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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the year ended
OR
X TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from January 1, 1999 to March 31, 1999
Commission file number: 0-20058
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
California 33-0316953
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
NONE
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 and non-voting common equity 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
2
PART I.
Item 1. Business
Organization
WNC California Housing Tax Credits, L.P. ("CHTC" or the "Partnership") is a
California Limited Partnership formed under the laws of the State of California
on September 15, 1988. The Partnership was formed to acquire limited partnership
interests in other limited partnerships or limited liability companies ("Local
Limited Partnerships") which own multifamily housing complexes that are eligible
for low-income housing federal and, in certain cases, California income tax
credits ("Low Income Housing Credits").
The general partners of the Partnership are WNC & Associates, Inc.
("Associates") and Wilfred N. Cooper, Sr. (collectively, the "General Partner"
or "General Partners"). Wilfred N. Cooper, Sr., through the Cooper Revocable
Trust, owns 66.8% of the outstanding stock of Associates. John B. Lester, Jr.
was the original limited partner of the Partnership and owns, through the Lester
Family Trust, 28.6% of the outstanding stock of Associates. The business of the
Partnership is conducted primarily through Associates, as the Partnership has no
employees of its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission, on March 16, 1989, the Partnership commenced a public offering of
10,000 Units of Limited Partnership Interest ("Units") at a price of $1,000 per
Unit. As of the close of the public offering on October 31, 1990, a total of
7,450 Units representing $7,450,000 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 or non-managing member in
Local Limited Partnerships each of which will own and operate a multi-family
housing complex (the "Housing 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
to reduce 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
Housing Complex is subject to a fifteen-year compliance period (the "Compliance
Period"), and under state law may have to be maintained as low income housing
for 30 or more years.
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 any Local Limited Partnership of its Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership's Agreement of Limited
Partnership, as amended by Supplement No. 1 through Supplement No. 9 thereto
(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 its
Housing Complex, it is anticipated that the local general partner ("Local
General Partner") will either continue to operate such Housing Complex or take
such other actions as the Local General Partner believes to be in the best
interest of the Local Limited Partnership. Notwithstanding the preceding,
circumstances beyond the control of the General Partner or the Local General
Partners may occur during the Compliance Period, which would require the
Partnership to approve the disposition of a Housing Complex prior to the end
thereof, possibly resulting in recapture of Low Income Housing Credits.
3
As of March 31, 1999, the Partnership had invested in eleven Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is eligible for the federal Low Income Housing Credit and eight of them
were eligible for the California Low Income Housing Credit. Certain Local
Limited Partnerships may 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 multi-unit
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 Housing Complexes owned by the Local Limited Partnerships will be readily
marketable. To the extent the Housing Complexes receive government financing or
operating subsidies, they may be subject to one or more of the following risks:
difficulties in obtaining tenants for the Housing Complexes; difficulties in
obtaining rent increases; limitations on cash distributions; limitations on
sales or refinancing of Housing Complexes; limitations on transfers of Local
Limited Partnership Interests; limitations on removal of Local General Partners;
limitations on subsidy programs; and possible changes in applicable regulations.
The Housing Complexes are subject to mortgage indebtedness. If a Local Limited
Partnership does not makes its mortgage payments, the lender could foreclose
resulting in a loss of the Housing Complex and Low Income Housing Credits. As a
limited partner or non-managing member of the Local Limited Partnerships, the
Partnership will have very limited rights with respect to management of the
Local Limited Partnerships, and will rely totally on the general partners or
managing members of the Local Limited Partnerships for management of the Local
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 Housing Complexes and the Partnership. In addition,
each Local Limited Partnership is subject to risks relating to environmental
hazards and natural disasters, which might be uninsurable. Because the
Partnership's 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 the anticipated Low Income Housing Credits will be available to
Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the Low Income Housing Credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All Partnership management
decisions are made by the General Partner.
As a limited partner or non-managing member, the Partnership's liability for
obligations of each Local Limited Partnership is limited to its investment. The
Local General Partners of each Local Limited Partnership retain responsibility
for developing, constructing, maintaining, operating and managing the Housing
Complexes.
Item 2. Properties
Through its investments in Local Limited Partnerships, the Partnership holds
limited partnership interests in the Housing Complexes. The following table
reflects the status of the eleven Housing Complexes as of the dates and for the
periods indicated:
4
------------------------------------- ---------------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------------- ---------------------------------------------
Partnership's Encumbrances
Total Investment Amount of Number Estimated Low of Local
Partnership General Partner in Local Limited Investment of Occu- Income Housing Limited
Name Location Name Partnerships Paid to Date Units pancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Alta Vista Orosi, Philip R. Hammond,
Investors California Jr. and Diane M.
Hammond $ 583,000 $ 583,000 42 98% $ 1,274,000 $ 1,440,000
BCA Associates Anderson, Douglas W. Young 514,000 514,000 40 100% 1,105,000 1,429,000
California
Cloverdale Cloverdale, David J. Michael,
Garden California Patrick R.
Apartments Sabelhaus and
Professional
Apartment
Management 617,000 617,000 34 100% 1,387,000 1,642,000
Countryway Mendota, Philip R. Hammond,
Associates California Jr. and Diane M.
Hammond 571,000 571,000 41 95% 1,162,000 1,481,000
East Garden Jamestown, David J. Michael
Apartments California and Professional
Apartment
Management 770,000 770,000 51 100% 1,772,000 2,161,000
HPA Shafter, Douglas W. Young 538,000 538,000 42 98% 1,223,000 1,516,000
California
Knights Landing Knights Landing, Douglas W. Young and
Harbor California Diane L. Young 275,000 275,000 25 96% 446,000 986,000
5
------------------------------------- ---------------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------------- ---------------------------------------------
Partnership's Encumbrances
Total Investment Amount of Number Estimated Low of Local
Partnership General Partner in Local Limited Investment of Occu- Income Housing Limited
Name Location Name Partnerships Paid to Date Units pancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Midland Manor Mendota, Philip R. Hammond,
Associates California Jr. and Diane M.
Hammond $ 383,000 $ 383,000 40 98% $ 668,000 $ 1,431,000
San Jacinto San Jacinto, Richard Parasol
Associates California and Richard A.
Gullota 469,000 469,000 38 74% 830,000 1,790,000
Woodlake Manor Woodlake, Thomas G. Larson,
California William H. Larson
and Raymond L.
Tetzlaff 545,000 545,000 44 93% 1,146,000 1,460,000
Yreka Investment Yreka, Ronald D.
