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|
\\CMANWPRD\SYS1\DATA\Audit\FINSTAT\WNC\2001\10k\CAL2K01.doc
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 California Housing Tax Credits II, L.P. ("CHTC" or the "Partnership") is a
California Limited Partnership formed under the laws of the State of California
on September 13, 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 Credit").
The general partner of the Partnership is WNC Tax Credit Partners, L.P. (the
"General Partner"). WNC & Associates, Inc. ("Associates") and Wilfred N. Cooper,
Sr. are the general partners of WNC Tax Credit Partners, L.P. 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 3.6%
of the outstanding stock of Associates. The business of the Partnership is
conducted primarily through Associates, as the Partnership has no employees of
its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission, on January 22, 1991, the Partnership commenced a public offering of
20,000 units of limited partnership interest ("Units") at a price of $1,000 per
Unit. As of the close of the public offering on January 21, 1993, a total of
17,726 Units representing $17,726,000 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 the Supplements 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 fifteen Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is eligible for the federal Low Income Housing Credit and twelve of them
were eligible for the California Low Income Housing Credit. Certain Local
Limited Partnerships may also benefit from government programs promoting low- or
moderate-income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness. If a Local Limited Partnership does not 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 fifteen Housing Complexes as of the dates 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
- ------------------------------------------------------------------------------------------------------------------------------------
601 Main Street Stockto Daniels
Investors California C. Louge $ 1,656,000 $ 1,656,000 165 98% $ 4,080,000 $ 3,984,000
ADI Development Delhi, Anthony
Partners California Donovan 699,000 699,000 31 94% 1,757,000 1,214,000
Bayless Garden Red Bluff, Douglas W.
Apartments California Young 1,110,000 1,110,000 46 91% 2,741,000 1,276,000
Investors
Blackberry Lodi, Bonita Homes
Oaks, Ltd California Incorporated 463,000 463,000 42 100% 1,063,000 1,920,000
Jacob's Square Exeter, Philip R.
California Hammond,
Jr. and Diane M.
Hammond 1,324,000 1,324,000 45 91% 2,933,000 1,580,00
Mecca Apartments II Mecca, Sam Jack, Jr. and
California Sam Jack and
Associates 2,200,000 2,200,000 60 100% 5,183,000 2,498,000
Nevada Meadows Grass Valley, Thomas G. Larson,
California William H. Larson
and Raymond L.
Tetzlaff 459,000 459,000 34 100% 1,030,000 1,925,000
Northwest Tulare Ivanhoe, Philip R.
Associates California Hammond,
Jr. and Diane M.
Hammond 1,226,000 1,226,000 54 72% 2,950,000 1,768,000
Orland, Richard E.
Orland Associates California Huffman and 432,000 432,000 40 100% 972,000 1,709,000
Robert A. Ginno
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
- ------------------------------------------------------------------------------------------------------------------------------------
Pine Gate Limited Ahoskie, Regency Investment
Partnership California Associates, Inc.,
Boyd Management,
Inc. and Gordon L.
Blackwell 272,000 272,000 56 100% 611,000 1,447,000
Silver Birch Huron, Philip R. Hammond,
Associates California Jr. and Diane M.
Hammond 378,000 378,000 35 97% 1,131,000 1,339,000
Twin Pines Groveland, Donald S. Kavanagh
Apartments California and John N. Brezzo 1,278,000 1,278,000 39 97% 3,055,000 1,788,000
Associates
Ukiah Terrace Ukiah, Thomas G. Larson,
California William H. Larson
and Raymond L.
Tetzlaff 349,000 349,000 41 100% 825,000 1,770,000
Woodlake Garden Woodlake, David J. Michael
Apartments California and Pamela J.
