Back to GetFilings.com
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 March 31, 2001
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 0-20057
WNC HOUSING TAX CREDIT FUND II, L.P.
California 33-0391979
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 No X
- ---- -------
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|
1
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 Housing Tax Credit Fund II, L.P. ("the Partnership") is a California limited
partnership formed under the laws of the State of California on January 19,
1990. The Partnership was formed to acquire limited partnership interests in
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 partner of the Partnership is WNC Financial Group, L.P. (the
"General Partner"). The general partners of WNC Financial Group, L.P. are WNC &
Associates, Inc. ("Associates") and Wilfred N. Cooper, Sr. 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. Wilfred N. Cooper, Jr., President of Associates, owns 2.1%
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 April 27, 1990, the Partnership commenced a public offering of
12,000 units of Limited Partnership Interest ("Units") at a price of $1,000 per
Unit. The General Partner concluded the sale of Units on December 31, 1992. A
total of 7,000 Units representing $7,000,000 had been sold. Holders of Units are
referred to herein as "Limited Partners."
Description of Business
The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner 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.12 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, 2001, the Partnership had invested in twenty-seven Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is eligible for the federal 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 make 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 twenty-seven Housing Complexes as of the dates and
for the periods indicated:
4
------------------------------ ---------------------------------
As of March 31, 2001 December 31, 2000
------------------------------ ---------------------------------
Partnership Name Location General Partner Partnership's Amount of Encumbrances
Name Total Investment Investment Estimated Low of Local
in Local Limited Paid to Number Income Housing Limited
Partnerships Date of Units Occupancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Road Slidell, Clifford E. Olsen,
Associates, Limited Louisiana Olsen Securities
Corporation $ 334,000 $ 334,000 40 100% $ 695,000 $ 1,444,000
Am-Kent Associates, Amite & Olsen
Ltd. Kentwood, Securities
Louisiana Corporation 232,000 232,000 32 100% 585,000 1,114,000
Arizona I Limited Showlow, Western States
Partnership Arizona Housing
Corporationand Joe W.
Roberts Company 320,000 320,000 42 93% 617,000 1,480,000
Ashland Investment Ashland, Ronald D.
Group, an Oregon Oregon Bettencourt
Limited Partnership 300,000 300,000 40 100% 666,000 1,381,000
Brantley Housing, Brantley, Thomas H. Cooksey
Ltd. Alabama and Apartment
Developers,Inc. 108,000 108,000 19 100% 287,000 572,000
Brian's Village Mannford, Robert W. Green
Apartments, an Oklahoma and Emerald
Oklahoma Limited Development
Partnership. Co., Inc. 176,000 176,000 28 100% 374,000 753,000
Candleridge Perry, Eric A Sheldahl
Apartments Iowa
of Perry,L.P. 93,000 93,000 23 100% 224,000 590,000
Candleridge Runnells, Eric A. Sheldahl
Apartments of Iowa
Runnells, L.P. 58,000 58,000 15 93% 141,000 371,000
5
------------------------------ ---------------------------------
As of March 31, 2001 December 31, 2000
------------------------------ ---------------------------------
Partnership Name Location General Partner Partnership's Amount of Encumbrances
Name Total Investment Investment Estimated Low of Local
in Local Limited Paid to Number Income Housing Limited
Partnerships Date of Units Occupancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Casa Allegre Las Vegas, Western States
Limited New Mexico Housing Corporation,
Partnership ABO Corporation and
Alan D. Nofsker 318,000 318,000 42 100% 635,000 1,378,000
Castroville Castroville, Doublekaye Corp and
Village,Ltd. Texas Gary L. Kersch 165,000 165,000 40 100% 426,000 944,000
Cherokee Rogersville, Douglas B. Parker and
Square, L.P. Tennessee Billy D. Cobb 202,000 202,000 31 97% 418,000 973,000
Divall Midland Port Gary J. DiVall
Associates Limited Washington,
Partnership II Wisconsin 234,000 234,000 32 91% 489,000 1,153,000
Eclectic Eclectic, Thomas H. Cooksey
Housing, Ltd. Alabama and Apartment
Developers,Inc. 74,000 74,000 15 100% 216,000 409,000
Elizabeth Square Raceland, Olsen Securities
Associates, Ltd. Louisiana Corp. 356,000 356,000 48 96% 748,000 1,465,000
Emory Capital, Emory, 1600 Capital
L.P. Texas Company, Inc. 85,000 85,000 16 94% 175,000 368,000
Emory Manor, Emory, 1600 Capital
L.P. Texas Company, Inc. 128,000 128,000 24 100% 206,000 550,000
Idalou Manor, Idalou, 1600 Capital
L.P. Texas Company, Inc. 122,000 122,000 24 100% 290,000 616,000
Jefferson Jefferson, 1600 Capital
Capital,L.P. Texas Company, Inc. 167,000 167,000 30 77% 269,000 711,000
6
------------------------------ -------------------------------
As of March 31, 2001 December 31, 2000
------------------------------ ---------------------------------
Partnership Name Location General Partner Partnership's Amount of Encumbrances
Name Total Investment Investment Estimated Low of Local
in Local Limited Paid to Number Income Housing Limited
Partnerships Date of Units Occupancy Credits Partnerships
- -----------------------------------------------------------------------------------------------------------------------------------
Jefferson Jefferson, 1600 Capital
Manor, L.P. Texas Company, Inc. 179,000 179,000 32 100% 362,000 760,000
Beaver Dam, Thomas G. Larson,
Lakeview Limited Wisconsin William H. Larson,
Partnership and Raymond L.
Tetzlaff 264,000 264,000 40 95% 528,000 1,234,000
Littlefield Littlefield, 1600 Capital
Manor,L.P. Texas Company, Inc. 117,000 117,000 24 83% 280,000 592,000
Perry County Uniontown, Thomas H. Cooksey
Housing,Ltd. Alabama and Apartment
Developers, Inc. 82,000 82,000 15 73% 215,000 437,000
Pine Hill Pine Hill, Thomas H. Cooksey
Housing,Ltd. Alabama and Apartment
Developers, Inc. 105,000 105,000 19 89% 267,000 559,000
Rociada Partners Hereford, Richard Lee (Rick)
Ltd. Texas Brown 154,000 154,000 28 93% 316,000 727,000
Wadley Housing, Wadley, Thomas H. Cooksey
Ltd. Alabama Apartment and
Developers, Inc. 76,000 76,000 15 60% 213,000 437,000
Whitewater Whitewater, Thomas G. Larson,
Woods Wisconsin William H. Larson,
Limited and Raymond L.
Partnership Tetzlaff 301,000 301,000 40 97% 603,000 1,290,000
Willcox Investment Willcox, John P. Casper
Group, an Arizona Arizona
Limited Partnership 246,000 246,000 30 97% 490,000 1,055,000
-------- -------- -------- -- ------- ---------
$ 4,996,000 $ 4,996,000 784 94% $10,735,000 $ 23,363,000
============ ========== ========== === ============ ============
7
--------------------------------------------------------------------------
For the year ended December 31, 2000
--------------------------------------------------------------------------
Low Income Housing
Credits Allocated to
Partnership Name Rental Income Net Income/(Loss) Partnership
- -----------------------------------------------------------------------------------------------------------
Airport Road Associates, Limited $ 162,000 $ (71,000) 99%
Am-Kent Associates, Ltd. 131,000 (66,000) 99%
Arizona I Limited Partnership 157,000 (24,000) 99%
Ashland Investment Group, an
Oregon Limited Partnership 165,000 4,000 99%
Brantley Housing, Ltd. 64,000 (3,000) 99%
Brian's Village Apartments, an
Oklahoma Limited Partnership. 114,000 (24,000) 99%
Candleridge Apartments of
Perry, L.P. 121,000 (16,000) 99%
Candleridge Apartments of
Runnells, L.P. 85,000 (10,000) 99%
Casa Allegre Limited Partnership 175,000 2,000 99%
Castroville Village, Ltd. 167,000 (3,000) 99%
Cherokee Square, L.P. 89,000 (27,000) 99%
Divall Midland Associates
Limited Partnership II 128,000 (45,000) 99%
Eclectic Housing, Ltd. 47,000 (4,000) 99%
Elizabeth Square Associates,
Ltd. 165,000 (45,000) 99%
Emory Capital, L.P. 54,000 (13,000) 99%
Emory Manor, L.P. 80,000 (21,000) 99%
Idalou Manor, L.P. 82,000 (20,000) 99%
Jefferson Capital, L.P. 86,000 (12,000) 99%
Jefferson Manor, L.P. 96,000 (20,000) 99%
Lakeview Limited Partnership 144,000 (46,000) 99%
Littlefield Manor, L.P. 69,000 (28,000) 99%
8
---------------------------------------------------------------------------------------
For the year ended December 31, 2000
--------------------------------------------------------------------------
Low Income Housing
Credits Allocated to
Partnership Name Rental Income Net Income/(Loss) Partnership
- ------------------------------------------------------------------------------------------------
Perry County Housing, Ltd. 44,000 (11,000) 99%
Pine Hill Housing, Ltd. 57,000 (12,000) 99%
Rociada Partners Ltd. 142,000 (20,000) 99%
Wadley Housing, Ltd. 48,000 (14,000) 99%
Whitewater Woods Limited
Partnership 171,000 (37,000) 99%
Willcox Investment Group, an
Arizona Limited Partnership 119,000 (21,000) 99%
------- --------
$2,962,000 $(607,000)
=========== ==========
9
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, 2001, there were 583 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 year
ended March 31, 2001.
Item 5b.