Group California Bettencourt 538,000 538,000 36 100% 1,174,000 1,475,000
--------- --------- --- ----- ---------- ----------
$ 5,803,000 $ 5,803,000 433 96% $ 12,187,000 $ 16,811,000
========= ========= === ===== ========== ==========
6
-----------------------------------------------
For the Year Ended December 31, 1998
-----------------------------------------------
Low Income Housing
Rental Net Credits Allocated
Partnership Name Income Loss to Partnership
- --------------------------------------------------------------------------------
Alta Vista Investors $ 153,000 $ (47,000) 99%
BCA Associates 151,000 (16,000) 99%
Cloverdale Garden Apartments 176,000 (25,000) 99%
Countryway Associates 167,000 (34,000) 99%
East Garden Apartments 218,000 (42,000) 99%
HPA Investors 161,000 (63,000) 99%
Knights Landing Harbor 118,000 (21,000) 99%
Midland Manor Associates 151,000 (45,000) 99%
San Jacinto Associates 118,000 (80,000) 99%
Woodlake Manor 170,000 (45,000) 99%
Yreka Investment Group 154,000 (7,000) 99%
--------- --------
$ 1,737,000 $ (425,000)
========= ========
7
Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Item 5a.
(a) 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 and none exists. Units can be
assigned only if certain requirements in the Partnership Agreement are
satisfied.
(b) At March 31, 1999, there were 685 Limited Partners.
(c) 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.
(d) No unregistered securities were sold by the Partnership during the three
months ended March 31, 1999.
Item 5b.
NOT APPLICABLE
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows as of
December 31:
March 31 December 31
----------------------------- ----------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)
ASSETS
Cash and cash
equivalents $ 61,123 $ 79,190 $ 66,028 $ 78,109 $ 83,943 $ 84,504 $ 93,726
Investments in limited
partnerships, net 1,508,351 1,892,936 1,595,464 2,001,822 2,442,547 2,943,052 3,376,715
Other assets - - - - - 358 74
--------- --------- --------- --------- --------- --------- ---------
$ 1,569,474 $ 1,972,126 $ 1,661,492 $ 2,079,931 $ 2,526,490 $ 3,027,914 $ 3,470,515
========= ========= ========= ========= ========= ========= =========
LIABILITIES
Accrued fees and
expenses due to
general partner and
affiliates $ 848,503 $ 735,348 $ 820,365 $ 705,925 $ 594,248 $ 483,938 $ 372,353
PARTNERS' EQUITY 720,971 1,236,778 841,127 1,374,006 1,932,242 2,543,976 3,098,162
--------- --------- --------- --------- --------- --------- ---------
$ 1,569,474 $ 1,972,126 $ 1,661,492 $ 2,079,931 $ 2,526,490 $ 3,027,914 $ 3,470,515
========= ========= ========= ========= ========= ========= =========
8
Selected results of operations, cash flows and other information for the
Partnership are as follows for the periods indicated:
For the Three Months Ended For the Years Ended
March 31 December 31
----------------------------- ------------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)
Loss from operations $ (37,519) $ (32,603) $ (144,721) $ (137,368) $ (135,167) $ (141,895) $ (142,872)
Equity in loss from
limited partnerships (82,637) (104,625) (388,158) (420,868) (476,567) (412,291) (437,264)
-------- -------- -------- -------- -------- -------- --------
Net loss $ (120,156) $ (137,228) $ (532,879) $ (558,236) $ (611,734) $ (554,186) $ (580,136)
======== ======== ======== ======== ======== ======== ========
Net loss allocated to:
General partners $ (1,202) $ (1,372) $ (5,329) $ (5,582) $ (6,117) $ (5,542) $ (5,801)
======== ======== ======== ======== ======== ======== ========
Limited partners $ (118,954) $ (135,856) $ (527,550) $ (552,654) $ (605,617) $ (548,644) $ (574,335)
======== ======== ======== ======== ======== ======== ========
Net loss per limited
partner unit $ (15.97) $ (18.24) $ (70.81) $ (74.18) $ (81.29) $ (73.64) $ (77.09)
======== ======== ======== ======== ======== ======== ========
Outstanding weighted
limited partner units 7,450 7,450 7,450 7,450 7,450 7,450 7,450
======== ======== ======== ======== ======== ======== ========
For the Three Months Ended For the Years Ended
March 31 December 31
----------------------------- ------------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)
Net cash provided by
(used in):
Operating activities $ (5,655) $ 546 $ (15,377) $ (10,787) $ (9,595) $ (14,624) $ (11,490)
Investing activities 750 535 3,296 4,953 9,034 5,402 7,402
-------- -------- -------- -------- -------- -------- --------
Net change in cash and
cash equivalents (4,905) 1,081 (12,081) (5,834) (561) (9,222) (4,088)
Cash and cash
equivalents,
beginning of period 66,028 78,109 78,109 83,943 84,504 93,726 97,814
-------- -------- -------- -------- -------- -------- --------
Cash and cash
equivalents, end of
period $ 61,123 $ 79,190 $ 66,028 $ 78,109 $ 83,943 $ 84,504 $ 93,726
======== ======== ======== ======== ======== ======== ========
Low Income Housing Credit per Unit was as follows for the years ended December
31:
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Federal $ 99 $ 99 $ 99 $ 99 $ 118
State - - - - -
------------ ------------ ------------ ------------ -------------
Total $ 99 $ 99 $ 99 $ 99 $ 118
============ ============ ============ ============ =============
9
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Condition
The Partnership's assets at March 31, 1999 consisted primarily of $61,123 in
cash and aggregate investments in the eleven Local Limited Partnerships of
$1,508,351. Liabilities at March 31, 1999 primarily consisted of $845,540 of
accrued annual management fees due to the General Partners.
Results of Operations
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
The Partnership's net loss for the three months ended March 31, 1999 was
$(120,000), reflecting a decrease of $17,000 from the net loss experienced for
the three months ended March 31, 1998. The decline in net loss is primarily due
to equity in losses from limited partnerships which declined by $22,000 to
$(83,000) for the three months ended March 31, 1999 from $(105,000) for the
three months ended March 31, 1998. This decrease was a result of the Partnership
not recognizing certain losses of the Local Limited Partnerships. The
investments in such Local Limited Partnerships had reached $0 at March 31, 1999.
Since the Partnership's liability with respect to its investments is limited,
losses in excess of investment are not recognized. The reduction in equity
losses recognized was partially offset by an increase in loss from operations of
$5,000 for the three months ended March 31, 1999 to $(37,000), from $(32,000)
for the three months ended March 31, 1998, due to a comparable increase in
operating expense allocations.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. The
Partnership's net loss for 1998 was $(533,000), reflecting a decrease of $25,000
from the net loss experienced in 1997. The decline in net loss is primarily due
to equity in losses from limited partnerships which declined to $(388,000) in
1998 from $(421,000) in 1997. This decrease was a result of the Partnership not
recognizing certain losses of the Local Limited Partnerships. The investments in
such Local Limited Partnerships reached $0 during 1998. Since the Partnership's
liability with respect to its investments is limited, losses in excess of
investment are not recognized. The reduction in equity losses recognized was
partially offset by an increase in loss from operations of $8,000 in 1998 to
$(145,000), from $(137,000) in 1997, due to a comparable increase in operating
expense allocations.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996. The
Partnership's net loss for 1997 was $(558,000), reflecting a decrease of $54,000
from the net loss experienced in 1996. The decline in net loss is primarily due
to equity in losses from limited partnerships which declined to $(421,000) in
1997 from $(477,000) in 1996, because the investments in certain Local Limited
Partnerships reached $0 during 1997. Losses from operations were essentially
unchanged between years.
