOUSING TAX CREDITS III, 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 California Housing Tax Credits III, L.P.
We have audited the accompanying balance sheets of WNC California Housing Tax
Credits III, 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 California Housing Tax Credits III, 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 88% and 87% of the total assets of WNC
California Housing Tax Credits III, L.P. at December 31, 1996 and 1995,
respectively. Substantially all of 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 other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC California Housing Tax Credits III, 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
April 23, 1997
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS 1996 1995
---------- ----------
Cash and cash equivalents $ 1,498,036 $ 1,916,200
Investments in limited partnerships
(Note 2) 11,447,928 13,032,752
Other assets 5,419 --
---------- ---------
$ 12,951,383 $ 14,948,952
========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships (Note 4) $ 16,836 $ 651,094
Due to General Partner and affiliates
(Note 3) 233,380 240,188
---------- ----------
Total liabilities 250,216 891,282
---------- ----------
Partners' equity (deficit):
General partner (52,119) (38,553)
Limited partners (30,000 units authorized;
18,000 units issued and outstanding at
December 31, 1996 and 1995) 12,753,286 14,096,223
---------- ----------
Total partners' equity 12,701,167 14,057,670
---------- ----------
$ 12,951,383 $ 14,948,952
========== ==========
See accompanying notes to financial statements
FS-2
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
---------- ---------- ----------
Interest income $ 74,947 $ 145,959 $ 156,271
---------- ---------- ----------
Operating expenses:
Amortization 57,933 57,466 41,757
Partnership management fee (Note 3) 186,422 173,406 71,307
Bad debt expense 8,680 -- --
Office 19,635 20,510 14,999
---------- ---------- ----------
Total operating expenses 272,670 251,382 128,063
---------- ---------- ----------
Income (loss) from operations (197,723) (105,423) 28,208
Equity in losses from limited
partnerships (Note 2) (1,132,216) (1,155,114) (352,511)
---------- ---------- ----------
Net loss $(1,329,939) $(1,260,537) $ (324,303)
========== ========== ==========
Net loss allocable to:
General partner $ (13,300) $ (12,605) $ (3,243)
========== ========== ==========
Limited partners $(1,316,639) $(1,247,932) $ (321,060)
========== ========== ==========
Net loss per weighted limited
partner units $ (73.15) $ (69.33) $ (48.71)
========= ========= =========
Outstanding weighted limited
partner units $ 18,000 $ 18,000 $ 6,591
========== ========== ==========
See accompanying notes to financial statements
FS-3
WNC CALIFORNIA HOUSING TAX CREDITS III, 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 $ (12,172) $ 6,809,022 $ 6,796,850
Capital contributions -- 9,640,000 9,640,000
Collection of notes receivable -- 326,000 326,000
Notes received in exchange
for capital contributions -- (205,000) (205,000)
Offering costs (11,389) (1,127,515) (1,138,904)
Net loss (3,243) (321,060) (324,303)
---------- ---------- ----------
Equity (deficit) -
December 31, 1994 (26,804) 15,121,447 15,094,643
Capital contributions -- 10,000 10,000
Collection of notes
receivable -- 205,000 205,000
Offering costs 856 7,708 8,564
Net loss (12,605) (1,247,932) (1,260,537)
---------- ---------- ----------
Equity (deficit) -
December 31, 1995 (38,553) 14,096,223 14,057,670
Offering costs (266) (26,298) (26,564)
Net loss (13,300) (1,316,639) (1,329,939)
---------- ---------- ----------
Equity (deficit) -
December 31, 1996 $ (52,119) $ 12,753,286 $ 12,701,167
========== ========== ==========
See accompanying notes to financial statements
FS-4
WNC CALIFORNIA HOUSING TAX CREDITS III, 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 $ (1,329,939) $ (1,260,537) $ (324,303)
Adjustments to reconcile net loss
to net cash provided (used) by
operating activities:
Amortization 57,933 57,466 41,757
Bad debt 8,680 -- --
Equity in loss of limited
partnerships 1,132,216 1,155,114 352,511
Change in other assets (5,419) 19,960 (11,876)
Change in receivable from affiliate -- 216,645 (216,645)
Change in accrued fees and expenses
due to general partner and
affiliates (6,808) 248,752 (66,449)
---------- ---------- ----------
Net cash provided (used) by operating
activities (143,337) 437,400 (225,005)
---------- ---------- ----------
Cash flows used by investing activities:
Investments in limited partnerships, net (220,733) (3,636,150) (6,961,371)
Capitalized acquisition costs and