NOT APPLICABLE
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
March 31 December 31
------------------------------------- -------------------------------------
2001 2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
ASSETS
Cash and cash
equivalents $ 136,626 $ 150,827 $ 175,658 $ 175,192 $ 181,313 $ 208,303
Investments in
limited
partnerships, net 622,522 1,049,680 1,460,945 1,533,952 1,828,770 2,005,382
Other assets - - - - - 587
----------- ----------- ----------- ----------- ----------- -----------
$ 759,148 $ 1,200,507 $ 1,636,603 $ 1,709,144 $ 2,010,083 $ 2,214,272
=========== =========== =========== =========== =========== ===========
LIABILITIES
Accrued fees and
expenses due to
general partner
and affiliates $ 1,335,561 $ 1,194,613 $ 1,055,204 $ 1,019,071 $ 871,377 $ 758,827
PARTNERS' (DEFICIT)
EQUITY (576,413) 5,894 581,399 690,073 1,138,706 1,455,445
----------- ----------- ----------- ----------- ----------- -----------
$ 759,148 $ 1,200,507 $ 1,636,603 $ 1,709,144 $ 2,010,083 $ 2,214,272
=========== =========== =========== =========== =========== ===========
10
Selected results of operations, cash flows, and other information for the
Partnership is as follows for the periods indicated:
For the Years Ended For the Three Months For the Years Ended
March 31 Ended March 31 December 31
------------------------ ------------------------ -------------------------------------
2001 2000 1999 1998 1998 1997 1996
----------- ---------- ----------- ---------- ---------- ---------- ----------
(Unaudited
Loss from operations $ (180,074) $ (190,926) $ (46,381)$ (40,643) $ (181,052)$ (173,718)$ (224,004)
Equity in loss from
limited
partnerships (402,233) (384,579) (62,293) (70,760) (267,581) (143,021) (568,488)
------------ --------- --------- -------- -------- --------- --------- ---------
Net loss $ (582,307) $ (575,505) $ (108,674) $ (111,403) $ (448,633) $ (316,739)$ (792,492)
=========== ========== =========== ========== ========== ========== ==========
Net loss allocated to:
General partner $ (5,823) $ (5,755) $ (1,087) $ (1,114) $ (4,486) $ (3,167)$ (7,925)
=========== ========== =========== ========== ========== ========== ==========
Limited partners $ (576,484) $ (569,750) $ (107,587) $ (110,289) $ (444,147) (313,572)$ (784,567)
=========== ========== =========== ========== ========== ========== ==========
Net loss per limited
partner unit $ (82.35) $ (81.39) $ (15.37) $ (15.76)$ (63.45) $ (44.80)$ (112.08)
=========== ========== =========== ========== ========== ========== ==========
Outstanding
weighted limited
partner units 7,000 7,000 7,000 7,000 7,000 7,000 7,000
=========== ========== =========== ========== ========= ========= ==========
For the Years Ended For the Three Months For the Years Ended
March 31 Ended March 31 December 31
------------------------ ------------------------ -------------------------------------
2001 2000 1999 1998 1998 1997 1996
----------- ----------- ----------- ---------- ---------- ---------- -----------
(Unaudited
Net cash provided by
(used in):
Operating
activities $ (17,774) $ (30,165) $ (4,910) $ 3,849 $ (12,006) $ (39,229) $ (41,630)
Investing
activities 3,573 5,334 5,376 2,545 5,885 12,239 11,451
----------- ----------- ----------- ---------- ---------- ---------- -----------
Net change in cash
and cash equivalents (14,201) (24,831) 466 6,394 (6,121) (26,990) (30,179)
Cash and cash
equivalents,
beginning of period 150,827 175,658 175,192 181,313 181,313 208,303 238,482
----------- ----------- ----------- ---------- ---------- ---------- -----------
Cash and cash
equivalents, end of
period $ 136,626 $ 150,827 $ 175,658 $ 187,707 $ 175,192 $ 181,313 $ 208,303
=========== =========== =========== ========== ========== ========== =========
Low Income Housing Credit per Unit was as follows for the year ended December
31:
2001 2000 1999 1998 1997 1996
---- -------- -------- -------- -------- --------
Federal $ $ 145 $ 145 $ 145 $ 145 $ 145
120
State - - - - - -
-------------- -------------- --------------- -------------- --------------- --------------
Total $ 120 $ 145 $ 145 $ 145 $ 145 $ 145
============== ============== =============== ============== =============== ==============
11
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Financial Condition
The Partnership's assets at March 31, 2001 consisted primarily of $137,000 in
cash and aggregate investments in the twenty-seven Local Limited Partnerships of
$623,000. Liabilities at March 31, 2001 primarily consisted of $1,336,000 of
accrued annual management fees due to the General Partner.
12
Results of Operations
Year Ended March 31, 2001 Compared to Year Ended March 31, 2000. The
Partnership's net loss for the year ended March 31,2001 was $(582,000),
reflecting an increase of $(7,000) from the net loss experienced for the year
ended March 31, 2000. The increase in net loss is primarily due to the increase
in the equity in losses from limited partnerships which increased by $(17,000)
to $(402,000) for the year ended March 31, 2001 from $(385,000) for the year
ended March 31, 2000 offset by a decrease in loss from operations which
decreased by $11,000 to $(180,000) for the year ended March 31, 2001 from
$(191,000) for the year ended March 31, 2000 due to lower operating expenses.
Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. The
Partnership's net loss for the year ended March 31, 2000 was $(576,000),
reflecting an increase of $127,000 from the net loss experienced for the year
ended December 31, 1998. The increase in net loss is primarily due to equity in
losses from limited partnerships which increased by $117,000 to $(385,000) for
the year ended March 31, 2000 from $(268,000) for the year ended December 31,
1998. This increase is primarily due to a cumulative effect of a change in
accounting principle for one of the Local Limited Partnerships, which changed
its depreciation method in 1999. In addition, the Partnership realized
approximately $12,000 of losses from the sale of certain cash equivalents which
did not occur in the year ended December 31, 1998.
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
$(109,000), reflecting a decrease of $2,000 from the net loss experienced for
the three months ended March 31, 1998. The decline in net loss is due to equity
in losses of limited partnerships which decreased by $9,000 to $(62,000) for the
three month period ended March 31, 1999 from $(71,000) for the three month
period 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 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 in losses of limited
partnerships was partially offset by loss from operations which increased by
$5,000 to $(46,000) for the three month period ended March 31, 1999 from
$(41,000) for the three month period ended March 31, 1998, due to a comparable
increase in operating expenses.
Cash Flows
Year Ended March 31, 2001 Compared to Year Ended March 31, 2000. Net cash used
during the year ended March 31, 2001 was $(14,000), compared to net cash used
for the year ended March 31, 2000 of $(25,000). The change was due primarily to
a decrease in cash paid to the General Partner or affiliates.
Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. Net cash
used during the year ended March 31, 2000 was $(25,000), compared to net cash
used for the year ended December 31, 1998 of $(6,000). The change was due
primarily to an increase in cash paid to the General Partner or affiliates and
an increase in losses realized on certain cash equivalents.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net increase in cash during the three months ended March 31,1999 was negligible,
compared to a net increase in cash for the three months ended March 31, 1998 of
$6,000. The change was due primarily to an increase in cash paid to the General
Partner or affiliates of $3,000, and in increase in operating expenses of
$6,000, partially offset by an increase in distributions received from Local
Limited Partnerships of $3,000.
During the years ended March 31, 2001 and 2000 and the three months ended March
31, 1999, accrued payables, which consist primarily of related party management
fees due to the General Partner, increased by $141,000, $139,000 and $36,000,
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, 2001, to be sufficient to meet all currently foreseeable
future cash requirements.
13
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NOT APPLICABLE
Item 8. Financial Statements and Supplementary Data
14
Report of Independent Certified Public Accountants
To the Partners
WNC Housing Tax Credit Fund II, L.P.
We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund
II, L.P. (a California Limited Partnership) (the "Partnership") as of March 31,
2001 and 2000, and the related statements of operations, partners' equity
(deficit) and cash flows for the year ended March 31, 2001 and 2000, 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 62% and
50%, of the total assets of the Partnership at March 31, 2001 and 2000,
respectively. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the reports of
the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund II, L.P. (A California
Limited Partnership) as of March 31, 2001 and 2000, and the results of its
operations and its cash flows for the years ended March 31, 2001 and 2000, the
three months ended March 31, 1999 and the year ended December 31, 1998, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
May 10, 2001
15
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
BALANCE SHEETS
See accompanying notes to financial statements
March 31
------------------------------
2001 2000
-------------- -------------
ASSETS
Cash and cash equivalents $ 136,626 $ 150,827
Investments in limited partnerships, net (Notes 2 and 3) 622,522 1,049,680
-------------- -------------
$ 759,148 $ 1,200,507
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Accrued fees and expenses due to General Partner and
affiliates (Note 3) $ 1,335,561 $ 1,194,613
-------------- -------------
Commitments and contingencies
Partners' equity (deficit):
General partner (65,306) (59,483)
Limited partners (12,000 units authorized; 7,000 units
issued and outstanding) (511,107) 65,377
-------------- -------------
Total partners' equity (deficit) (576,413) 5,894
-------------- -------------
$ 759,148 $ 1,200,507
============== =============
16
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Years Ended For the Three For the Year
Months Ended Ended
March 31 March 31 December 31
------------------------------ ---------------- ---------------
2001 2000 1999 1998
-------------- ------------- ---------------- ---------------
Interest income $ 701 $ 5,418 $ 3,627 $ 9,224
Distribution income 5,549 2,500 500 -
Dividend income 5,134 3,029 - -
-------------- ------------- ---------------- ---------------
Total income 11,384 10,947 4,127 9,224
-------------- ------------- ---------------- ---------------
Operating expenses:
Amortization (Note 2) 21,352 21,352 5,338 21,352
Asset management fees (Note 3) 144,904 144,902 36,226 144,903
Other 25,202 35,619 8,944 24,021
-------------- ------------- ---------------- ---------------
Total operating expenses 191,458 201,873 50,508 190,276
-------------- ------------- ---------------- ---------------
Loss from operations (180,074) (190,926) (46,381) (181,052)
Equity in losses of limited
partnerships (Note 2) (402,233) (384,579) (62,293) (267,581)
-------------- ------------- ---------------- --- ------------
Net loss $ (582,307)$ (575,505) $ (108,674)$ (448,633)
============== ============= ================ ===============
Net loss allocated to:
General partner $ (5,823)$ (5,755) $ (1,087)$ (4,486)
============== ============= ================ ==============
Limited partners $ (576,484)$ (569,750) $ (107,587)$ (444,147)
============== ============= ================ ===============
Net loss per limited partnership unit $ (82.35)$ (81.39) $ (15.37)$ (63.45)
============== ============= ================ ===============
Outstanding weighted limited partner
units 7,000 7,000 7,000 7,000
============== ============= ================ ===============
17
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
General Limited
Partner Partners Total
--------------- --------------- ---------------
Partners' equity (deficit) at January 1, 1998 $ (48,155) $ 1,186,861 $ 1,138,706
Net loss (4,486) (444,147) (448,633)
--------------- --------------- ---------------
Partners' equity (deficit) at December 31, 1998 (52,641) 742,714 690,073
Net loss (1,087) (107,587) (108,674)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 1999 (53,728) 635,127 581,399
Net loss (5,755) (569,750) (575,505)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2000 (59,483) 65,377 5,894
Net loss (5,823) (576,484) (582,307)
--------------- --------------- ---------------
Partners' deficit at March 31, 2001 $ (65,306) $ (511,107)$ (576,413)
=============== =============== ===============
18
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Years Ended March For the For the Years
Three
Months
Ended Ended
31 March 31 December 31
--------------------------- ------------ ---------------
2001 2000 1999 1998
------------- ----------- ------------ ---------------
Cash flows from operating activities:
Net loss $ (582,307) $ (575,505) $ (108,674) $ (448,633)
Adjustments to reconcile net loss
to
net cash used in operating
activities:
Amortization 21,352 21,352 5,338 21,352
Equity in losses of limited
partnerships 402,233 384,579 62,293 267,581
Increase in accrued fees and
expenses due to general partner
and affiliates 140,948 139,409 36,133 147,694
------------- ----------- ------------ ---------------
Net cash used in operating activities (17,774) (30,165) (4,910) (12,006)
------------- ----------- ------------ ---------------
Cash flows from investing activities:
Distributions from limited
partnerships 3,573 5,334 5,376 5,885
------------- ----------- ------------ ---------------
Net increase (decrease) in cash and
cash equivalents (14,201) (24,831) 466 (6,121)
Cash and cash equivalents, beginning
of period 150,827 175,658 175,192 181,313
------------- ----------- ------------ ---------------
Cash and cash equivalents, end of
period $ 136,626 $ 150,827 $ 175,658 $ 175,192
============= =========== ============ ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Taxes paid $ 800 $ 800 $ - $ 800
============ =========== ============ ==============
19
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC Housing Tax Credit Fund II, L.P., a California Limited Partnership (the
"Partnership"), was formed on January 19, 1990 under the laws of the State of
California. The Partnership was formed to invest primarily in other limited
partnerships (the "Local Limited Partnerships") which own and operate
multifamily 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.