Cash Flows
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net cash used during the three months ended March 31, 1999 was $(5,000),
compared to a net increase in cash for the three months ended March 31, 1998 of
$1,000. The change was due primarily to an increase in operating costs paid to
third parties.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. Net cash
used in 1998 was $(12,000), compared to net cash used in 1997 of $(6,000). The
change was due primarily to an increase in operating costs paid to third parties
and a decline in distributions from Local Limited Partnerships.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996. Net cash
used in 1997 was $(6,000), compared to $(1,000) in 1996.The change was due
primarily to a decrease in distributions from limited partnerships.
10
During the three months ended March 31, 1999 and the year ended December 31,
1998, accrued payables, which consist primarily of related party management fees
due to the General Partner, increased by $28,000 and $115,000, respectively. The
General Partner does not anticipate that these accrued fees will be paid until
such time as capital reserves are in excess of future foreseeable working
capital requirements of the partnership.
The Partnership expects its future cash flows, together with its net available
assets at March 31, 1999, to be sufficient to meet all currently foreseeable
future cash requirements.
Impact of Year 2000
WNC & Associates, Inc.
Status of Readiness
Information Technology (IT) Systems. The Partnership relies on the IT systems of
WNC, its general partner. IT systems include computer hardware and software used
to produce financial reports and tax return information. This information is
then used to generate reports to investors and regulatory agencies, including
the Internal Revenue Service and the Securities and Exchange Commission. The IT
systems of WNC are year 2000 compliant.
Non-IT Systems. The Partnership also relies on the non-IT systems of WNC. Non-IT
systems include machinery and equipment such as telephones, voice mail and
electronic postage equipment. Except for one telephone system, the non-IT
systems of WNC are year 2000 compliant. The one telephone system will require
the replacement of one computer and one software application, both of which will
be completed on or before October 1, 1999.
Service Providers. WNC also relies on the IT and non-IT systems of service
providers. Service providers include utility companies, financial institutions,
telecommunications carriers, municipalities, and other outside vendors. WNC has
obtained verbal assurances from its material service providers (electrical power
provider, financial institutions and telecommunications carriers) that their IT
and non-IT systems are year 2000 compliant. There can be no assurance that this
compliance information is correct. There also can be no assurance that the
systems of other, less-important service providers and outside vendors will be
year 2000 compliant.
Costs to Address Year 2000 Issues
The cost to address year 2000 issues for WNC has been less than $20,000. The
cost to replace the telephone system noted above will be less than $5,000. The
cost to deal with potential year 2000 issues of other outside vendors cannot be
estimated at this time.
Risk of Year 2000 Issues
The most reasonable and likely result from non-year 2000 compliance of systems
of the service providers noted above will be the disruption of normal business
operations for WNC. This disruption would, in turn, lead to delays in performing
reporting and fiduciary responsibilities on behalf of the Partnership. The worst
case scenario would be the replacement of a service provider. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
11
Local Limited Partnerships
Status of Readiness
WNC is in the process of obtaining year 2000 certifications from each Local
General Partner of each Local Limited Partnership. Those certifications will
represent to the Partnership that the IT and non-IT systems critical to the
operation of the Housing Complexes and investor reporting to the Partnership are
year 2000 compliant. These certifications will also represent to the Partnership
that the IT and non-IT systems of property management companies, independent
accountants, electrical power providers, financial institutions and
telecommunications carriers used by the Local Limited Partnership are year 2000
compliant.
There can be no assurance that the representations in the certifications will be
correct. There also can be no assurance that the systems of other,
less-important service providers and outside vendors, upon which the Local
Limited Partnerships rely, will be year 2000 compliant.
Costs to Address Year 2000 Issues
There will be no cost to the Partnership as a result of assessing year 2000
issues for the Local Limited Partnerships. The cost to deal with potential year
2000 issues of the Local Limited Partnerships cannot be estimated at this time.
Risk of Year 2000 Issues
There may be Local General Partners who indicate that they or their property
management company are not year 2000 compliant and do not have plans to become
year 2000 compliant before the end of 1999. There may be other Local General
Partners who are unwilling to respond to the certification request. The most
likely result of either non-compliance or failure to respond will be the removal
and replacement of the property management company and/or the Local General
Partner with year 2000 compliant operators.
Despite the efforts to obtain certifications, there can be no assurance that the
Partnership will be unaffected by year 2000 issues. The most reasonable and
likely result from non-year 2000 compliance will be the disruption of normal
business operations for the Local Limited Partnerships, including but not
limited to the possible failure to properly collect rents and meet their
obligations in a timely manner. This disruption would, in turn, lead to delays
by the Local Limited Partnerships in performing reporting and fiduciary
responsibilities on behalf of the Partnership. The worst-case scenario would
include the initiation of foreclosure proceedings on the property by mortgage
debt holders. Under these circumstances, WNC or its affiliates will take actions
necessary to minimize the risk of foreclosure, including the removal and
replacement of a Local General Partner by the Partnership. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
NOT APPLICABLE
Item 8. Financial Statements and Supplementary Data
12
Report of Independent Certified Public Accountants
To the Partners
WNC California Housing Tax Credits, L.P.
We have audited the accompanying balance sheets of WNC California Housing Tax
Credits, L.P. (a California Limited Partnership) (the "Partnership") as of March
31, 1999 and December 31, 1998, and the related statements of operations,
partners' equity (deficit) and cash flows for the three months ended March 31,
1999 and the year ended December 31, 1998. 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. A significant
portion of the financial statements of the limited partnerships in which the
Partnership is a limited partner were audited by other auditors whose reports
have been furnished to us. As discussed in Note 2 to the financial statements,
the Partnership accounts for its investments in limited partnerships using the
equity method. The portion of the Partnership's investment in limited
partnerships audited by other auditors represented 80% of the total assets of
the Partnership at March 31, 1999 and December 31, 1998. Our opinion, insofar as
it relates to the amounts included in the financial statements for the limited
partnerships which were audited by others, 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 California Housing Tax Credits, L.P. (A California
Limited Partnership) as of March 31, 1999 and December 31, 1998, and the results
of its operations and its cash flows for the three months ended March 31, 1999
and the year ended December 31, 1998 in conformity with generally accepted
accounting principles.