fees (33,906) -- (966,641)
Change in cash in escrow -- 2,090,570 (2,090,570)
Change in loans receivable -- -- 1,000,000
Distributions from limited
partnerships 6,376 9,893 --
---------- ---------- -------
Net cash used in investing activities (248,263) (1,535,687) (9,018,582)
---------- ---------- ----------
Cash flows from financing activities:
Capital contributions from limited
partners -- 215,000 10,875,100
Offering costs (26,564) -- (1,138,904)
---------- ---------- ----------
Net cash provided by financing activities (26,564) 215,000 9,736,196
---------- ---------- ----------
Net change in cash (418,164) (883,287) 492,609
Cash and cash equivalents,
beginning of period 1,916,200 2,799,487 2,306,878
---------- ---------- ----------
Cash and cash equivalents,
end of period $ 1,498,036 $ 1,916,200 $ 2,799,487
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ -- $ -- $ --
========== ========== ==========
Taxes paid $ 800 $ 800 $ 800
========== ========== ==========
Continued
FS-5
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
ACTIVITY:
During 1996 and 1995, the Partnership had $422,205 and $140,766, respectively
of investments in limited partnerships returned through tax credit
adjustments reflected as a reduction in the payables to limited partnerships.
During 1996 and 1995, the Partnership adjusted offering costs and accrued fees
and expenses due to General Partner and affiliates by $(26,564) and $8,564,
respectively (see Note 1).
During 1994, the Partnership received subscription notes receivable of
$205,000 in exchange for capital contributions.
See accompanying notes to financial statements
FS-6
WNC CALIFORNIA HOUSING TAX CREDITS III, 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 California Housing Tax Credits III, L.P. (the "Partnership") was formed
under the California Revised Limited Partnership Act on October 5, 1992 and
began operations on July 19, 1993. The Partnership was formed to invest
primarily in other limited partnerships which will own and operate multi-family
housing complexes that qualify for low income housing credits.
The general partner is WNC California Tax Credit Partners III, L.P. (the
"General Partner"), a California limited partnership. WNC & Associates, Inc. is
the general partner of the General Partner. The Cooper Trust owns 70% of the
outstanding stock of WNC & Associates, Inc. John B. Lester is the original
limited partner of the Partnership and owns, through the Lester Family Trusts,
30% of the outstanding stock of WNC & Associates, Inc.
The Partnership Agreement authorized the sale of up to 30,000 units of Limited
Partnership Interest at $1,000 per Unit ("Units"). The offering of Units
concluded in July 1994 at which time 17,990 Units in the amount of $17,990,000
had been accepted. During 1995, an additional 10 units amounting to $10,000 was
collected on subscriptions accepted and previously deemed uncollectible. The
general partner has a 1% interest in operating profits and losses, taxable
income and loss and in cash available for distribution from the Partnership. The
limited partners will be allocated the remaining 99% of these items in
proportion to their respective investments.
After the limited partners have received sale or refinancing proceeds equal to
their capital contributions and their return on investment (as defined in the
Partnership's Agreement of Limited Partnership) and the General Partner has
received a subordinated disposition fee (as described in Note 3), 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 housing tax credits will
be available to limited partners.
Continued
FS-7
WNC CALIFORNIA HOUSING TAX CREDITS III, 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 being 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 highly liquid investments with remaining maturities of
three months or less when purchased to be cash equivalents. Cash equivalents
represent U.S. Treasury Bills and totaled $1,291,287, at December 31, 1996.
Concentration of Credit Risk
- ----------------------------
At December 31, 1996, the Partnership maintained cash balances at certain
financial institutions in excess of the federally insured amounts.
Offering Costs
- --------------
Offering costs consist of underwriting commissions, legal fees, printing, filing
and recordation fees, and other costs incurred with selling units. 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 costs are
reflected as a reduction of partners' capital. Through December 31, 1996, the
Partnership had recorded offering and selling expenses of $926,564 and
$1,440,000, respectively.