Michael 548,000 548,000 48 92% 1,374,000 1,924,000
Yucca-Warren Vista Joshua Tree, WNC & Associates,
Associates California Inc. 520,000 520,000 50 100% 1,251,000 2,156,000
------------ ------- -- ---- --------- ---------
$ 12,914,000 $12,914,000 786 94% $ 30,956,000 $ 28,298,000
============ =========== === === ============ ============
6
-----------------------------------------------------------------------
For the year ended December 31, 2000
-----------------------------------------------------------------------
Low Income Housing
Credits Allocated
to Partnership
Partnership Name Rental Income Net Income (Loss)
--------------------------------------------------------------------------------------------------------------
601 Main Street Investors $ 388,000 $(328,000) 99%
ADI Development Partners 121,000 (52,000) 90%
Bayless Garden Apartments Investors 176,000 (96,000) 99%
Blackberry Oaks, Ltd 218,000 (15,000) 99%
Jacob's Square 193,000 (103,000) 99%
Mecca Apartments II 263,000 (177,000) 99%
Nevada Meadows 196,000 (41,000) 99%
Northwest Tulare Associates 168,000 (123,000) 99%
Orland Associates 202,000 (22,000) 99%
Pine Gate Limited Partnership 226,000 18,000 99%
Silver Birch Associates 139,000 (42,000) 99%
Twin Pines Apartments Associates 134,000 (134,000) 99%
Ukiah Terrace 185,000 (60,000) 99%
Woodlake Garden Apartments 183,000 (33,000) 95%
Yucca-Warren Vista Associates, Ltd 219,000 (8,000) 99%
------- -------
$ 3,011,000 $ (1,216,000)
=========== ==============
7
Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Item 5a.
(a) The Units are not traded on a public exchange but were sold through a
public offering. It is not anticipated that any public market will develop
for the purchase and sale of any Unit and none exists. Units can be
assigned only if certain requirements in the Partnership Agreement are
satisfied.
(b) At March 31, 2001, there were 1,286 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 $ 281,525 $ 314,630 $ 364,853 $ 379,754 $ 377,378 $ 517,151
Investments in
limited
partnerships, net 4,391,885 5,442,623 6,240,560 6,439,942 7,291,595 8,447,282
Due from affiliates 59,554 38,540 - - - -
Other assets - - - - - 12,492
----------- ----------- ------------- ----------- ----------- ----------
$ 4,732,964 $ 5,795,793 $ 6,605,413 $ 6,819,696 $ 7,668,973 $ 8,976,925
=========== =========== ============= =========== =========== ===========
LIABILITIES
Accrued fees and
expenses due to
general partner and
affiliates $ 1,448,236 $ 1,278,242 $ 1,077,385 $ 1,044,307 $ 836,316 $ 703,693
PARTNERS' EQUITY 3,284,728 4,517,551 5,528,028 5,775,389 6,832,657 8,273,232
----------- ----------- ------------- ----------- ----------- -----------
$ 4,732,964 $ 5,795,793 $ 6,605,413 $ 6,819,696 $ 7,668,973 $ 8,976,925
=========== =========== ============= =========== =========== ===========
8
Selected results of operations, cash flows and other information for the
Partnership is as follows:
For the Three Months Ended For the Years Ended
Years Ended
March 31 March 31 December 31
------------------------ ------------------------ -------------------------------------
2001 2000 1999 1998 1998 1997 1996
----------- ----------- ---------- --------- ---------- ----------- -----------
(Unaudited)
Loss from operations $ (272,354) $ (273,480) $ (68,998) $ (65,161) $ (274,539)$ (284,989) $ (264,807)
Equity in losses of
limited partnerships (960,469) (736,997) (178,363) (241,600) (782,729) (1,155,586) (1,128,793)
----------- ----------- ---------- --------- ----------- ----------- ------------
Net loss $ (1,232,823) $ (1,010,477) $ (247,361) $ (306,761) $ (1,057,268)$(1,440,575) $ (1,393,600)
=========== =========== ============ ============= ============= =========== ===============
Net loss allocated to:
General partner $ (12,328) $ (10,105) $ (2,474) $ (3,068) $ (10,573)$ (14,406) $ (13,936)
=========== =========== ============= ============= ============= ============ ==============
Limited partners $ (1,220,495) $ (1,000,372) $ (244,887) $ (303,693) $ (1,046,695)$(1,426,169) $ (1,379,664)
=========== =========== ============ ============= ============== ============ ==============
Net loss per limited
partner unit $ (68.85) $ (56.44) $ (13.82) $ (17.13) $ (59.05)$ (80.46) $ (77.83)
=========== =========== ============ ============= ============== ========== ==============
Outstanding weighted
limited partner
units 17,726 17,726 17,726 17,726 17,726 17,726 17,726
=========== =========== ========== ========= ========== =========== ===========
For the For the Three Months For the Years Ended
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 $ (70,146) $ (57,948) $ (22,613) $ (1,469) $ (13,320)$ (95,215)$ (46,174)
Investing
activities 37,041 7,725 7,712 3,606 15,696 (44,558) (550,250)
----------- ----------- ----------- ---------- --------- ---------- -----------
Net change in cash
and cash equivalents (33,105) (50,223) (14,901) 2,137 2,376 (139,773) (596,424)
Cash and cash
equivalents,
beginning of period 314,630 364,853 379,754 377,378 377,378 517,151 1,113,575
----------- ----------- ----------- ---------- --------- ---------- -----------
Cash and cash
equivalents, end of
period $ 281,525 $ 314,630 $ 364,853 $ 379,515 $ 379,754 $ 377,378 $ 517,151
=========== =========== =========== =========== ========= ========== ===========
Low Income Housing Credits per limited partner unit was as follows for the years
ended December 31:
2000 1999 1998 1997 1996
---------------- --------------- --------------- ---------------- ---------------
Federal $ 117 $ 117 $ 117 $ 117 $ 116
State -
- 9 27 37
---------------- --------------- --------------- ---------------- ---------------
Total $ 117 $ 117 $ 126 $ 144 $ 153
================ =============== =============== ================ ===============
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
With the exception of the discussion regarding historical information,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other discussions elsewhere in this Form 10-K contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties and other factors
9
which may involve known and unknown risks that could cause actual results of
operations to differ materially from those projected or implied. Further,
certain forward-looking statements are based upon assumptions about future
events which may not prove to be accurate.