BDO SEIDMAN, LLP
Orange County, California
July 7, 1999
13
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC California Housing Tax Credits, L.P.
We have audited the accompanying balance sheet of WNC California Housing Tax
Credits, L.P. (a California Limited Partnership) (the "Partnership") as of
December 31, 1997, and the related statements of operations, partners' equity
(deficit) and cash flows for each of the years in the two-year period ended
December 31, 1997. 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 audit. We did not audit the financial
statements of the limited partnerships in which WNC California Housing Tax
Credits, 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 96% of the total assets of
WNC California Housing Tax Credits, L.P. at December 31, 1997. 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 California Housing Tax Credits, L.P. (a California
Limited Partnership) as of December 31, 1997, and the results of its operations
and its cash flows for each of the years in the two-year period ended December
31, 1997, in conformity with generally accepted accounting principles.
CORBIN & WERTZ
Irvine, California
March 18, 1998
14
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
BALANCE SHEETS
March 31 December 31
------------------------------ ------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $ 61,123 $ 79,190 $ 66,028 $ 78,109
Investments in limited
partnerships, net (Note 2) 1,508,351 1,892,936 1,595,464 2,001,822
--------- --------- --------- ---------
$ 1,569,474 $ 1,972,126 $ 1,661,492 $ 2,079,931
========= ========= ========= =========
LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)
Liabilities:
Accrued fees and expenses
due to General Partner
and affiliates (Note 3) $ 848,503 $ 735,348 $ 820,365 $ 705,925
Commitments and contingencies
Partners' equity (deficit):
General partners (57,631) (52,472) (56,429) (51,100)
Limited partners
(10,000 units authorized;
7,450 units issued and
outstanding) 778,602 1,289,250 897,556 1,425,106
--------- --------- --------- ---------
Total partners' equity 720,971 1,236,778 841,127 1,374,006
--------- --------- --------- ---------
$ 1,569,474 $ 1,972,126 $ 1,661,492 $ 2,079,931
========= ========= ========= =========
See accompanying notes to financial statements
15
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three Months Ended
March 31 For the Years Ended December 31
---------------------------- -------------------------------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
(Unaudited)
Interest income $ 465 $ 546 $ 2,166 $ 2,227 $ 3,549
Operating expenses:
Amortization (Note 2) 3,726 3,726 14,904 14,904 14,904
Asset management fees (Note 3) 27,923 27,923 111,691 111,691 111,691
Legal and accounting 4,553 500 4,000 5,339 5,175
Office 1,782 1,000 16,292 7,661 6,946
-------- -------- -------- -------- --------
Total operating expenses 37,984 33,149 146,887 139,595 138,716
-------- -------- -------- -------- --------
Loss from operations (37,519) (32,603) (144,721) (137,368) (135,167)
Equity in losses of limited
partnerships (Note 2) (82,637) (104,625) (388,158) (420,868) (476,567)
-------- -------- -------- -------- --------
Net loss $ (120,156) $ (137,228) $ (532,879) $ (558,236) $ (611,734)
======== ======== ======== ======== ========
Net loss allocated to:
General partners $ (1,202) $ (1,372) $ (5,329) $ (5,582) $ (6,117)
========= ======== ======== ======== ========
Limited partners $ (118,954) $ (135,856) $ (527,550) $ (552,654) $ (605,617)
========= ======== ======== ======== ========
Net loss per limited
partnership unit $ (15.97) $ (18.24) $ (70.81) $ (74.18) $ (81.29)
========= ======== ======== ======== ========
Outstanding weighted limited
partner units 7,450 7,450 7,450 7,450 7,450
========= ======== ======== ======== ========
See accompanying notes to financial statements
16
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Three Months Ended March 31, 1999 and For
The Years Ended December 31, 1998, 1997 and 1996
General Limited
Partners Partners Total
-------- -------- -----
Partners' equity (deficit)
at January 1, 1996 $ (39,401) $ 2,583,377 $ 2,543,976
Net loss (6,117) (605,617) (611,734)
-------- --------- ---------
Partners' equity (deficit)
at December 31, 1996 (45,518) 1,977,760 1,932,242
Net loss (5,582) (552,654) (558,236)
-------- --------- ---------
Partners' equity (deficit)
at December 31, 1997 (51,100) 1,425,106 1,374,006
Net loss (5,329) (527,550) (532,879)
-------- --------- ---------
Partners' equity (deficit)
at December 31, 1998 (56,429) 897,556 841,127
Net loss (1,202) (118,954) (120,156)
-------- --------- ---------
Partners' equity (deficit)
at March 31, 1999 $ (57,631) $ 778,602 $ 720,971
======== ========= =========
See accompanying notes to financial statements
17
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31 For the Years Ended December 31
---------------------------- -------------------------------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
(Unaudited)
Cash flows from operating activities:
Net loss $ (120,156) $ (137,228) $ (532,879) $ (558,236) $ (611,734)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Amortization 3,726 3,726 14,904 14,904 14,904
Equity in losses of limited
partnerships 82,637 104,625 388,158 420,868 476,567
Change in other assets - - - - 358
Change in accrued fees and
expenses due to General
Partner and affiliates 28,138 29,423 114,440 111,677 110,310
--------- --------- --------- --------- ---------
Net cash provided by (used in)
operating activities (5,655) 546 (15,377) (10,787) (9,595)
--------- --------- --------- --------- ---------
Cash flows provided by investing activities:
Distributions from limited partnerships 750 535 3,296 4,953 9,034
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and
cash equivalents (4,905) 1,081 (12,081) (5,834) (561)
Cash and cash equivalents, beginning
of period 66,028 78,109 78,109 83,943 84,504
--------- --------- --------- --------- ---------
Cash and cash equivalents, end of
period $ 61,123 $ 79,190 $ 66,028 $ 78,109 $ 83,943
========= ========= ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Taxes paid $ - $ - $ 800 $ 800 $ 800
========= ========= ========= ========= =========
See accompanying notes to financial statements
18
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Three Months Ended March 31, 1999 and 1998 (Unaudited)
And For The Years Ended December 31, 1998, 1997 and 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC California Housing Tax Credits, L.P., a California Limited Partnership (the
"Partnership"), was formed on September 15, 1988 under the laws of the State of
California. The Partnership was formed to invest primarily in other limited
partnerships (the "Local Limited Partnerships") which own and operate
multi-family housing complexes (the "Housing Complex") that are eligible for low
income housing tax credits. The local general partners (the "Local General
Partners") of each Local Limited Partnership retain responsibility for
maintaining, operating and managing the Housing Complex.
WNC & Associates, Inc., a California corporation ("WNC"), and Wilfred N. Cooper,
Sr., are general partners of the Partnership (the "General Partners"). Wilfred
N. Cooper, Sr., through the Cooper Revocable Trust owns 66.8% of the outstanding
stock of WNC. John B. Lester, Jr. was the original limited partner of the
Partnership and owns, through the Lester Family Trust, 28.6% of the outstanding
stock of WNC.