The general partner is WNC Financial Group, L.P., a California partnership (the
"General Partner") of the Partnership. WNC & Associates, Inc. ("WNC") and
Wilfred N. Cooper, Sr. are the partners of the General Partner. 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. Wilfred N. Cooper, Jr., President of WNC, owns 2.1% of the
outstanding stock of WNC.
The Partnership shall continue in full force and effect until December 31, 2045
unless terminated prior to that date pursuant to the partnership agreement or
law.
The 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 12,000 units at $1,000
per Unit ("Units"). The offering of Units concluded on December 31, 1992 at
which time 7,000 Units representing subscriptions in the amount of $7,000,000
had been accepted. The General Partner has a 1% interest in operating profits
and losses, 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 Partner has received proceeds
equal to its capital contribution and a subordinated disposition fee (as
described in Note 3) from the remainder, any additional sale or refinancing
proceeds will be distributed 95% to the limited partners (in proportion to their
respective investments) and 5% to the General Partner.
Change in Reporting Year End
In 1999, the Partnership 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.
20
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998
NOTE 1 - 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 make 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 Partner.
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 account and are being amortized over 30 years (see Notes 2 and 3).
Losses from limited partnerships for the year ended December 31, 1998 have been
recorded by the Partnership based on reported results provided by the Local
limited Partnerships. Losses from limited partnerships for the three months
ended March 31, 1999 have been estimated by management of the Partnership.
Losses from Local Limited Partnerships for the years ended March 31, 2001 and
2000 have been recorded by the Partnership based on nine months of reported
results provided by the Local Limited Partnerships and on three months of
results estimated by management of the Partnership. Losses from Local Limited
Partnerships allocated to the Partnership are not recognized to the extent that
the investment balance would be adjusted below zero.
21
NOTE 1 - 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. The General Partner is obligated to
pay all offering and organization costs in excess of 15% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of partners' capital and amounted to $1,036,840 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, 2001 and 2000, the Partnership had cash equivalents of $129,950 and
$142,285, respectively.
Concentration of Credit Risk
At March 31, 2001, the Partnership maintained a cash balance at a financial
institution in excess of the federally insured maximum.
Reclassifications
Certain prior year balances have been reclassified to conform to the 2001
presentation.
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 loss 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.
22
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of the periods presented, the Partnership had acquired limited partnership
interests in twenty-seven Local Limited Partnerships, each of which owns one
Housing Complex consisting of an aggregate of 784 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, as defined, require the approval of 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 investment in Local Limited Partnerships shown in the balance
sheets at March 31, 2001 and 2000 are approximately $1,462,000 and $1,283,000,
respectively, greater than the Partnership's equity at the preceding December 31
as shown in the Local Limited Partnerships' combined financial statements
presented below. This difference is primarily due to unrecorded losses, as
discussed below, acquisition, selection and other costs related to the
acquisition of the investments which have been capitalized in the Partnership's
investment account. Capitalized costs are being amortized over 30 years. The
Partnership's investment is also lower than the Partnership's equity as shown in
the Local Limited Partnership's combined financial statements due to the losses
recorded by the Partnership for the three month period ended March 31.
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, 2001 and 2000, 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 years ended March 31, 2001
and 2000 and the three month period ended March 31, 1999 amounting to
approximately $209,414, $373,135 and $52,058, respectively, have not been
recognized. The Partnership's share of losses during the year ended December 31,
1998 amounting to approximately $189,571 have not been recognized. As of March
31, 2001, the aggregate share of net losses not recognized by the Partnership
amounted to $1,251,095.
Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented:
For the Years For the For the Year
Three Months
Ended Ended
Ended March 31 March 31 December 31
------------------------------- -------------- ---------------
2001 2000 1999 1998
-------------- ------------- --------------- ---------------
Investments per balance sheet, beginning of period $ 1,049,680 $ 1,460,945 $ 1,533,952 $ 1,828,770
Equity in losses of limited partnerships (402,233) (384,579) (62,293) (267,581)
Distributions received (3,573) (5,334) (5,376) (5,885)
Amortization of paid acquisition fees and costs (21,352) (21,352) (5,338) (21,352)
-------------- ------------- --------------- ---------------
Investments per balance sheet, end of period $ 622,522 $ 1,049,680 $ 1,460,945 $ 1,533,952
============== ============= =============== ===============
23
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 Local Limited Partnerships as of December
31 and for the years then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
2000 1999
--------------- ---------------
ASSETS
Buildings and improvements, net of accumulated
depreciation of $8,832,000 and $7,981,000 for 2000
and 1999, respectively $ 20,377,000 $ 21,139,000
Land 1,354,000 1,354,000
Other assets 2,068,000 2,059,000
--------------- ---------------
$ 23,799,000 $ 24,552,000
=============== ===============
LIABILITIES
Mortgage loan payable $ 23,363,000 $ 23,441,000
Due to related parties 194,000 182,000
Other liabilities 375,000 430,000
--------------- ---------------
23,932,000 24,053,000
--------------- ---------------
PARTNERS' CAPITAL (DEFICIT)
WNC Housing Tax Credit Fund II, L.P. (839,000) (233,000)
Other partners 706,000 732,000
--------------- ---------------
(133,000) 499,000
--------------- ---------------
$ 23,799,000 $ 24,552,000
=============== ===============
24
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2000 1999 1998
--------------- --------------- ---------------
Total revenues, including interest and rent $ 3,100,000 $ 2,958,000 $ 2,944,000
subsidies
--------------- --------------- ---------------
Expenses:
Operating expenses 2,160,000 2,035,000 1,951,000
Interest expense 696,000 619,000 624,000
Depreciation and amortization 851,000 1,044,000 831,000
--------------- --------------- ---------------
Total expenses 3,707,000 3,698,000 3,406,000
--------------- --------------- ---------------
Net loss $ (607,000)$ (740,000) $ (462,000)
=============== =============== ===============
Net loss allocable to the Partnership $ (601,000)$ (733,000) $ (457,000)
=============== =============== ===============
Net loss recorded by the Partnership $ (402,000)$ (385,000) $ (268,000)
=============== =============== ===============
Certain Local Limited Partnerships incurred operating losses and/or 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 Partner may be required to sustain the
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, and the loss
and recapture of the related tax credits could occur.
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 of up to 9% of the gross proceeds from the sale of Units as
compensation for services rendered in connection with the acquisition of
Local Limited Partnerships. At the end of all periods presented, the
Partnership incurred acquisition fees of $630,000. Accumulated amortization
of these capitalized costs was $480,661 and $186,974 as of March 31, 2001
and 2000, respectively. Of the accumulated amortization recorded on the
balance sheet at March 31, 2001, $272,691 of the related expense was
reflected as equity in losses of limited partnerships on the statement of
operations during the fourth quarter of the year of the year ended March
31, 2001 to reduce the respective net acquisition fee component of
investments in local limited partnerships to zero for the Local Limited
Partnerships which would otherwise be below a zero balance.
Reimbursement of costs incurred by an affiliate of WNC in connection with the
acquisition of Local Limited Partnerships. These reimbursements have not
exceeded 1.7% of the gross proceeds. As of the end of all periods
presented, the Partnership incurred acquisition costs of $10,581 which have
been included in investments in limited partnerships. Accumulated
amortization totaled $10,581 at March 31, 2001. Of the accumulated
amortization recorded on the balance sheet at March 31, 2001, $6,631 of the
related expense was reflected as equity in losses of limited partnerships
on the statement of operations during the fourth quarter of the year of the
year of the year ended March 31, 2001 to reduce the respective net
acquisition fee component of investments in local limited partnerships to
zero for the Local Limited Partnerships which would otherwise be below a
zero balance.
25
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
An annual management fee equal to 0.5% of the invested assets of the
Local Limited Partnerships, including the Partnership's allocable
share of the mortgages. Management fees of $144,904 and $144,902 were
incurred during the years ended March 31, 2001 and 2000, respectively,
$36,226 were incurred during the three months ended March 31, 1999 and
$144,903 were incurred during the year ended December 31, 1998, of
which $7,000 and $2,500 were paid during the years ended March 31,
2001 and 2000, respectively, and $0 was paid during the three months
ended March 31, 1999, and the year ended December 31, 1998.
A subordinated disposition fee in an amount equal to 1% of the sales
price of any real estate sold. Payment of this fee is subordinated to
the limited partners who receive a 6% preferred return (as defined in
the Partnership Agreement) and is payable only if the General Partner
or its affiliates render services in the sales effort.
The accrued fees and expenses due to General Partner and affiliates
consist of the following at:
March 31
----------------------------------
2001 2000
--------------- ---------------
Advances from WNC $ 3,014 $ (30)
Asset management fee payable 1,332,547 1,194,643
--------------- ---------------
$ 1,335,561 $ 1,194,613
=============== ===============
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.
NOTE 4 - 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.
26
NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the quarterly operations for the years ended March
31, 2001 and 2000:
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2001
Income $ 1,652 $ 1,522 $ 1,428 $ 6,782
Operating expenses 45,406 54,666 46,167 45,219
Equity in losses of limited
partnerships (45,718) (44,056) (38,737) (273,722)
Net income (loss) (89,472) (97,200) (83,476) (312,159)
Income (loss) available to
limited partner (88,577) (96,228) (82,641) (309,038)
Earnings (loss) per limited
partnership unit (13) (14) (12) (44)
2000
Income $ 3,104 $ 1,160 $ 1,423 $ 5,260
Operating expenses 46,128 57,498 52,550 45,697
Equity in losses of limited
partnerships (49,391) (46,647) (46,647) (241,894)
Net income (loss) (92,415) (102,985) (97,774) (282,331)
Income (loss) available to
limited partner (91,491) (101,955) (96,796) (279,508)
Earnings (loss) per limited
partnership unit (13) (15) (14) (40)
27
49 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 70, is the founder, Chief Executive Officer,
Chairman of the Board 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 67, is Vice-Chairman, a Director 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 38, is President, Chief Operating Officer, 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 49, is Executive 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.
28
Thomas J. Riha, age 46, became Chief Financial Officer effective January 2001.
Prior to his appointment as Chief Financial Officer he was 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 55, 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 38, is Vice President - Acquisitions and a member of the
Acquisition Committee 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 46, 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 64, 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.
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) Annual Asset Management Fee. 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 Housing Complexes owned by such Local Limited Partnerships). Fees of
$144,904, $144,902, $36,226 and $144,903 were incurred during the years
ended March 31, 2001 and 2000, the three months ended March 31, 1999, and
the year ended December 31, 1998, respectively. The Partnership paid the
General Partner or its affiliates $7,000, $2,500, $0 and $0 of those fees
during the years ended March 31, 2001 and 2000, the three months ended
March 31, 1999 and the year ended December 31, 1998, respectively.