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.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of December 31, 1996 and 1995, the Partnership had acquired limited
partnership interests in eighteen limited partnerships, which own and operate
apartment complexes consisting of 663 apartment units. The respective general
partners of the limited partnerships manage the day-to-day operations of the
limited partnerships. Significant limited partnership business decisions require
approval from the Partnership. The Partnership, as a limited partner, is
generally entitled to 99% of the operating profits and losses of the limited
partnerships.
Continued
FS-8
WNC CALIFORNIA HOUSING TAX CREDITS III, 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
- -------------------------------------------------------
The Partnership's investments in limited partnerships as shown in the
accompanying balance sheets at December 31, 1996 and 1995 are approximately
$1,637,000 and $2,089,000, respectively, greater than the Partnership's equity
as shown in the limited partnerships' combined financial statements,
respectively. This difference is due primarily to acquisition costs related to
the acquisition of the investment that have been capitalized in the
Partnership's investment account and capital contributions accrued but not paid
by the Partnership and syndication costs incurred by the limited partnerships
which are reflected as a reduction of partners' equity in the Partnership's
accounts. The capitalized acquisition costs are being amortized over 30 years
(see Note 3).
Following is a summary of the equity method activity of investments in limited
partnerships for the years ended December 31:
1996 1995
---------- ----------
Investments, beginning of year $ 13,032,752 $ 14,368,908
Capital contributions payable -- 27,083
Tax credit adjustments (422,205) (140,766)
Capitalized acquisition costs and
acquisition fees 33,906 --
Losses in equity of limited partnerships (1,132,216) (1,155,114)
Distributions (6,376) (9,893)
Amortization of capitalized acquisition
costs and fees (57,933) (57,466)
---------- ----------
Investments, end of year $ 11,447,928 $ 13,032,752
========== ==========
Continued
FS-9
WNC CALIFORNIA HOUSING TAX CREDITS III, 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
Assets 1996 1995
- ------ ---------- ----------
Buildings and improvements, net of
accumulated depreciation for 1996
and 1995 of $2,968,000 and $1,711,000,
respectively $32,866,000 $34,273,000
Land 2,380,000 2,213,000
Construction in progress -- --
Other assets 1,660,000 2,057,000
---------- ----------
Total assets $36,906,000 $38,543,000
========== ==========
Liabilities
- -----------
Mortgage and construction loans payable $24,593,000 $25,026,000
Other liabilities 1,496,000 1,596,000
---------- ----------
Total liabilities 26,089,000 26,622,000
---------- ----------
Partners' Capital
- -----------------
WNC California Housing Tax Credits III, L.P. 9,811,000 10,944,000
Other partners 1,006,000 977,000
---------- ----------
Total partners' capital 10,817,000 11,921,000
---------- ----------
Total liabilities and partners' capital $36,906,000 $38,543,000
========== ==========
COMBINED CONDENSED STATEMENTS OF OPERATIONS
1996 1995 1994
---------- ---------- ----------
Total revenues $ 2,786,000 $ 2,622,000 $ 1,171,000
---------- ---------- ----------
Expenses:
Operating expenses 1,689,000 1,509,000 668,000
Interest expense 968,000 1,066,000 386,000
Depreciation and amortization 1,273,000 1,214,000 475,000
---------- ---------- ----------
Total expenses 3,930,000 3,789,000 1,529,000
---------- ---------- ----------
Net loss $(1,144,000) $(1,167,000) $ (358,000)
========== ========== ==========
Net loss allocable to
the Partnership $(1,132,000) $(1,155,000) $ (353,000)
========== ========== ==========
Continued
FS-10
WNC CALIFORNIA HOUSING TAX CREDITS III, 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
- -------------------------------------------------------
Certain limited partnerships have incurred significant operating losses and have
working capital deficiencies. In the event these limited partnerships continue
to incur significant operating losses, 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 - 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:
Acquisition 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, acquisition
fees of $1,620,000 have been incurred and included in the
Partnership's investment in limited partnerships. Accumulated
amortization amounted to $149,033 and $95,038 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 1.5% of the gross proceeds. As of
December 31, 1996 and 1995, the Partnership has incurred acquisition
costs of $138,025, and $104,119, respectively, which have been
included in the Partnership's investment in limited partnerships.