The Partnership shall continue to be in full force and effect until December 31,
2037 unless terminated prior to that date pursuant to the partnership agreement
or law.
The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.
The Partnership Agreement authorized the sale of up to 10,000 units at $1,000
per Unit ("Units"). The offering of Units concluded in October 1990 at which
time 7,450 Units representing subscriptions in the amount of $7,450,000, had
been accepted. The General Partners have a 1% interest in operating profits and
losses, taxable income and losses, in cash available for distribution from the
Partnership and tax credits of 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 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 Partners have received proceeds
equal to their capital contributions from the remainder, any additional sale or
refinancing proceeds will be distributed 99% to the limited partners (in
proportion to their respective investments) and 1% to the General Partners.
Change in Reporting Year End
The Partnership has elected to change its year end for financial reporting
purposes from December 31 to March 31. All financial information reflected in
the financial statements and related footnotes has been adjusted for this change
in year end except for the combined condensed financial information relating to
the Local Limited Partnerships included in Note 2.
Due to the change in year end, unaudited financial information as of and for the
three months ended March 31, 1998 is included in the financial statements for
comparative purposes only. The financial statements as of and for the three
months ended March 31, 1998 are unaudited but include all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of financial position and results of
operations of the Partnership for the interim period.
19
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited)
And For The Years Ended December 31, 1998, 1997 and 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Risks and Uncertainties
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 multi-unit 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 Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not makes its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local 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 Housing Complexes and the
Partnership. In addition, each Local Limited Partnership is subject to risks
relating to environmental hazards and natural disasters which might be
uninsurable. Because the Partnership's 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 the anticipated low income housing
credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partners.
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 the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of the
investment and are being amortized over 30 years (see Note 2).
Losses from limited partnerships for the years ended December 31, 1998, 1997 and
1996 have been recorded by the Partnership's based on reported results provided
by the Local Limited Partnerships. Losses from limited partnerships for the
three months ended March 31, 1999 and 1998 have been estimated by management of
the Partnership. Losses from limited partnerships allocated to the Partnership
are not recognized to the extent that the investment balance would be adjusted
below zero.
20
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited)
And For The Years Ended December 31, 1998, 1997 and 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
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. WNC 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 and amounted to $946,704 at the end of all periods
presented.
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.
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. As of
March 31, 1999 and December 31, 1998 and 1997, the Partnership had no cash
equivalents.
Net Loss Per Limited Partner Unit
Net loss per limited partnership unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit
includes no dilution and is computed by dividing loss available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net income per unit is not required.
Reporting Comprehensive Income
In June 1997, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income. This statement establishes
standards for reporting the components of comprehensive income and requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be included in a financial statement that is
displayed with the same prominence as other financial statements. Comprehensive
income includes net income as well as certain items that are reported directly
within a separate component of Partners' equity and bypass net income. The
Partnership adopted the provisions of this statement in 1998. For the periods
presented, the Partnership has no elements of other comprehensive income, as
defined by SFAS No. 130.
Reclassifications
Certain prior period balances have been reclassified to conform to the 1999
presentation.
21
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited)
And For The Years Ended December 31, 1998, 1997 and 1996
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of the periods presented, the Partnership has acquired limited partnership
interests in eleven Local Limited Partnerships each of which owns one Housing
Complex consisting of an aggregate of 433 apartment units. The respective
general partners of the Local Limited Partnerships manage the day to day
operations of the entities. Significant Local Limited Partnership business
decisions require approval from the Partnership. The Partnership, as a limited
partner, is generally entitled to 99%, as specified in the Local Limited
Partnership agreements, of the operating profits and losses, taxable income and
losses, and tax credits of the Local Limited Partnerships.
The Partnership's investments in Local Limited Partnerships as shown in the
balance sheets at December 31, 1998 and 1997, are approximately $205,000 and
$208,000, respectively, greater than the Partnership's equity as shown in the
Local Limited Partnerships' financial statements. This difference is primarily
due to unrecorded losses as discussed below, and acquisition, selection and
other costs related to the acquisition of the investments which have been
capitalized in the Partnership's investment account.
Equity in losses of the local limited partnerships is recognized in the
financial statements until the related investment account is reduced to a zero
balance. Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income.
At March 31, 1999, the investment accounts in certain Local Limited Partnerships
have reached a zero balance. Consequently, a portion of the Partnership's
estimate of its share of losses for the three month period ended March 31, 1999
amounting to approximately $23,000 have not been recognized. The Partnership's
share of losses during the year ended December 31, 1998 amounting to
approximately $32,000 have not been recognized. As of March 31, 1999, the
aggregate share of net losses not recognized by the Partnership amounted to
$55,000.
The following is a summary of the equity method activity of the investments in
Local Limited Partnerships for the periods presented:
For the Three For the Years Ended
Months Ended December 31
March 31
--------------- --------------------------
1999 1998 1997
---- ---- ----
Investments per balance sheet,
beginning of period $ 1,595,464 $ 2,001,822 $ 2,442,547
Equity in losses of limited
partnerships (82,637) (388,158) (420,868)
Distributions received (750) (3,296) (4,953)
Amortization of paid
acquisition fees and costs (3,726) (14,904) (14,904)
--------- --------- ---------
Investments per balance sheet,
end of period $ 1,508,351 $ 1,595,464 $ 2,001,822
========= ========= =========
22
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited)
And For The Years Ended December 31, 1998, 1997 and 1996
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
The financial information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted against
interest expense. 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
1998 1997
---- ----
ASSETS
Buildings and improvements,
(net of accumulated $ 16,079,000 $ 16,617,000
depreciation for 1998 and
1997 of $5,420,000 and
$4,818,000, respectively)
Land 1,484,000 1,484,000
Other assets 1,465,000 1,387,000
--------------- ---------------
$ 19,028,000 $ 19,488,000
=============== ===============
LIABILITIES
Mortgage loans payable $ 16,811,000 $ 16,854,000
Other liabilities
(including $348,000 and $347,000 506,000 483,000
due to related parties)
--------------- ---------------
17,317,000 17,337,000
--------------- ---------------
PARTNERS' CAPITAL
WNC California Housing
Tax Credits, L.P 1,390,000 1,794,000
Other partners 321,000 357,000
--------------- ---------------
1,711,000 2,151,000
--------------- ---------------
$ 19,028,000 $ 19,488,000
=============== ===============
23
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited)
And For The Years Ended December 31, 1998, 1997 and 1996
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
COMBINED CONDENSED STATEMENTS OF OPERATIONS
1998 1997 1996
---- ---- ----
Revenues $ 1,828,000 $ 1,802,000 $ 1,771,000
--------- --------- ---------
Expenses:
Operating expenses 1,251,000 1,199,000 1,236,000
Interest expense 400,000 410,000 406,000
Depreciation and
amortization 602,000 618,000 611,000
--------- --------- ---------
Total expenses 2,253,000 2,227,000 2,253,000
--------- --------- ---------
Net loss $ (425,000) $ (425,000) $ (482,000)
========= ========= =========
Net loss allocable to
the Partnership $ (420,000) $ (421,000) $ (477,000)
========= ========= =========
Net loss recorded
by the Partnership $ (388,000) $ (421,000) $ (477,000)
========= ========= =========
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partners may be
required to sustain operations of such Local Limited Partnerships. If additional
capital contributions are not made when they are required, the Partnership's
investment in certain of such Local 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 Partners or their affiliates for the following items:
Acquisition fees equal to 6% of the gross proceeds from the sale of
Units as compensation for services rendered in connection with the
acquisition of Local Limited Partnerships. As of the end of all
periods presented, the Partnership incurred acquisition fees of
$447,060. Accumulated amortization of these capitalized costs was
$190,683, $186,957 and $172,053 as of March 31, 1999 and December 31,
1998 and 1997, respectively.