(b) Subordinated Disposition Fee. A subordinated disposition fee in an amount
equal to 1% of the sale price received in connection with the sale or
disposition of a Housing Complex. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital
contributions and payment of the Return on Investment to the Limited
Partners. "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 rate; 6% for the balance of the Partnership's
term. No disposition fees have been paid.
29
(c) Operating Expenses. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $6,000, $14,000, $11,000
and $3,000 during the years ended March 31, 2001 and 2000, the three months
ended March 31, 1999, and the year ended December 31, 1998, respectively.
(d) Interest in Partnership. The General Partners receive 1% of the
Partnership's allocated Low Income Housing Credits, which approximated
$8,000, $10,000 and $10,000 for the General Partners for the years ended
December 31, 2000, 1999 and 1998, respectively. The General Partners are
also entitled to receive 1% of cash distributions. There were no
distributions of cash to the General Partners during the years ended March
31, 2001 and 2000, the three months ended March 31, 1999 or 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 Partner, its affiliates, nor any of the officers or
directors of the General Partner or its affiliates own directly or
beneficially any Units in the Partnership.
(c) Changes in Control
The management and control of the General Partner may be changed at any
time in accordance with their respective organizational documents, without
the consent or approval of the Limited Partners. In addition, the
Partnership Agreement provides for the admission of one or more additional
and successor General Partners in certain circumstances.
First, with the consent of any other General Partners and a
majority-in-interest of the Limited Partners, any General Partner may
designate one or more persons to be successor or additional General
Partners. In addition, any General Partner may, without the consent of any
other General Partner or the Limited Partners, (i) substitute in its stead
as General Partner any entity which has, by merger, consolidation or
otherwise, acquired substantially all of its assets, stock or other
evidence of equity interest and continued its business, or (ii) cause to be
admitted to the Partnership an additional General Partner or Partners if it
deems such admission to be necessary or desirable so that the Partnership
will be classified a partnership for Federal income tax purposes. Finally,
a majority-in-interest of the Limited Partners may at any time remove the
General Partner of the Partnership and elect a successor General Partner.
Item 13. Certain Relationships and Related Transactions
The General Partner manages all of the Partnership's affairs. The
transactions with the General Partner 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.
30
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
Balance Sheets, March 31,2001 and 2000
Statements of Operations for the years ended March 31, 2001
and 2000, the three months ended March 31, 1999 and the year ended December
31, 1998
Statements of Partners' Equity (Deficit) for the years ended March
31, 2001 and 2000, the three months ended March 31, 1999 and the year ended
December 31, 1998
Statements of Cash Flows for the years ended March 31,
2001 and 2000, the three months ended March 31, 1999 and the year ended
December 31, 1998
Notes to Financial Statements
(a)(2)Financial statement schedules included in Part IV hereof:
--------------------------------------------------------
Report of Independent Certified Public Accountants on Financial Statement
Schedules Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K.
-------------------
None
(c) Exhibits.
--------
3.1 Articles of incorporation and by-laws: The registrant is not
incorporated. The Partnership Agreement dated as of January 19, 1990 is
included as Exhibit B to the Prospectus, filed as Exhibit 28.1 to Form 10
K for the year ended December 31, 1994 is hereby incorporated herein as
exhibit 3.1.
10.1 Amended and Restated Agreement of Limited Partnership of DiVall Midland
Associates Limited Partnership II 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 Airport Road
Associates, Limited 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 Arizona I
Limited Partnership 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 Cherokee Square,
L.P. filed as exhibit 10.4 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 Ashland
Investment Group filed as exhibit 10.5 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 Brian's Village
Apartments filed as exhibit 10.6 on Form 10-K dated December 31, 1992 is
hereby incorporated herein as exhibit 10.6.
10.7 Amended and Restated Agreement of Limited Partnership of Emory Capital,
L.P. filed as exhibit 10.7 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 Emory Manor,
L.P. filed as exhibit 10.8 on Form 10-K dated December 31, 1992 is hereby
incorporated herein as exhibit 10.8.
31
10.9 Amended and Restated Agreement of Limited Partnership of Jefferson
Capital, L.P. filed as exhibit 10.9 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 Jefferson Manor,
L.P. filed as exhibit 10.10 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 Rociada
Partners, Ltd. filed as exhibit 10.11 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.11.
10.12 Amended and Restated Agreement of Limited Partnership of Wilcox
Investment Group filed as exhibit 10.12 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.12.
10.13 Amended and Restated Agreement of Limited Partnership of Casa Allegre
filed as exhibit 10.13 on Form 10-K dated December 31, 1992 is hereby
incorporated herein as exhibit 10.13.
10.14 Amended and Restated Agreement of Limited Partnership of Lakeview Limited
Partnership filed as exhibit 10.14 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.14.
10.15 Amended and Restated Agreement of Limited Partnership of Whitewater Woods
Limited Partnership filed as exhibit 10.15 on Form 10-K dated December
31, 1992 is hereby incorporated herein as exhibit 10.15.
10.16 Amended and Restated Agreement of Limited Partnership of Castroville
Village, Ltd. filed as exhibit 10.16 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.16.
10.17 Amended and Restated Agreement of Limited Partnership of Idalou Manor,
L.P. filed as exhibit 10.17 on Form 10-K dated December 31, 1992 is
hereby incorporated herein as exhibit 10.17.
10.18 Amended and Restated Agreement of Limited Partnership of Littlefield
Manor, L.P. filed as exhibit 10.18 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.18.
10.19 Amended and Restated Agreement of Limited Partnership of Am-Kent
Associates, Ltd. filed as exhibit 10.19 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.19.
10.20 Amended and Restated Agreement of Limited Partnership of Brantley
Housing, Ltd. filed as exhibit 10.20 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.20.
10.21 Amended and Restated Agreement of Limited Partnership of Candleridge of
Perry, L.P. filed as exhibit 10.21 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.21.
10.22 Amended and Restated Agreement of Limited Partnership of Candleridge of
Runnells, L.P. filed as exhibit 10.22 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.22.
10.23 Amended and Restated Agreement of Limited Partnership of Perry County
Housing, Ltd. filed as exhibit 10.23 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.23.
10.24 Amended and Restated Agreement of Limited Partnership of Eclectric
Housing, Ltd. filed as exhibit 10.24 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.24.
10.25 Amended and Restated Agreement of Limited Partnership of Pine Hill
Housing, Ltd. filed as exhibit 10.25 on Form 10-K dated December 31, 1992
is hereby incorporated herein as exhibit 10.25.
10.26 Amended and Restated Agreement of Limited Partnership of Wadley Housing,
Ltd. filed as exhibit 10.26 on Form 10-K dated December 31, 1992 is
hereby incorporated herein as exhibit 10.26.
10.27 Amendment and Entire Restatement of Articles of Partnership of Elizabeth
Square Associates, Ltd. filed as exhibit 10.1 on Form 10-K dated December
31, 1994 is hereby incorporated herein as exhibit 10.27.
21.1 Financial Statements of Airport Road Associates, Limited as of and for
the years ended December 31, 2000 and 1999 together with independent
auditors' report thereon; a significant subsidiary of the partnership.
(d) Financial statement schedules follow, as set forth in subsection (a)(2)
hereof. ------------------------------------
32
Report of Independent Certified Public Accountants on Financial Statement
Schedules
To the Partners
WNC Housing Tax Credit Fund II, L.P.
The audits referred to in our report dated May 10, 2001, relating to the 2001,
2000, 1999 and 1998 financial statements of WNC Housing Tax Credit Fund II, 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.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
May 10, 2001
33
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
------------------------------ --------------------------------------------------
As of March 31, 2001 As of December 31, 2000
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Road Slidell,
Associates, Limited Louisiana $ 334,000 $ 334,000 $1,444,000 $1,858,000 $709,000 $1,149,000
Amite &
Kentwood,
Am-Kent Associates, Ltd. Louisiana 232,000 232,000 1,114,000 1,588,000 535,000 1,053,000
Arizona I Limited Showlow,
Partnership Arizona 320,000 320,000 1,480,000 1,973,000 525,000 1,448,000
Ashland Investment Group, an Ashland,
Oregon Limited Partnership Oregon 300,000 300,000 1,381,000 1,825,000 419,000 1,406,000
Brantley,
Brantley Housing, Ltd. Alabama 108,000 108,000 572,000 706,000 178,000 528,000
Brian's Village
Apartments, an Oklahoma Mannford,
Limited Partnership. Oklahoma 176,000 176,000 753,000 974,000 353,000 621,000
Candleridge Apartments
of Perry, L.P. Perry, Iowa 93,000 93,000 590,000 776,000 242,000 534,000
Candleridge Apartments Runnells,
of Runnells, L.P. Iowa 58,000 58,000 371,000 492,000 153,000 339,000
Casa Allegre Las Vegas,
Limited Partnership New Mexico 318,000 318,000 1,378,000 1,906,000 473,000 1,433,000
Castroville Castroville,
Village, Ltd. Texas 165,000 165,000 944,000 1,150,000 210,000 940,000
34
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
------------------------------ --------------------------------------------------
As of March 31, 2001 As of December 31, 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Rogersville,
Cherokee Square, L.P. Tennessee 202,000 202,000 973,000 1,225,000 452,000 773,000
Divall Midland Port
Associates Limited Washington,
Partnership II Wisconsin 234,000 234,000 1,153,000 1,533,000 543,000 990,000
Eclectic Eclectic,