Accumulated amortization amounted to $8,123 and $4,185 as of December
31, 1996 and 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. Fees of $186,422, $173,406 and $71,307 were incurred
for 1996, 1995 and 1994, respectively. Fees of $200,000 were paid
during 1996. No amounts were paid during 1995 and 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 receiving a 6% preferred
return (as defined in the partnership agreement) and is payable only
if the General Partner or its affiliates render services.
Due to General Partner and affiliates as of December 31, 1996 and 1995 consist
of the following:
1996 1995
---------- ----------
Working capital advances due to (from)
affiliate $ 11 $ (6,759)
Annual management fees accrued 233,369 246,947
---------- ----------
$ 233,380 $ 240,188
========== ==========
FS-11
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables to limited partnerships at December 31, 1996 and 1995, represent
amounts which are due at various times based on conditions specified in the
respective limited partnership agreements. These contributions are payable in
installments and are generally due upon the limited partnerships achieving
certain operating and development benchmarks and are expected to be paid
generally within two years of the Partnership's initial investment.
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.
NOTE 6 - INVESTOR NOTES RECEIVABLE
- ----------------------------------
As of December 31, 1994, the Partnership had received notes receivable of
$205,000 in connection with the sale of partnership units. Limited partners who
subscribed for ten or more units of limited partnership interest ($10,000) could
elect to pay 50% of the purchase price in cash upon subscription and the
remaining 50% by the delivery of a promissory note payable, together with
interest at the rate of 11% per annum, due no later than 13 months after the
subscription date. Since such notes were not collected prior to the issuance of
the Partnerships' financial statements, the balance was reflected as a reduction
of partners' equity in the accompanying financial statements. During 1995, the
Partnership collected $205,000 of notes receivable.
FS-12
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Item 10. Directors and Executive Officers of the Registrant
Directors of Registrant
Directors and Executive Officers of WNC & Associates, Inc.
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.
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 Low Income Housing 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 $186,422, $173,406, and $71,307 were incurred for 1996,
1995, and 1994 respectively.
(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 Parners. "Return on
Investment" means an annual, cumulative but not compounded, "return" to the
Limited Partners (including Low Income Housing Credits) as a class on their
adjusted capital contributions commencing for each Limited Partner on the last
day of the calendar quarter during which the Limited Partner's capital
contribution is received by the Partnership, calculated at the following rates:
(i) 16% through December 31, 2003, and (ii) 6% for the balance of the
Partnerships term. No disposition fees have been paid.
(c) The General Partner was allocated federal and California Housing Tax Credits
for 1996 as follows:
1996
----
Federal $20,481
California 15,391
------
$35,872
=======
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
No person is known to own beneficially in excess of 5% of the
outstanding Units.
(b) Security Ownership of Management
Neither the General Partner, Associates nor any of the officers or
directors of Associates own directly or beneficially any Units in CHTCF III.
(c) Changes in Control
The management and control of the General Partner may be changed at any
time in accordance with its 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 any
time 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 sheets 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 Colonial Village
Roseville (1) filed as exhibit 10.1 to Form 8-K/A Amendment No. 1 to Current
Report dated December 27, 1993 is hereby incorporated herein by reference as
exhibit 10.1.
10.2 Amended and Restated Agreement of Limited Partnership of Almond Garden
Apartment Associates filed as exhibit 10.2 to Form 8-K/A Amendment No. 1 to
Current Report dated December 27, 1993 is hereby incorporated herein by
reference as exhibit 10.2.
10.3 Amended and Restated Agreement of Limited Partnership of Winters Investment
Group filed as exhibit 10.3 to Form 8-K/A Amendment No. 1 to Current Report
dated December 27, 1993 is hereby incorporated herein by reference as exhibit
10.3.
10.4 Third Amended and Restate Articles of Limited Partnership of Buccaneer
Associates, Limited filed as exhibit 10.2 to Post-Effective Amendment No. 2 to
Form S-11 dated September 17, 1993 is hereby incorporated herein by reference as
exhibit 10.4.