Reimbursement of costs incurred by the General Partners or an
affiliate in connection with the acquisition of the Local Limited
Partnerships. These reimbursements have not exceeded 3% of the gross
proceeds. As of the end of all periods presented, the Partnership
incurred acquisition costs of $32,018 which have been included in
investments in limited partnerships. Such costs were fully amortized
at December 31, 1997.
An annual management fee equal to 0.5% of the invested assets of the
Local Limited Partnerships, including the Partnerships allocable share
of the mortgages. Management fees of $27,923 were incurred during the
three months ended March 31, 1999 and $111,691 were incurred for 1998,
1997 and 1996, of which $0 was paid during the three months ended
March 31, 1999 and the years ended December 31, 1998, 1997 and 1996.
24
WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Three Months Ended March 31, 1999 and 1998 (Unaudited)
And For The Years Ended December 31, 1998, 1997 and 1996
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
The accrued fees and expenses due to the General Partners and affiliates consist
of the following as of the dates indicated:
March 31 December 31
--------------- ----------------------------
1999 1998 1997
---- ---- ----
Reimbursement for expenses
paid by the General
Partners or an affiliate $ 2,963 $ 2,748 $ -
Asset management fee payable 845,540 817,617 705,925
--------- --------- ---------
Total $ 848,503 $ 820,365 $ 705,925
========= ========= =========
The General Partners do not anticipate that these accrued fees will be paid
until such time as capital reserves are in excess of future foreseeable working
capital requirements of the Partnership.
NOTE 4 - INCOME TAXES
No provision for income taxes has been recorded in the financial statements as
any liability for income taxes is the obligation of the partners of the
Partnership.
25
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NOT APPLICABLE
PART III.
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.
The directors of WNC & Associates, Inc. are Wilfred N. Cooper, Sr., who serves
as Chairman of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N.
Cooper, Jr. and Kay L. Cooper. The principal shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.
Wilfred N. Cooper, Sr., age 68, is the founder, Chief Executive Officer and a
Director of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a
general partner in some of the programs previously sponsored by the Sponsor. Mr.
Cooper has been involved in real estate investment and acquisition activities
since 1968. Previously, during 1970 and 1971, he was founder and 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 where
he had responsibility for factory-built housing evaluation and project
management in urban planning and development. Mr. Cooper is a Director of the
National Association of Home Builders (NAHB) and a National Trustee for NAHB's
Political Action Committee, a Director of the National Housing Conference (NHC)
and a member of NHC's Executive Committee and a Director of the National
Multi-Housing Council (NMHC). Mr. Cooper graduated from Pomona College in 1956
with a Bachelor of Arts degree.
John B. Lester, Jr., age 65, is President, a Director, Secretary and a member of
the Acquisition Committee of WNC & Associates, Inc., and a Director of WNC
Capital Corporation. Mr. Lester has 27 years of experience in engineering and
construction and has been involved in real estate investment and acquisition
activities since 1986 when he joined the Sponsor. Previously, 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 graduated from the
University of Southern California in 1956 with a Bachelor of Science degree in
Mechanical Engineering.
Wilfred N. Cooper, Jr., age 36, is Executive Vice President, a Director and a
member of the Acquisition Committee of WNC & Associates, Inc. He is President
of, and a registered principal with, WNC Capital Corporation, a member firm of
the NASD, and is a Director of WNC Management, Inc. He has been involved in
investment and acquisition activities with respect to real estate since he
joined the Sponsor in 1988. Prior to this, he served as Government Affairs
Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of
the Advisory Board for LIHC Monthly Report, a Director of NMHC and an Alternate
Director of NAHB. He graduated from The American University in 1985 with a
Bachelor of Arts degree.
David N. Shafer, age 47, is Senior Vice President, a Director, General Counsel,
and a member of the Acquisition Committee of WNC & Associates, Inc., and a
Director and Secretary of WNC Management, Inc. Mr. Shafer has been involved in
real estate investment and acquisition activities since 1984. Prior to joining
the Sponsor in 1990, he was practicing law with a specialty in real estate and
taxation. Mr. Shafer is a Director and President of the California Council of
Affordable Housing 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 (cum laude) and from the University of San Diego in 1986 with a
Master of Law degree in Taxation.
26
Michael L. Dickenson, age 42, is Vice President and Chief Financial Officer, and
a member of the Acquisition Committee of WNC & Associates, Inc., and Chief
Financial Officer of WNC Management, Inc. He has been involved with acquisition
and investment activities with respect to real estate since 1985. Prior to
joining the Sponsor in March 1999, he was the Director of Financial Services at
TrizecHahn Centers Inc., a developer and operator of commercial real estate,
from 1995 to 1999, a Senior Manager with E&Y Kenneth Leventhal Real Estate
Group, Ernst & Young, LLP, from 1988 to 1995, and Vice President of Finance with
Great Southwest Companies, a commercial and residential real estate developer,
from 1985 to 1988. Mr. Dickenson is a member of the Financial Accounting
Standards Committee for the National Association of Real Estate Companies and
the American Institute of Certified Public Accountants, and a Director of
HomeAid Southern California, a charitable organization affiliated with the
building industry. He graduated from Texas Tech University in 1978 with a
Bachelor of Business Administration - Accounting degree, and is a Certified
Public Accountant in California and Texas.
Thomas J. Riha, age 44, is Vice President - Asset Management and a member of the
Acquisition Committee of WNC & Associates, Inc. and a Director and Chief
Executive Officer of WNC Management, Inc. Mr. Riha has been involved in
acquisition and investment activities with respect to real estate since 1979.
Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty
Advisor, a real estate acquisition and management company, last serving as Vice
President - Operations. 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 and a member of the American Institute of Certified Public
Accountants.