Housing, Ltd. Alabama 74,000 74,000 409,000 500,000 132,000 368,000
Elizabeth Square Raceland,
Associates, Ltd. Louisiana 356,000 356,000 1,465,000 2,063,000 635,000 1,428,000
Emory Capital, L.P. Emory, Texas 85,000 85,000 368,000 486,000 181,000 305,000
Emory Manor, L.P. Emory, Texas 128,000 128,000 550,000 742,000 253,000 489,000
Idalou Manor, L.P. Idalou, Texas 122,000 122,000 616,000 776,000 174,000 602,000
Jefferson Jefferson,
Capital, L.P. Texas 167,000 167,000 711,000 962,000 316,000 646,000
Jefferson Jefferson,
Manor, L.P. Texas 179,000 179,000 760,000 1,007,000 336,000 671,000
35
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
------------------------------ --------------------------------------------------
As of March 31, 2001 As of December 31, 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Lakeview Limited Beaver Dam,
Partnership Wisconsin 264,000 264,000 1,234,000 1,589,000 411,000 1,178,000
Littlefield,
Littlefield Manor, L.P. Texas 117,000 117,000 592,000 746,000 170,000 576,000
Perry County Uniontown,
Housing, Ltd. Alabama 82,000 82,000 437,000 527,000 135,000 392,000
Pine Hill Pine Hill,
Housing, Ltd. Alabama 105,000 105,000 559,000 680,000 166,000 514,000
Rociada Hereford,
Partners Ltd. Texas 154,000 154,000 727,000 922,000 239,000 683,000
Wadley Wadley,
Housing, Ltd. Alabama 76,000 76,000 437,000 527,000 132,000 395,000
Whitewater Woods Whitewater,
Limited Partnership Wisconsin 301,000 301,000 1,290,000 1,692,000 444,000 1,248,000
Willcox Investment Willcox,
Group, an Arizona Arizona
Limited Partnership 246,000 246,000 1,055,000 1,338,000 316,000 1,022,000
-------- -------- --------- --------- --------- ---------
$ 4,996,000 $ 4,996,000 $ 23,363,000 $ 30,563,000 $ 8,832,00 $ 21,731,000
============== ============= ============= ============ ============ ===========
36
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
-------------------------------------------------------------------------------------------------
For the year ended December 31, 2000
-------------------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Road
Associates, Limited $ 162,000 $(71,000) 1990 Completed 27.5
Am-Kent Associates, Ltd. 131,000 (66,000) 1991 Completed 27.5
Arizona I Limited
Partnership 157,000 (24,000) 1990 Completed 35
Ashland Investment Group, an
Oregon Limited Partnership. 165,000 4,000 1990 Completed 50
Brantley Housing, Ltd. 64,000 (3,000) 1992 Completed 40
Brian's Village Apartments, an
Oklahoma Limited Partnership. 114,000 (24,000) 1990 Completed 30
Candleridge Apartments
of Perry, L.P. 121,000 (16,000) 1992 Completed 27.5
Candleridge Apartments
of Runnells, L.P. 85,000 (10,000) 1992 Completed 27.5
Casa Allegre
Limited Partnership 175,000 2,000 1990 Completed 40
Castroville Village, Ltd. 167,000 (3,000) 1991 Completed 50
Cherokee Square, L.P. 89,000 (27,000) 1990 Completed 50
Divall Midland Associates
Limited Partnership II 128,000 (45,000) 1990 Completed 27.5
Eclectic Housing, Ltd. 47,000 (4,000) 1992 Completed 40
Elizabeth Square
Associates, Ltd. 165,000 (45,000) 1994 Completed 27.5
Emory Capital, L.P. 54,000 (13,000) 1990 Completed 27.5
37
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
-------------------------------------------------------------------------------------------------
For the year ended December 31, 2000
-------------------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
Emory Manor, L.P. 80,000 (21,000) 1990 Completed 30
Idalou Manor, L.P. 82,000 (20,000) 1992 Completed 40
Jefferson Capital, L.P. 86,000 (12,000) 1990 Completed 50
Jefferson Manor, L.P. 96,000 (20,000) 1990 Completed 50
Lakeview Limited
Partnership 144,000 (46,000) 1991 Completed 35
Littlefield Manor, L.P. 69,000 (28,000) 1991 Completed 40
Perry County Housing, Ltd. 44,000 (11,000) 1992 Completed 40
Pine Hill Housing, Ltd. 57,000 (12,000) 1992 Completed 40
Rociada Partners Ltd. 142,000 (20,000) 1990 Completed 40
Wadley Housing, Ltd. 48,000 (14,000) 1992 Completed 40
Whitewater Woods
Limited Partnership 171,000 (37,000) 1991 Completed 35
Willcox Investment Group, an
Arizona Limited Partnership 119,000 (21,000) 1990 Completed 50
-------- --------
$ 2,962,000 $ (607,000)
============ ===========
38
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
------------------------------ ------------------------------------------------
As of March 31, 2000 As of December 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Road Slidell,
Associates, Limited Louisiana $ 334,000 $ 334,000 $ 1,447,000 $1,858,000 $ 645,000 $ 1,213,000
Am-Kent Amite &
Kentwood,
Associates, Ltd. Louisiana 232,000 232,000 1,117,000 1,586,000 480,000 1,106,000
Arizona I Limited Showlow,
Partnership Arizona 320,000 320,000 1,484,000 1,967,000 471,000 1,496,000
Ashland Investment Group, Ashland,
an Oregon LimitedPartnership Oregon 300,000 300,000 1,385,000 1,824,000 385,000 1,439,000
Brantley,
Brantley Housing, Ltd. Alabama 108,000 108,000 573,000 703,000 158,000 545,000
Brian's Village Apartments, Mannford,
an Oklahoma Limited Partnership. Oklahoma 176,000 176,000 755,000 974,000 322,000 652,000
Candleridge Apartments
of Perry, L.P. Perry, Iowa 93,000 93,000 593,000 769,000 209,000 560,000
Candleridge Apartments Runnells,
of Runnells, L.P. Iowa 58,000 58,000 374,000 486,000 132,000 354,000
Casa Allegre Las Vegas,
Limited Partnership New Mexico 318,000 318,000 1,386,000 1,878,000 423,000 1,455,000
Castroville Castroville,
Village, Ltd. Texas 165,000 165,000 950,000 1,150,000 187,000 963,000
39
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
--------------------------------- --------------------------------------------------
As of March 31, 2000 As of December 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Rogersville,
Cherokee Square, L.P. Tennessee 202,000 202,000 976,000 1,225,000 417,000 808,000
Divall Midland Port
Associates Limited Washington,
Partnership II Wisconsin 234,000 234,000 1,156,000 1,514,000 483,000 1,031,000
Eclectic Eclectic,
Housing, Ltd. Alabama 74,000 74,000 411,000 500,000 122,000 378,000
Elizabeth Square Raceland,
Associates, Ltd. Louisiana 356,000 356,000 1,471,000 2,063,000 561,000 1,502,000
Emory Capital, L.P. Emory, Texas 85,000 85,000 369,000 486,000 168,000 318,000
Emory Manor, L.P. Emory, Texas 128,000 128,000 551,000 742,000 235,000 507,000
Idalou Manor, L.P. Idalou, Texas 122,000 122,000 616,000 776,000 155,000 621,000
Jefferson Jefferson,
Capital, L.P. Texas 167,000 167,000 713,000 962,000 301,000 661,000
Jefferson Jefferson,
Manor, L.P. Texas 179,000 179,000 762,000 1,005,000 320,000 685,000
40
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
----------------------------- -------------------------------------------------
As of March 31, 2000 As of December 31, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Lakeview Limited Beaver Dam,
Partnership Wisconsin 264,000 264,000 1,240,000 1,589,000 368,000 1,221,000
Littlefield Littlefield,
Manor, L.P. Texas 117,000 117,000 593,000 745,000 151,000 594,000
Perry County Uniontown,
Housing, Ltd. Alabama 82,000 82,000 438,000 524,000 121,000 403,000
Pine Hill Pine Hill,
Housing, Ltd. Alabama 105,000 105,000 561,000 675,000 145,000 530,000
Rociada Hereford,
Partners Ltd. Texas 154,000 154,000 729,000 922,000 217,000 705,000
Wadley Wadley,
Housing, Ltd. Alabama 76,000 76,000 439,000 521,000 117,000 404,000
Whitewater Woods Whitewater,
Limited Partnership Wisconsin 301,000 301,000 1,294,000 1,692,000 398,000 1,294,000
Willcox Investment Group,an Willcox,
Arizona Limited Partnership Arizona 246,000 246,000 1,058,000 1,338,000 290,000 1,048,000
-------- -------- --------- --------- --------- ---------
$ 4,996,000 $ 4,996,000 $ 23,441,000 $ 30,474,000 $ 7,981,000 $ 22,493,000
============== ============== ============= ============ =========== ===========
41
WNC Housing
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
-------------------------------------------------------------------------------------------------
For the year ended December 31, 1999
-------------------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Road
Associates, Limited $ 162,000 $(52,000) 1990 Completed 27.5
Am-Kent Associates, Ltd. 124,000 (38,000) 1991 Completed 27.5
Arizona I Limited
Partnership 149,000 (36,000) 1990 Completed 35
Ashland Investment Group, an
Oregon Limited Partnership. 172,000 (4,000) 1990 Completed 50
Brantley Housing, Ltd. 60,000 (8,000) 1992 Completed 40
Brian's Village Apartments, an
Oklahoma Limited Partnership. 103,000 (20,000) 1990 Completed 30
Candleridge
Apartments of Perry, L.P. 118,000 (16,000) 1992 Completed 27.5
Candleridge Apartments
of Runnells, L.P. 86,000 (8,000) 1992 Completed 27.5
Casa Allegre
Limited Partnership 174,000 (6,000) 1990 Completed 40
Castroville Village, Ltd. 154,000 (5,000) 1991 Completed 50
Cherokee Square, L.P. 90,000 (202,000) 1990 Completed 50
Divall Midland Associates
Limited Partnership II 128,000 (37,000) 1990 Completed 27.5
Eclectic Housing, Ltd. 46,000 (4,000) 1992 Completed 40
Elizabeth Square
Associates, Ltd. 162,000 (51,000) 1994 Completed 27.5
Emory Capital, L.P. 52,000 (16,000) 1990 Completed 27.5
42
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
-------------------------------------------------------------------------------------------------
For the year ended December 31, 1999
-------------------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
Emory Mano 81,000 (10,000) 199 Completed 30
Idalou Manor, L.P. 81,000 (5,000) 1992 Completed 40
Jefferson Capital, L.P. 82,000 (21,000) 1990 Completed 50
Jefferson Manor, L.P. 85,000 (27,000) 1990 Completed 50
Lakeview Limited
Partnership 141,000 (43,000) 1991 Completed 35
Littlefield Manor, L.P. 71,000 (6,000) 1991 Completed 40
Perry County Housing, 49,000 (10,000) 1992 Completed 40
Pine Hill Housing, Lt 60,000 (16,000) 1992 Completed 40
Rociada Partners Ltd. 94,000 (18,000) 1990 Completed 40
Wadley Housing, Ltd. 51,000 (5,000) 1992 Completed 40
Whitewater Woods
Limited Partnership 151,000 (46,000) 1991 Completed 35
Willcox Investment Group, an
Arizona Limited Partnership 116,000 (30,000) 1990 Completed 50
-------- --------
$ 2,842,000 $ (740,000)
============ ===========
43
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
------------------------------- -------------------------------------------------
As of March 31, 1999 As of December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Road
Associates, Limited Slidell,
Louisiana $ 334,000 $ 334,000 $ 1,450,000 $ 1,858,000 $ 580,000 $ 1,278,000
Am-Kent Associates, Ltd. Amite &
Kentwood,
Louisiana 232,000 232,000 1,119,000 1,585,000 424,000 1,161,000
Arizona I Limited
Partnership Showlow,
Arizona 320,000 320,000 1,487,000 1,968,000 412,000 1,556,000
Ashland Investment Group, an Ashland,
Oregon LimitedPartnership Oregon 300,000 300,000 1,390,000 1,824,000 351,000 1,473,000