10.5 Amended and Restated Agreement and Certificate of Limited Partnership of
Dallas County Housing, Ltd. filed as exhibit 10.3 to Post-Effective Amendment
No. 2 to Form S-11 dated September 17, 1993 is hereby incorporated herein by
reference as exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of La Paloma Del Sol
Phase II Limited Partnership filed as exhibit 10.4 to Post-Effective Amendment
No. 2 to Form S-11 dated September 17, 1993 is hereby incorporated herein by
reference as exhibit 10.6.
10.7 Second Amended and Restated Agreement of Limited Partnership of Old Fort
Limited Partnership filed as exhibit 10.5 to Post-Effective Amendment No. 2 to
Form S-11 dated September 17, 1993 is hereby incorporated herein by reference as
exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Orosi Apartments,
Ltd. filed as exhibit 10.6 to Post-Effective Amendment No. 2 to Form S-11 dated
September 17, 1993 is hereby incorporated herein by reference as exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership of Sun Manor, L.P.
filed as exhibit 10.7 to Post-Effective Amendment No. 2 to Form S-11 dated
September 17, 1993 is hereby incorporated herein by reference as exhibit 10.9.
10.10 Amended and Restated Agreement of Limited Partnership of Venus Retirement
Village, Ltd. filed as exhibit 10.8 to Post-Effective Amendment No. 2 to Form
S-11 dated September 17, 1993 is hereby incorporated herein by reference as
exhibit 10.10.
10.11 Second Amended and Restated Agreement of Limited Partnership of
Walnut-Pixley, L.P. filed as exhibit 10.9 to Post-Effective Amendment No. 2 to
Form S-11 dated September 17, 1993 is hereby incorporated herein by reference as
exhibit 10.11.
10.12 Amended and Restated Agreement of Limited Partnership of Almond View
Apartments, Ltd. filed as exhibit 10.11 to Form 10K dated December 31, 1993 is
hereby incorporated herein by reference as exhibit 10.12.
10.13 Amended and Restated Agreement of Limited Partnership of Candleridge
Apartments of Perry, L.P. II filed as exhibit 10.1 to Form 8-K dated May 26,
1994 is hereby incorporated herein by reference as exhibit 10.13.
10.14 Second Amended and Restated Agreement of Limited Partnership of Parlier
Garden Apts.filed as exhibit 10.2 to Form 8-K dated May 26, 1994 is hereby
incorporated herein by reference as exhibit 10.14.
10.15 Agreement of Limited Partnership of Rosewood Apartments Limited
Partnership filed as exhibit 10.3 to Form 8-K dated May 26, 1994 is hereby
incorporated herein by reference as exhibit 10.15.
10.16 Agreement of Limited Partnership of Limited Partnership of Nueva Sierra
Vista Associates filed as exhibit 10.4 to Form 8-K/A Amendment No. 1 to Current
Report dated May 26, 1994 is hereby incorporated herein by reference as exhibit
10.16.
10.17 Amended and Restated Agreement of Limited Partnership of Memory Lane
Limited Partnership filed as exhibit 10.1 to Form 8-K dated July 7, 1994 is
hereby incorporated herein by reference as exhibit 10.17.
10.18 Second Amended and Restated Agreement of Limited Partnership of Tahoe
Pines Apartnments filed as exhibit 10.1 to Form 8-K dated July 27, 1994 is
hereby incorporated herein by reference as exhibit 10.18.
Reports on Form 8-K
No reports on 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 CALIFORNIA HOUSING TAX CREDITS III, L.P.
By: WNC California Tax Credit Partners III, L.P. General Partner of the
Registrant
By: WNC & Associates, Inc. General Partner of WNC California Tax Credit Partners
III, L.P.
By: /s/ John B. Lester, Jr.
_____________________________________________________
John B. Lester, Jr. President and Chief Opertating Officer of WNC & Associates,
Inc.
Date: May 9, 1997
By: /s/ Theodore M. Paul
_____________________________________________________
Theodore M. Paul Vice-President Finance and Chief Financial Officer of WNC &
Associates, Inc.
Date: May 9, 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, Sr.
_____________________________________________________
Wilfred N. Cooper, Sr. Director and Chairman of the Board WNC & Associates, Inc.
Date: May 9, 1997
By: /s/ John B. Lester, Jr.
_____________________________________________________
John B. Lester, Jr. Director and Secretary of the Board WNC & Associates, Inc.
Date: May 9, 1997