Sy P. Garban, age 53, is Vice President - National Sales of WNC & Associates,
Inc. and has been employed by the Sponsor since 1989. Mr. Garban has been
involved in real estate investment activities since 1978. Prior to joining the
Sponsor he served as Executive Vice President of MRW, Inc., a real estate
development and management firm. Mr. Garban is a member of the International
Association of Financial Planners. He graduated from Michigan State University
in 1967 with a Bachelor of Science degree in Business Administration.
N. Paul Buckland, age 36, is Vice President - Acquisitions of WNC & Associates,
Inc. He has been involved in real estate acquisitions and investments since 1986
and has been employed with WNC & Associates, Inc. since 1994. Prior to that, he
served on the development team of the Bixby Ranch that constructed apartment
units and Class A office space in California and neighboring states, and as a
land acquisition coordinator with Lincoln Property Company where he identified
and analyzed multi-family developments. Mr. Buckland graduated from California
State University, Fullerton in 1992 with a Bachelor of Science degree in
Business Finance.
David Turek, age 44, is Vice President - Originations of WNC & Associates, Inc.
He has been involved with real estate investment and finance activities since
1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to
1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties. From 1990 to 1995, he was involved in the development of
conventional and tax credit multi-family housing. He is a Director with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.
Kay L. Cooper, age 62, is a Director of WNC & Associates, Inc. Mrs. Cooper was
the founder and sole proprietor of Agate 108, a manufacturer and retailer of
home accessory products, from 1975 until 1998. She is the wife of Wilfred N.
Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B.
Lester, Jr. Ms. Cooper graduated from the University of Southern California in
1958 with a Bachelor of Science degree.
27
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 its affiliates during the current or future years for the following
fees:
(a) Annual Asset Management Fee. An annual asset management fee in an amount
equal to 0.5% of the Invested Assets of the Partnership, as defined.
"Invested Assets" means the sum of the Partnership's investment in Local
Limited Partnerships and the Partnership's allocable share of the amount of
the mortgage loans on and other debts related to the Housing Complexes
owned by such Local Limited Partnerships. Fees of $28,000 and $112,000 were
incurred during the three months ended March 31, 1999 and the year ended
December 31, 1998, respectively. The Partnership paid the General Partners
and or their affiliates $0 of those fees during the three months ended
March 31, 1999 and the year ended December 31, 1998.
(b) Operating Expense. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $6,000 and $3,000 during
the three months ended March 31, 1999 and the year ended December 31, 1998,
respectively.
(c) Interest in Partnership. The General Partners receive 1% of the
Partnership's allocated Low Income Housing Credits, which approximated
$6,700 for Associates and $750 for Mr. Cooper for the year ended December
31, 1998. The General Partners are also entitled to receive 1% of cash
distributions. There were no distributions of cash to the General Partners
during the three months ended March 31, 1999 and the year ended December
31, 1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
No person is known to the General Partner to own beneficially in excess of
5% of the outstanding Units.
(b) Security Ownership of Management
Neither the General Partners, their affiliates, nor any of the officers or
directors of the corporate General Partner or its affiliates own directly
or beneficially any Units in the Partnership.
(c) Changes in Control
The management and control of the corporate 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
The General Partners manage all of the Partnership's affairs. The transactions
with the General Partners are primarily in the form of fees paid by the
Partnership for services rendered to the Partnership and the General Partner's
interests in the Partnership, as discussed in Item 11 and in the notes to the
Partnership's financial statements.
28
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof:
Report of Independent Certified Public Accountants
Independent Auditors' Report
Balance Sheets, March 31, 1999 and 1998 (Unaudited) and December 31,
1998 and 1997
Statements of Operations for the three months ended March 31, 1999 and
1998 (Unaudited) and for the years ended December 31, 1998, 1997
and 1996
Statements of Partners' Equity (Deficit) for the three months
ended March 31, 1999 and for the years ended December 31, 1998,
1997 and 1996
Statements of Cash Flows for the three months ended March 31, 1999 and
1998 (Unaudited) and for the years ended December 31, 1998, 1997 and
1996
Notes to Financial Statements
(a)(2) Financial statement schedules included in Part IV hereof:
Report of Independent Certified Public Accountants on Financial State-
ment Schedules
Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K.
1. A Form 8-K dated May 13, 1999 was filed on May 14, 1999 reporting the
Partnership's change in fiscal year end to March 31.
(c) Exhibits.
3.1 Agreement of Limited Partnership dated September 15, 1988; included as
Exhibit B to the Prospectus, which was filed as Exhibit 28.1 to Form
10-K for the year ended December 31, 1992 is hereby incorporated herein
as Exhibit 3.1.
10.1. Amended and Restated Agreement of Limited Partnership of Countryway
Associates filed as exhibit 10.1 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.1.
10.2. Amended and Restated Agreement of Limited Partnership of Alta Vista
Investors filed as exhibit 10.2 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.2.
10.3. Amended and Restated Agreement of Limited Partnership of Yreka Invest-
ment Group filed as exhibit 10.3 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.3.
10.4. Amended and Restated Agreement of Limited Partnership of BCA Associates
filed as exhibit 10.7 on Form 10-K dated December 31, 1992 is hereby
incorporated herein as exhibit 10.4.
10.5. Amended and Restated Agreement of Limited Partnership of HPA Investors
filed as exhibit 10.8 on Form 10-K dated December 31, 1992 is hereby
incorporated herein as exhibit 10.5.
10.6. Amended and Restated Agreement of Limited Partnership of Cloverdale
Garden Apartments filed as exhibit 10.11 on Form 10-K dated December
31, 1992 is hereby incorporated herein as exhibit 10.6.
29
10.7. Amended and Restated Agreement of Limited Partnership of Knights Land
ing Harbor filed as exhibit 10.13 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.7.
10.8. Amended and Restated Agreement of Limited Partnership of Woodlake Manor
filed as exhibit 10.16 on Form 10-K dated December 31, 1992 is hereby
incorporated herein as exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership of East Garden
Apartments filed as exhibit 10.18 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.9.
10.10. Amended and Restated Agreement of Limited Partnership of Midland Manor
Associates filed as exhibit 10.26 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.10.
10.11. Amended and Restated Agreement of Limited Partnership of San Jacinto
Associates filed as exhibit 10.27 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.11.
(d) Financial statement schedules follow, as set forth in subsection (a)(2)
hereof.
30
Report of Independent Certified Public Accountants on
Financial Statement Schedule
To the Partners
California Housing Tax Credits, L.P.
The audits referred to in our report dated July 7, 1999, relating to the 1999
and 1998 financial statements of WNC California Housing Tax Credits, L.P. (the
"Partnership"), which is contained in Item 8 of this Form 10-K, included the
audit of the accompanying financial statement schedules. The financial statement
schedules are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statement schedules
based upon our audits.