Brantley Housing, Ltd. Brantley,
Alabama 108,000 108,000 575,000 699,000 139,000 560,000
Brian's Village Apartments, Mannford,
an OklahomaLimited Partnership. Oklahoma 176,000 176,000 757,000 974,000 292,000 682,000
Candleridge Perry,
Apartments of Perry, L.P. Iowa 93,000 93,000 595,000 747,000 180,000 567,000
Candleridge Apartments Runnells,
of Runnells, L.P. Iowa 58,000 58,000 377,000 471,000 114,000 357,000
Casa Allegre Las Vegas,
Limited Partnership New Mexico 318,000 318,000 1,394,000 1,835,000 374,000 1,461,000
Castroville Castroville,
Village, Ltd. Texas 165,000 165,000 954,000 1,151,000 165,000 986,000
44
WNC Housing TaxCredit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
------------------------------- -------------------------------------------------
As of March 31, 1999 As of December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Cherokee Rogersville,
Square, L.P. Tennessee 202,000 202,000 978,000 1,225,000 202,000 1,023,000
Divall Midland Port
Associates Limited Washington,
Partnership II Wisconsin 234,000 234,000 1,159,000 1,483,000 425,000 1,058,000
Eclectic Eclectic,
Housing, Ltd. Alabama 74,000 74,000 414,000 499,000 108,000 391,000
Elizabeth Square Raceland,
Associates, Ltd. Louisiana 356,000 356,000 1,477,000 2,063,000 487,000 1,576,000
Emory Capital, L.P. Emory, Texas 85,000 85,000 369,000 486,000 150,000 336,000
Emory Manor, L.P. Emory, Texas 128,000 128,000 552,000 740,000 211,000 529,000
Idalou Manor, L.P. Idalou, Texas 122,000 122,000 619,000 773,000 135,000 638,000
Jefferson Capital, L.P. Jefferson,
Texas 167,000 167,000 714,000 962,000 286,000 676,000
Jefferson Manor, L.P. Jefferson,
Texas 179,000 179,000 763,000 1,004,000 304,000 700,000
45
WNC Housing Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
------------------------------- -------------------------------------------------
As of March 31, 1999 As of December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Lakeview Limited Beaver Dam,
Partnership Wisconsin 264,000 264,000 1,240,000 1,585,000 325,000 1,260,000
Littlefield Littlefield,
Manor, L.P. Texas 117,000 117,000 595,000 744,000 133,000 611,000
Perry County Uniontown,
Housing, Ltd. Alabama 82,000 82,000 440,000 523,000 107,000 416,000
Pine Hill Pine Hill,
Housing, Ltd. Alabama 105,000 105,000 564,000 668,000 125,000 543,000
Rociada Partners Hereford,
Ltd. Texas 154,000 154,000 731,000 922,000 195,000 727,000
Wadley Housing, Wadley,
Ltd. Alabama 76,000 76,000 440,000 521,000 102,000 419,000
Whitewater Woods Whitewater,
Limited Partnership Wisconsin 301,000 301,000 1,297,000 1,687,000 351,000 1,336,000
Willcox Investment Group, Willcox,
an Arizona LimitedPartnership Arizona 246,000 246,000 1,060,000 1,322,000 263,000 1,059,000
-------- -------- ---------- ---------- -------- ---------
$ 4,996,000 $ 4,996,000 $ 23,510,000 $ 30,319,000 $ 6,940,000 $ 23,379,000
============== ============= ============ =========== =========== ===========
46
WNC Housing Tin
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
-------------------------------------------------------------------------------------------------
For the year ended December 31, 1998
-------------------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
Airport Road
Associates, Limited $ 152,000 $ (39,000) 1990 Completed 27.5
Am-Kent Associates, Ltd. 123,000 (40,000) 1991 Completed 27.5
Arizona I Limited Partnership 129,000 (65,000) 1990 Completed 35
Ashland Investment Group,
an Oregon Limited Partnership. 168,000 27,000 1990 Completed 50
Brantley Housing, Ltd. 54,000 (12,000) 1992 Completed 40
Brian's Village Apartments, an
Oklahoma Limited Partnership. 102,000 (14,000) 1990 Completed 30
Candleridge Apartments
of Perry, L.P. 117,000 (9,000) 1992 Completed 27.5
Candleridge Apartments
of Runnells, L.P. 88,000 (5,000) 1992 Completed 27.5
Casa Allegre Limited Partnership 172,000 20,000 1990 Completed 40
Castroville Village, Ltd. 146,000 (8,000) 1991 Completed 50
Cherokee Square, L.P. 87,000 (19,000) 1990 Completed 50
Divall Midland Associates
Limited Partnership II 126,000 (31,000) 1990 Completed 27.5
Eclectic Housing, Ltd. 41,000 (10,000) 1992 Completed 40
Elizabeth Square
Associates, Ltd. 158,000 (45,000) 1994 Completed 27.5
Emory Capital, L.P. 52,000 (12,000) 1990 Completed 27.5
47
WNCing Tin
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
-------------------------------------------------------------------------------------------------
For the year ended December 31, 1998
-------------------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
Emory Manor, L.P. 77,000 (30,000) 1990 Completed 30
Idalou Manor, L.P. 75,000 (15,000) 1992 Completed 40
Jefferson Capital, L.P. 82,000 (11,000) 1990 Completed 50
Jefferson Manor, L.P. 78,000 (13,000) 1990 Completed 50
Lakeview Limited Partnership 142,000 (21,000) 1991 Completed 35
Littlefield Manor, L.P. 75,000 (15,000) 1991 Completed 40
Perry County Housing, Ltd. 50,000 (9,000) 1992 Completed 40
Pine Hill Housing, Ltd. 58,000 (10,000) 1992 Completed 40
Rociada Partners Ltd. 85,000 (21,000) 1990 Completed 40
Wadley Housing, Ltd. 43,000 (13,000) 1992 Completed 40
Whitewater Woods
Limited Partnership 146,000 (39,000) 1991 Completed 35
Willcox Investment Group, an
Arizona Limited Partnership 119,000 (3,000) 1990 Completed 50
--------- -------
$ 2,745,000 $ (462,000)
============= ==============
48
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND II, L.P.
By: WNC Financial Group, L.P. General Partner of the Registrant
By: WNC & Associates, Inc. General Partner of WNC Financial Group, L.P.
By: /s/ Wilfred N. Cooper, Jr.
--------------------------
Wilfred N. Cooper, Jr., President-Chief
Operating Officer of WNC & Associates, Inc.
JUNE 18,2001
- --------------------
By: /s/ Thomas J. Riha
Thomas J. Riha, Vice-President - Chief Financial
Officer of WNC & Associates, Inc.
JUNE 18, 2001
- ----------------------
By: /s/ Wilfred N. Cooper, Sr.
--------------------------
Wilfred N. Cooper, Sr., General Partner
JUNE 18, 2001
- ----------------------
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.
JUNE 18 , 2001
- ----------------------
By: /s/ John B. Lester, Jr.
-----------------------
John B. Lester, Jr., Director of WNC & Associates, Inc.
JUNE 18 , 2001
- ----------------------
By: /s/ David N. Shafer
David N Shafer, Director of WNC & Associates, Inc.
JUNE 18 , 2001
- ----------------------
49
FINANCIAL STATEMENTS AND
INDEPENDENT AUDITOR'S REPORT
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
DECEMBER 31, 2000 AND 1999
1
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-72113265
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT 3
FINANCIAL STATEMENTS: BALANCE SHEETS 5
STATEMENTS OF OPERATIONS 7
STATEMENTS OF CHANGES IN PARTNERS' EQUITY 8
STATEMENTS OF CASH FLOWS 9
NOTES TO FINANCIAL STATEMENTS 10
ACCOMPANYING INFORMATION
INDEPENDENT AUDITOR'S REPORT ON INFORMATION
ACCOMPANYING THE BASIC FINANCIAL STATEMENTS 16
SUPPLEMENTAL INFORMATION REQUIRED BY RHS 17
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL 25
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE 27
2
PAILET, MEUNIER and LeBLANC, L.L.P.
Certified Public Accountants
Management Consultants
INDEPENDENT AUDITOR'S REPORT
To the Partners
AIRPORT ROAD ASSOCIATES, LIMITED
We have audited the accompanying balance sheets of AIRPORT ROAD ASSOCIATES,
LIMITED, RHS PROJECT NO.: 22-052-721132657 as of December 31, 2000 and 1999 and
the related statements of operations, changes in partners' equity (deficit) and
cash flows for the years then ended. 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 conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. 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 provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AIRPORT ROAD ASSOCIATES,
LIMITED as of December 31, 2000 and 1999 and the results of its operations,
changes in partners' equity and cash flows for the years then ended in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental information presented on
pages 16 through 24, is presented for purposes of additional analysis and is not
a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
3421 N. Causeway Blvd., Suite 701. 201 St. Charles Ave., Suite 2559.
Metairie, LA 70002 New Orleans, LA 70170
Telephone (504) 837-0770 Telephone (504) 522-0504
Fax (504) 837-7102 Fax (504) 837-710
Member of
IGAF - International Group of Member Firms in Principal Cities
Accounting Firms
AICPA SEC Practice Section . AICPA Private Companies Practice Section
3
In accordance with Government Auditing Standards, we have also issued a report
dated February 10, 2001 on our consideration of AIRPORT ROAD ASSOCIATES,
LIMITED's internal control and a report dated February 10, 2001 on its
compliance with laws and regulations applicable to the financial statements.
/s/PAILET, MEUNIER and LeBLANC, L.L.P.
Metairie, Louisiana
February 10, 2001
4
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
Balance Sheets
December 31,200 and 1999
2000 1999
ASETS
CURRENT ASSETS
CASH AND EQUIVALENTS $ 8,752 5,020
PREPAID EXPENSES 2,218 1,767
----------- -----------
TOTAL CURRENT ASSETS 10,970 6,787
----------- -----------
RESTRICTED CASH
RESERVE FUNDS 137,118 144,286
ESCROW FUNDS 1,201 5,916
SECURITY DEPOSITS 11,835 12,068
----------- ----------
TOTAL RESTRICTED CASH 150,154 162,270
------------ ---------
RENTAL PROPERTY-AT COST
BUILDINGS 1,768,384 1,768.384
FURNITURE & FIXTURES 2,356 2,356
------------ ----------
1,770,740 1,770,740
ACCUMULATED DEPRECIATION (709.269) (644,964)
LAND 87,500 87,500
----------- ----------
TOTAL RENTAL PROPERTY-AT COST 1,148,971 1,213,276
----------- ----------
OTHER ASSETS
DEPOSITS 300 300
----------- ----------
TOTAL ASSETS
$ 1,310,395 $ 1,382,633
============== =============
SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.
5
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
Balance Sheets
December 31,200 and 1999
2000 1999
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 10,193 $ 4,764
ACCRUED INTEREST PAYABLE 2,841 2,866
CURRENT PORTION OF LONG TERM DEBT 3,360 3,000
----------- ----------
TOTAL CURRENT LIABILITIES 16,394 10,630
----------- -----------
DEPOSITS & PREPAYMENT LIABILITIES
TENANTS' SECURITY DEPOSITS 11,835 10,992
----------- ----------
TOTAL DEPOSITS AND PREPAYMENT LIA 11.835 10,992
------------ ---------
LONG TERM LIABILITIES
MORTGAGE PAYABLE-RHS 1,444,135 1,447,183
LESS: CURRENT PORTION (3,360) (3,000)
DUE TO RELATED PARTIES 24,539 28,159
------------ ----------
TOTAL LONG TERM LIABILITIES 1,465,314 1,472,342
------------- ---------
PARTENRS' EQUITY
PARTENRS' EQUITY (183,148) (111,331)
----------- ----------
TOTAL PARTENRS' EQUITY (183,148) (111,331)
----------- ----------
TOTAL LIABILITIES AND EQUITY $ 1,310,395 $ 1,382,633
============== =============
SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.