In our opinion, such financial statement schedules present fairly, in all
material respects, the financial information set forth therein.
BDO SEIDMAN, LLP
Orange County, California
July 7, 1999
31
WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
------------------------------------ ---------------------------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------------ ---------------------------------------------------------
Partnership's Total Amount of Encumbrances of
Investment in Local Investment Paid Local Limited Property and Accumulated Net Book
Partnership Name Location Limited Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Alta Vista Orosi,
Investors California $ 583,000 $ 583,000 $ 1,440,000 $ 2,038,000 $ 636,000 $ 1,402,000
BCA Associates Anderson,
California 514,000 514,000 1,429,000 2,014,000 471,000 1,543,000
Cloverdale Garden Cloverdale,
Apartments California 617,000 617,000 1,642,000 2,136,000 375,000 1,761,000
Countryway Mendota,
Associates California 571,000 571,000 1,481,000 2,085,000 668,000 1,417,000
East Garden Jamestown,
Apartments California 770,000 770,000 2,161,000 2,886,000 499,000 2,387,000
HPA Investors Shafter,
California 538,000 538,000 1,516,000 2,158,000 489,000 1,669,000
Knights Landing Knights
Harbor Landing,
California 275,000 275,000 986,000 1,345,000 312,000 1,033,000
Midland Manor Mendota,
Associates California 383,000 383,000 1,431,000 1,821,000 512,000 1,309,000
San Jacinto San Jacinto,
Associates California 469,000 469,000 1,790,000 2,349,000 374,000 1,975,000
Woodlake Manor Woodlake,
California 545,000 545,000 1,460,000 2,108,000 667,000 1,441,000
Yreka Investment Yreka,
Group California 538,000 538,000 1,475,000 2,043,000 417,000 1,626,000
--------- --------- ---------- ---------- --------- ----------
$ 5,803,000 $ 5,803,000 $ 16,811,000 $ 22,983,000 $ 5,420,000 $ 17,563,000
========= ========= ========== ========== ========= ==========
32
WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
------------------------------------------------------------------------------------------
For the year ended December 31, 1998
------------------------------------------------------------------------------------------
Year Investment Estimated Useful Life
Partnership Name Rental Income Net Loss Acquired Status (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
Alta Vista Investors $ 153,000 $ (47,000) 1989 Completed 27.5
BCA Associates 151,000 (16,000) 1989 Completed 40
Cloverdale Garden Apartments 176,000 (25,000) 1989 Completed 40
Countryway Associates 167,000 (34,000) 1989 Completed 27.5
East Garden Apartments 218,000 (42,000) 1989 Completed 40
HPA Investors 161,000 (63,000) 1989 Completed 40
Knights Landing Harbor 118,000 (21,000) 1989 Completed 40
Midland Manor Associates 151,000 (45,000) 1990 Completed 27.5
San Jacinto Associates 118,000 (80,000) 1990 Completed 50
Woodlake Manor 170,000 (45,000) 1989 Completed 30
Yreka Investment Group 153,000 (7,000) 1989 Completed 50
--------- --------
$ 1,736,000 $ (425,000)
========= ========
33
WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
-------------------------------------------------------------------------------------------------
As of December 31, 1998
-------------------------------------------------------------------------------------------------
Partnership's Total Amount of Encumbrances of
Investment in Local Investment Paid Local Limited Property and Accumulated Net Book
Partnership Name Location Limited Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Alta Vista Orosi,
Investors California $ 583,000 $ 583,000 $ 1,440,000 $ 2,038,000 $ 636,000 $ 1,402,000
BCA Associates Anderson,
California 514,000 514,000 1,429,000 2,014,000 471,000 1,543,000
Cloverdale Garden Cloverdale,
Apartments California 617,000 617,000 1,642,000 2,136,000 375,000 1,761,000
Countryway Mendota,
Associates California 571,000 571,000 1,481,000 2,085,000 668,000 1,417,000
East Garden Jamestown,
Apartments California 770,000 770,000 2,161,000 2,886,000 499,000 2,387,000
HPA Investors Shafter,
California 538,000 538,000 1,516,000 2,158,000 489,000 1,669,000
Knights Landing Knights
Harbor Landing,
California 275,000 275,000 986,000 1,345,000 312,000 1,033,000
Midland Manor Mendota,
Associates California 383,000 383,000 1,431,000 1,821,000 512,000 1,309,000
San Jacinto San Jacinto,
Associates California 469,000 469,000 1,790,000 2,349,000 374,000 1,975,000
Woodlake Manor Woodlake,
California 545,000 545,000 1,460,000 2,108,000 667,000 1,441,000
Yreka Investment Yreka,
Group California 538,000 538,000 1,475,000 2,043,000 417,000 1,626,000
--------- --------- ---------- ---------- --------- ----------
$ 5,803,000 $ 5,803,000 $ 16,811,000 $ 22,983,000 $ 5,420,000 $ 17,563,000
========= ========= ========== ========== ========= ==========
34
WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
-----------------------------------------------------------------------------------------------
For the year ended December 31, 1998
-----------------------------------------------------------------------------------------------
Year Investment Estimated Useful Life
Partnership Name Rental Income Net Loss Acquired Status (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
Alta Vista Investors $ 153,000 $ (47,000) 1989 Completed 27.5
BCA Associates 151,000 (16,000) 1989 Completed 40
Cloverdale Garden Apartments 176,000 (25,000) 1989 Completed 40
Countryway Associates 167,000 (34,000) 1989 Completed 27.5
East Garden Apartments 218,000 (42,000) 1989 Completed 40
HPA Investors 161,000 (63,000) 1989 Completed 40
Knights Landing Harbor 118,000 (21,000) 1989 Completed 40
Midland Manor Associates 151,000 (45,000) 1990 Completed 27.5
San Jacinto Associates 118,000 (80,000) 1990 Completed 50
Woodlake Manor 170,000 (45,000) 1989 Completed 30
Yreka Investment Group 153,000 (7,000) 1989 Completed 50
--------- --------
$ 1,736,000 $ (425,000)
========= ========
35
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, L.P.
By: WNC & Associates, Inc., General Partner
By: /s/ John B. Lester, Jr.
John B. Lester, Jr., President of WNC & Associates, Inc.
Date: July 27, 1999
By: /s/ Michael L. Dickenson
Michael L. Dickenson,
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: July 27, 1999
By: /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., General Partner
Date: July 27, 1999
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., Chairman of the Board of WNC & Associates, Inc.
Date: July 27, 1999
By: /s/ John B. Lester, Jr.
John B. Lester, Jr., Director of WNC & Associates, Inc.
Date: July 27, 1999
By: /s/ David N. Shafer
David N Shafer, Director of WNC & Associates, Inc.
Date: July 27, 1999
36