6
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
STAMENTS OF OPERATIONS
FOR the years ended December 31,200 and 1999
2000 1999
REVENUE
RENTS $ 162,161 $ 161,631
LATE FEES,MISC.,ETC. 6,624 5,330
INTEREST REDUCTION SUBSIDY 104,637 104,300
----------- ----------
TOTAL REVENUE 273,422 271,261
----------- -----------
EXPENSES
OPERATING AND MAINTENANCE 76,834 56,707
UTILITIES 21,328 20,371
ADMINISTRATIVE 37,691 35,055
TAXES AND INSURANCE 12,510 11,915
INTEREST 140,941 141,226
DEPRECIATION 64,305 64,470
------------ ----------
TOTAL EXPENSES 353,609 329,744
------------ ---------
INCOME(LOSS) FROM RENTAL OPERATIONS (80,187) (58,483)
------------- ----------
OTHER INCOME AND EPENSES
INTEREST INCOME 8,370 6,352
------------ ---------
TOTAL OTHER INCOME AND EPENSES 8,370 6,352
------------- ---------
NET INCOME (LOSS) $ (71,817) $ (52,131)
============== =============
SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.
7
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
STAMENTS OF CHANGES IN PARTNERS'EQUITY
FOR the years ended December 31,200 and 1999
2000 1999
Partners' Equity-Ja $ (111,331) $ (59,200)
Contributions by Partners 0 0
Net Income (Loss) (71,817) (52,131)
Distributions to Partners 0 0
-------------- ----------
Partners' Equity- December 31,
$ (183,148) $ (111,331)
=============== ============
SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.
8
AIRPORT ROAD ASSOCIATES, LIMITED
: 22-052-721132657
STAMENTS OF CASH FLOWS
FOR the years ended December 31,200 and 1999
2000 1999
CASH flowa from operating activities:
Net Income $ (71,817) $ (52,131)
Adjustments to reconciile net income to net cash ------------ -----------
Provided by operating activities:
Depreciation and amortization 64,305 64,469
(Increase) decrease in prepaid expenses (451) 50
Increase(decrease in accounts payable 5,429 2,850
Increase(decrease in accrued liabilites (25) (22)
Increase(decrease in security deposits 843 2,573
Increase(decrease in current portion of debt 360 400
------------- ------------
Total adjustments 70,461 70,320
------------- ------------
Net cash provided(used)
by operating activities (1,356) 18,189
------------- ------------
Cash flow from investing activites:
(Deposit)withdrawal resrve 7,168 (20,332)
(Deposit)withdrawal escrow 4,715 9,596
(Deposit)withdrawal security deposit account 233 (3,347)
--------------- -----------
Net cash provided(used) by investing activites 12,116 (14,083)
--------------- -----------
Cash flow from financing activites:
Owner's cash used to pay related prty debts (3,620) (3,620)
Principal payments on long-term debt (3,408) (3,165)
--------------- -----------
net cash provided(used) by financing activites (7,028) (6,785)
--------------- -----------
Net increase(decreae) in cash and equivalents 3,732 (2,679)
Cash and equivalents,beginning of year 5,020 7,699
-------------- ----------
Cash and equivalents, end of year 8,752 5,020
$ ============= $ ==========
Supplemental discolsures of cash flow information:
Cash paid during the year for:
Interest expense $ 140,966 $ 141,248
============= ============
SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.
9
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
NOTE A - NATURE OF OPERATIONS
AIRPORT ROAD ASSOCIATES, LIMITED was organized as a limited partnership to
develop, construct, own, maintain and operate a 40-unit rental housing project
for persons of low and moderate income pursuant to Sections 515 (b) and 521 of
the Housing Act of 1949, as amended, which provides for interest and rental
subsidies. The project is located in Slidell, Louisiana . The major activities
of the partnership are governed by the partnership agreement and the Rural
Housing Service (RHS), formerly the Farmers' Home Administration. Annual
distributions to the partners are limited by RHS regulations to 8% of the
borrower's initial capital investment of $45,300. Undistributed amounts may
accumulate for payment the following year.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows.
Basis of Accounting
The financial statements of the partnership are prepared on the accrual basis of
accounting and in accordance with generally accepted accounting principles.
Cash and Cash Equivalents
For purposes of statements of cash flows, cash and cash equivalents represent
unrestricted cash and certificates of deposit with original maturities of 90
days or less. The carrying amount approximates fair value because of the short
period to maturity of the instruments.
Cash and Other Deposits
All bank balances of deposits, up to $100,000 in amount, as of December 31, 2000
are deposited in institutions insured by the FDIC. Account balances over
$100,000 have been collateralized with the Federal Reserve.
10
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Capitalization and Depreciation
Land, buildings and improvements are recorded at cost. Depreciation is provided
for in amounts sufficient to relate the cost of depreciable assets to operations
over their estimated service lives using the straight-line method. Improvements
are capitalized, while expenditures for maintenance and repairs are charged to
expense as incurred. Upon disposal of depreciable property, the appropriate
property accounts are reduced by the related costs and accumulated depreciation.
The resulting gains and losses are reflected in the statement of operations.
Tenants' Security Deposits
Tenants' security deposits are held in a separate bank account in the name of
the project. At December 31, 2000 this account was funded in an amount equal to
the security deposit liability.
Income Taxes
No provision or benefit for income taxes has been included in these financial
statements since taxable income or loss passes through to, and is reportable by,
the partners individually.
Rental Income
Rental income is recognized as rentals become due. Rental payments received in
advance are deferred until earned. All leases between the partnership and the
tenants of the property are operating leases.
NOTE C - PARTNERS' CAPITAL CONTRIBUTIONS
The partnership has two general partners - Clifford E. Olsen and Olsen
Securities Corp., and one special limited partner - WNC Housing Tax Credit Fund
II LP. Each general partner and the special limited partner have made capital
contributions of $45,300 and $333,700, respectively.
11
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
NOTE D - 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 differ from those estimates.
NOTE E - LONG-TERM DEBT
The project is financed by a 50-year mortgage payable to RHS in the original
amount of $1,465,473. The 9.75% mortgage is payable in monthly installments of
$3,095 through February 23, 2040. The partnership has entered into an interest
subsidy agreement with RHS which effectively reduces the interest rate to
approximately 1% over the term of the loan. Monthly payments to RHS of $3,109
are required under the terms of the mortgage.
The liability of the partnership under the mortgage note is limited to the
underlying value of the real estate collateral plus other amounts deposited with
the lender.
In accordance with the loan agreement with RHS, a reserve for replacements is to
be funded $14,627 annually until the account reaches a balance of $146,270. The
required amount of reserves as of December 31, 2000, amounted to $86,453. The
amount on hand at December 31, 2000, was $137,117 which was funded. See Item D
on page 19.
The apartment project is pledged as collateral for the mortgage. The mortgage
loan is nonrecourse debt secured by deeds of trust on the related real estate.
Aggregate maturities of long-term debt for the next five years are as follows:
December 31, 2001 $ 3,360
2002 3,650
2003 3,900
2004 4,250
2005 4,500
and Thereafter 1,424,475
---------
Total $1,444,135
==========
12
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
NOTE E - LONG-TERM DEBT (CONTINUED)
The fair value of the mortgage note payable is estimated based on the current
rates offered to the project for debt of the same remaining maturities. At
December 31, 2000, the fair value of the mortgage approximates the amount
recorded in the financial statements.
NOTE F - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Management Fee
In accordance with the partnership agreement, the partnership paid OSC
Management, Inc., an affiliate of the general partner, management fees of
$15,645 in 2000 and $15,855 in 1999 for services rendered in connection with the
leasing and operation of the project. The fee for its services is equal to 9.65%
in 2000 and 9.70% in 1999 of the project's gross rental income.
Amounts Due to Related Parties
Amounts due to related parties at December 31, 2000 and 1999, consist of the
following:
2000 1999
---- ----
General partner-non-interest bearing working
capital loans $24,539 $28,159
------- ---------
$24,539 $28,159
======== ========
The amounts due to related parties at December 31, 2000 are unsecured, without
interest, have no repayment schedule, and may be repaid only with RECD approval
or from use of owners return. These loans are not due on demand and are not
expected to require the use of existing current assets, and accordingly, are
reported as noncurrent.
13
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
NOTE G - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS
Ownership is 5% to the general partner and 95% to the limited partners. Profits
and losses are distributed as outlined in the partnership agreement.
Distributable cash flow is defined in the partnership agreement as the sum of
all cash receipts less cash disbursements for operating activities and
replacement reserve funding.
During 2000 and 1999, $3,620 and $3,620, respectively, was distributed as
owners' cash, and used to pay principal and interest on other long-term debt.
NOTE H - ADVERTISING
The partnership incurred advertising costs of $69 in 2000 and $19 in 1999. These
costs are expensed in the financial statements as incurred.
14
SUPPLEMENTAL INFORMATION REQUIRED BY RHS
15
PAILET, MEUNIER and LeBLANC, L.L.P.
Certified Public Accountants
Management Consultants
INDEPENDENT AUDITOR'S REPORT ON INFORMATION
ACCOMPANYING THE BASIC FINANCIAL STATEMENTS
To the Partners
AIRPORT ROAD ASSOCIATES, LIMITED
Our audit of the 2000 financial statements presented in the preceding section of
this report was for the purpose of forming an opinion on such financial
statements taken as a whole. The accompanying information shown on the following
pages is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the 2000 basic financial statements taken as a whole.
Metairie, Louisiana
February 10, 2001
Telephone (504) 837-0770 Telephone (504) 522-0504
Fax (504) 837-7102 Fax (504) 837-710
Member of
IGAF - International Group of Member Firms in Principal Cities
Accounting Firms
AICPA SEC Practice Sect
16
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.052-721132657
STAMENTS OF CASH FLOWS
FOR the years ended December 31,200 and 1999
2000 1999
A. SCHEDULES OF OPERATING AND MAINTENANCE, UTILITIES,
ADMINISTRATIVE, TAXS AND INSURANCE
REPAIRS AND MAINTENANCE
MAINTENANCE & REPAIRS- PAYROLL $ 15,172 $ 12,614
MAINTENANCE & REPAIRS- SUPPLY 847 0
MAINTENANCE & REPAIRS- CONTRACT 15,320 6,975
PAINTING & DECORATING 9,302 7,499
GROUND MAINTENANCE 6,407 10,952
SERVICES (EXTERMINATING AND CUSTODIAN) 1,933 1,483
FURNITURE REPLACEMENT AND APPLIANCES 27,738 16,186
OTHER OPERTING EXPENSES(INDUSTRY INTERFAC) 115 998
------------- ------------
Total $ 76,834 $ 56,707
============ ============
UTILITIES
ELECTRICITY $ 6,351 $ 4,983
WATER 5,664 6,004
GAS AND SEWERAGE 5,962 6,240
GARBAGE 3,351 3,144
----------- ------------
Total $ 21,328 $ 20,371
ADMINISTRATIVE =========== =============
SITE MANAGER PAYROLL $ 8,400 $ 7,888
MANAGEMENT FEE 15,645 15,680
PROJECT AUDITING EXPENSES 2,946 2,977
LEGAL EXPENSES 838 94
ADVERTISING 69 19
TELEPHONE 1,433 1,257
OFFICE EXPENSES 2,992 3,553
OFFICE FURNITURE & EQUIPMENT 0 152
TRAINING EXPENSES 420 300
HEALTH INSURANCE 3,141 1,673
PAYROLL TAXES 1,441 1,212
WORKMAN'S COMPENSATION 366 250
----------- ------------
Total $ 37,691 $ 35,055
=========== ============
17
RHS PROJECT NO.052-721132657
STAMENTS OF CASH FLOWS
FOR the years ended December 31,200 and 1999
2000 1999
TAXS AND INSURANCE
REAL ESTATE TAXES $ 7,948 $ 7,906
SPECIAL ASSESSMENT (AUDIT) 280 0
OTHER TAXES AND PERMITS 10 165
PROPERTY AND LIABILTY INSURANCE 4,000 3,584
FIDELITY COVERAGE INSURANCE 272 260
---------- --------
TOTAL $ 12,510 $ 11,915
=========== ==========
18
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
B. SCHEDULE OF ACCOUNTS RECEIVABLE - NONE
C. SCHEDULE OF ACCOUNTS PAYABLE EXCEEDING 30 DAYS - NONE
D. SCHEDULE OF RESERVE FUNDING
Annual Funding Required by Loan Agreement $ 14,627
==============
Beginning Balance $ 144,286
Actual funding including interest income 17,809
Amount of Withdrawals approved by Rural Development
Actual amount of withdrawals:
1. Capital items (24,978)
2. O & M Expenses 0
------------------
Reserve balance at year end 137,117
Fully funded balance per loan agreement 86,453
-------------
Excess (Underfunded) reserve on hand $ 50,664
=============
E. SCHEDULE OF INSURANCE COVERAGE
Name of Amount of Expiration
Insurance Company Coverage Date
Property Acordia of Illinois $1,318,947 July, 2001
Liability Acordia of Illinois 1,000,000 July, 2001
Liability Umbrella Acordia of Illinois 5,000,000 July, 2001
Fidelity Acordia of Illinois 750,000 July, 2001
All policies have been renewed.
F. SCHEDULE OF DELINQUENT REAL ESTATE TAXES - NONE
19
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
G. SCHEDULE OF RENTAL INFORMATION:
Market Basic Number of
Rate Rate Units Total
Two Bedroom $588 $359 $40 $172,320
--------
Total $172,320
========
Number of Units: 40
Number Occupied at year end: 38
Occupancy rate for the year: 93.13%
Occupancy rate at year end: 95.00%
H. SCHEDULE OF OWNERSHIP: Percentage
of
Name Position Address Ownership
Olsen Securities Corp. General Partner 2701 Houma Blvd.
Metairie, LA 4.5%
Clifford E. Olsen General Partner 2701 Houma Blvd.
Metairie, LA .5%
WNC housing Tax Limited Partner 3158 Redhill Costa
Credit Fund Mesa, CA 95%
20
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
I. SCHEDULE OF ALLOWED RETURN TO OWNER:
Line 31, Form 1930-7 $ 5,020
Line 23, Form 1930-7 3,620
--------
Subtotal 8,640
Adjustments for Increase (Decrease) in Accounts Receivable 0
Adjustments for Increase (Decrease) in Accounts Payable (5,429)
----------
Subtotal 3,211
Less: Adjustments for prior Reserve Withdrawal for O&M which
must be replaced before Return to Owner distribution 0
----------
Balance available for return to owner $ 3,211
==========
Amount allowed for return to owner per Loan Agreement $ 3,624
==========
Actual return to owner distributed $ 3,620
==========
J. SCHEDULE OF PHYSICAL CONDITION OF PROPERTY BASED UPON LATEST HUD PHYSICAL
INSPECTION FORM 9822, COMPLETED BY THE RHS CONSTRUCTION ANALYST (WILL BE
FURNISHED BY MANAGEMENT COMPANY)
K. SCHEDULE OF FINANCIAL INSTITUTIONS:
Name Location Bank Accounts Balance
Bank One New Orleans, LA Operating $ 8,552
Bank One New Orleans, LA Security Deposit 11,835
Bank One New Orleans, LA Escrow 1,200
First Bank & Trust New Orleans, LA Reserve 137,117
21
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
L. SCHEDULE OF RECONCILIATION OF ACCRUAL TO CASH ACCOUNTING:
2000
Addition (Subtractions):
Tenant rent receivable $ 0
Rental assistance receivable 0
Other receivables 0
Real estate taxes payable 0
Prepaid insurance (451)
Other payables 6,247
----------
Accrual adjustment per line 32 of
Form 1930-7 $ 5,796
========
M. SCHEDULE OF LIMITED PARTNERSHIP'S STANDING WITH SECRETARY OF
STATE:
IN GOOD STANDING
N. SCHEDULE OF MANAGEMENT FEES RECEIVED:
(SEE ATTACHMENT B)
O. BORROWER CERTIFICATIONS CONCERNING THE ANNUAL AUDIT
REPORTS:
(SEE ATTACHMENT C)
22
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
ATTACHMENT B
Units Units Allowed Management
Month Vacant Rented Fee Fee Amount
- ----- ------- ------ --- --- ------
January 3 37 X $35.00 1,295
February 3 37 X $35.00 1,295
March 3 37 X $35.00 1,295
April 2 38 X $35.00 1,330
May 3 37 X $35.00 1,295
June 6 34 X $35.00 1,190
July 3 37 X $35.00 1,295
August 2 38 X $35.00 1,330
September 1 39 X $35.00 1,365
October 3 37 X $35.00 1,295
November 2 38 X $35.00 1,330
December 2 38 X $35.00 1,330
Totals 33 447 X $35.00 $15,645
== === ========= =======
Vacancy Rate % = Total Units Vacant/Total Number of Units
40 Revenue Producing Units at $ 35.00 per month per occupied unit based upon
occupied units on the 1st day of each month.
100% Occupied is: $16,880
Earned Management Fees: $15,645
Management Fees Collected: $15,645
Previous Years Management Fees Collected
this year: $ 0
NOTE: The resident manager's unit is considered nonoccupied for management fee
purposes unless they are paying
normal rent.
The above figures are true and correct based upon the approved rate of
compensation as stated in the approved Management Agreement.
Borrower/Management Agent _____________________________________________
OSC Management
23
AIRPORT ROAD ASSOCIATES, LIMITED
RHS PROJECT NO.: 22-052-721132657
SUPPLEMENT INFORMATION REQUIRED BY RHS
December 31, 2000
ATTACHMENT C
CERTIFICATE OF BORROWER
The information provided by AIRPORT ROAD ASSOCIATES, LIMITED to Pailet, Meunier,
and LeBlanc, LLP, Certified Public Accountants, for the preparation of the 2000
annual audit to which this certification is attached is hereby certified to be
true and correct, and it is further certified that the handling of the reserve
account, the operation and maintenance account, rental receipts, and interest
credit by AIRPORT ROAD ASSOCIATES, LIMITED was in accordance with the USDA,
Rural Development regulations.
Done this ___________ day of _______________, 2001.
By: ______________________________________________
General Partner
24
PAILET, MEUNIER and LeBLANC, L.L.P.
Certified Public Accountants
Management Consultants
INDEPENDENT AUDITOR'S REPORT ON
INTERNAL CONTROL
To the Partner
AIRPORT ROAD ASSOCIATES LIMITED
We have audited the financial statements of AIRPORT ROAD ASSOCIATES
LIMITED as of and for the year ended December 31, 2000 and have issued our
report thereon dated February 10, 2001.
We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.
The management of AIRPORT ROAD ASSOCIATES LIMITED is responsible for
establishing and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of controls. The objectives of internal
controls are to provide management with reasonable, but not absolute, assurance
that assets are safeguarded against loss from unauthorized use or disposition,
and that transactions are executed in accordance with management's authorization
and recorded properly to permit the preparation of financial statements in
accordance with generally accepted accounting principles. Because of inherent
limitations in any internal control structure, errors or fraud may nevertheless
occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that procedures may become
inadequate because of changes in conditions or that the effectiveness of the
design of controls may deteriorate.
In planning and performing our audit of the financial statements of AIRPORT ROAD
ASSOCIATES LIMITED for the year ended December 31, 2000, we obtained an
understanding of internal control. With respect to internal control, we obtained
an understanding of the design of relevant controls and whether they have been
placed in operation, and we assessed control risk in order to determine our
auditing procedures for the purpose of expressing our opinion on the financial
statements and not to provide an opinion on internal control. Accordingly, we do
not express such an opinion.
3421 N. Cause770 Telephone (504) 522-0504
Fax (504) 837-7102 Fax (504) 837-710
Member of
IGAF - International Group of Member Firms in Principal Cities
Accounting Firms
AICPA SEC Practice Se
25
In connection therewith, we have also made a study of those internal
accounting controls and administrative control procedures comprehended in
Paragraph XIII of Exhibit B - Multiple Housing Management Handbook, which is set
forth in Part 1930, Subpart C Title 7CFR. Our study included tests of compliance
with such procedures.
Our consideration of the internal control structure would not
necessarily disclose all matters of internal control that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not reduce to a
relatively low level the risk that errors or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. We noted no matters involving internal
control and its operation that we consider to be material weaknesses as defined
above.
This report is intended for the information of the audit committee,
management, and the Rural Housing Service. However, this report is a matter of
public record and its distribution is not limited.
/s/PAILET, MEUNIER and LeBLANC, L.L.P.
Metairie, Louisiana
February 10, 2001
26
PAILET, MEUNIER and LeBLANC, L.L.P.
Certified Public Accountants
Management Consultants
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE
To the Partners
AIRPORT ROAD ASSOCIATES, LIMITED
We have audited the financial statements of AIRPORT ROAD ASSOCIATES,
LIMITED as of and for the year ended December 31, 2000, and have issued our
report thereon dated February 10, 2001.
We conducted our audit in accordance with generally accepted auditing
standards and Government Auditing Standards, issued by the Comptroller General
of the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement.
Compliance with laws, regulations, contracts, and grants applicable to
AIRPORT ROAD ASSOCIATES, LIMITED is the responsibility of AIRPORT ROAD
ASSOCIATES, LIMITED 's management. As part of obtaining reasonable assurance
about whether the financial statements are free of material misstatement, we
performed tests of AIRPORT ROAD ASSOCIATES, LIMITED 's compliance with certain
provisions of laws, regulations, contracts, and grants. However, the objective
of our audit of the financial statements was not to provide an opinion on
overall compliance with such provisions. Accordingly, we do not express such an
opinion.
We also considered those compliance matters regarding types of services
allowed or unallowed, eligibility, matching, level of effort and earmarking,
reporting and special tests and provisions comprehended in Attachment 2 of the
U. S. Department of Agriculture, Farmers Home Administration Audit Program
Handbook, dated December, 1989.
The results of our tests disclosed no instances of noncompliance that
are required to be reported herein under Government Auditing Standards or RHS
requirements.
3421 N. CausN. Cause770 Telephone (504) 522-0504
Fax (504) 837-7102 Fax (504) 837-710
Member of
IGAF - International Group of Member Firms in Principal Cities
Accounting Firms
AICPA SEC Practice Se
27
This report is intended for the information of management and the
Department of Agriculture, Rural Housing Service. However, this report is a
matter of public record and its distribution is not limited.
Metairie, Louisiana
February 10, 2001
28