Risks and uncertainties inherent in forward looking statements include, but are
not limited to, our future cash flows and ability to obtain sufficient
financing, level of operating expenses, conditions in the low income housing tax
credit property market and the economy in general, as well as legal proceedings.
Historical results are not necessarily indicative of the operating results for
any future period.
Subsequent written and oral forward looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by
cautionary statements in this Form 10-K and in other reports we filed with the
Securities and Exchange Commission. The following discussion should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto
included elsewhere in this filing.
Financial Condition
The Partnership's assets at March 31, 2001 consisted primarily of $281,525 in
cash and aggregate investments in the fifteen Local Limited Partnerships of
$4,391,885. Liabilities at March 31, 2001 primarily consisted of $1,448,236 of
accrued annual management fees due to the General Partner.
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 $(1,233,000),
reflecting an increase of $223,000 from the net loss experienced for the year
ended December 31, 2000. The increase in net loss is primarily due to equity in
losses of Local Partnerships which increased by $223,000 to $(960,000) for the
year ended March 31, 2001 from $(737,000) for the year ended March 31, 2000. The
increase in equity in losses of limited partnerships is due to the reduction of
the respective net acquisition fee component of investments in Local Limited
Partnerships to zero for those Local Limited Partnerships which would otherwise
be below a zero balance. This increase was offset by the Partnership not
recognizing certain losses of the Local Limited Partnerships. The investments in
such Local Limited Partnerships had reached $0 at March 31, 2001. Since the
Partnership's liability with respect to its investments is limited, losses in
excess of investments are not recognized.
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 $(1,010,000),
reflecting a decrease of $47,000 from the net loss experienced for the year
ended December 31, 1998. The decline in net loss is primarily due to equity in
losses from limited partnerships which declined by $46,000 to $(737,000) for the
year ended March 31, 2000 from $(783,000) for the year ended December 31, 1998.
This decrease was a result of the Partnership not recognizing certain losses of
the Local Limited Partnerships. The investments in such Local Limited
Partnerships had reached $0 at March 31, 2000. Since the Partnership's liability
with respect to its investments is limited, losses in excess of investment are
not recognized.
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
$(247,000), reflecting a decrease of $60,000 from the net loss experienced for
the three months ended March 31, 1998. The decline in net loss is primarily due
to equity in losses of limited partnerships which declined by $64,000 to
$(178,000) for the three months ended March 31, 1999 from $(242,000) for the
three months ended March 31, 1998. This decrease was a result of the Partnership
not recognizing certain losses of the Local Limited Partnerships. The
investments in such Local Limited Partnerships reached $0 during 1998. Since the
Partnership's liability with respect to its investments is limited, losses in
excess of investment are not recognized. The reduction in equity losses
recognized was partially offset by an increase in loss from operations of $4,000
to $(69,000) for the three months ended March 31, 1999 from $(65,000) for the
three months ended March 31, 1998, due to a comparable increase in operating
expense allocations.
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 $(33,000), compared to net cash used
for the year ended March 31, 2000 of $(50,000). The change was due primarily to
the Partnership advancing approximately $39,000 to two Local Limited
Partnerships to
10
cover operating cash deficits during the year ended March 31, 2000 and
approximately $21,000 during the year ended March 31, 2001. In addition, the
Partnership experienced an increase in cash paid to the General Partner for
annual management fees of $30,000 which was offset by an increase in
distributions received from Local Limited Partnerships of $29,000.
Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. Net cash
used during the year ended March 31, 2000 was $(50,000), compared to net cash
increase for the year ended December 31, 1998 of $2,000. The change was due
primarily to the Partnership advancing approximately $39,000 to two Local
Limited Partnerships to cover operating cash deficits, which did not occur in
the year ended December 31, 1998. In addition, the Partnership experienced an
increase in cash paid to the General Partner for annual management fees of
$10,000 and a decrease in distributions received from Local Limited Partnerships
of $8,000.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net cash used during the three months ended March 31, 1999 was $(15,000),
compared to a net increase in cash for the three months ended March 31, 1998 of
$2,000. The change was due primarily to an increase in cash paid to the general
partner or affiliates of $19,000, and an increase in operating costs paid to
third parties of $5,000, partially offset by an increase in distributions
received from Local Limited Partnerships of $4,000.
The report of the independent certified public accountants with respect to the
financial statements of one Local Limited Partnership expressed substantial
doubt as to the Local Limited Partnerships' ability to continue as a going
concern. The Partnership had no remaining investment in such Local Limited
Partnership at March 31, 2001 and 2000, respectively. The Partnership's original
investment in the Local Limited Partnership approximated $1,278,000. Through
December 31, 2000, the Local Limited Partnership has had recurring losses and
working capital deficiencies. In the event the Local Limited Partnership is
required to liquidate or sell its property, the net proceeds could be
significantly less than the carrying value of such property. As of December 31,
2000 and 1999, the net carrying value of such property on the books and records
of the Local Limited Partnership totaled $2,267,000 and $2,379,000,
respectively.
During the years ended March 31, 2001 and 2000, the three months ended March 31,
1999 and the year ended December 31, 1998, accrued payables, which consist of
related party management fees due to the General Partner, increased by $170,000,
$201,000, $33,000 and $208,000, 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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NOT APPLICABLE
Item 8. Financial Statements and Supplementary Data
11
Report of Independent Certified Public Accountants
To the Partners
WNC California Housing Tax Credits II, L.P.
We have audited the accompanying balance sheets of WNC California Housing Tax
Credits 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 years 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 71% and
74% of the total assets of the Partnership at March 31, 2001 and 2000. 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 California Housing Tax Credits 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 11, 2001
12
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
BALANCE SHEETS
See accompanying notes to financial statements
March 31
------------------------------
2001 2000
------------- -------------
ASSETS
Cash and cash equivalents $ 281,525 $ 314,630
Investments in limited partnerships, net (Note 2) 4,391,885 5,442,623
Due from affiliates (Note 2) 59,554 38,540
------------- -------------
$ 4,732,964 $ 5,795,793
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Accrued fees and expenses due to General Partner and affiliates
(Note 3) $ 1,448,236 $ 1,278,242
------------- -------------
Commitments and contingencies
Partners' equity (deficit):
General partner (132,415) (120,087)
Limited partners (20,000 units authorized; 17,726 units issued
and outstanding) 3,417,143 4,637,638
------------- -------------
Total partners' equity (deficit) 3,284,728 4,517,551
------------- -------------
$ 4,732,964 $ 5,795,793
============= =============
13
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the
For the Three Months For the Year
Years Ended Ended March Ended
March 31 31 December 31
----------------------------- -------------- ---------------
2001 2000 1999 1998
------------- ------------ --------------- ---------------
Interest income $ 16,193 $ 16,614 $ 4,060 $ 16,353
Distribution income 1,500 1,500 - -
------------- ------------ --------------- ---------------
Total income 17,693 18,114 4,060 16,353
------------- ------------ --------------- ---------------
Operating expenses:
Amortization (Note 2) 53,228 53,215 13,307 53,228
Asset management fees (Note 3) 210,084 210,084 52,521 210,084
Other 26,735 28,295 7,230 27,580
------------- ------------ --------------- ---------------
Total operating expenses 290,047 291,594 73,058 290,892
------------- ------------ --------------- ---------------
Loss from operations (272,354) (273,480) (68,998) (274,539)
Equity in losses of limited
partnerships (Note 2) (960,469) (736,997) (178,363) (782,729)
------------- ------------ --------------- ---------------
Net loss $ (1,232,823) $ (1,010,477) $ (247,361) $ (1,057,268)
============= ============ =============== ===============
Net loss allocated to:
General partner $ (12,328) $ (10,105) $ (2,474) $ (10,573)
============= ============ =============== ===============
Limited partners $ (1,220,495) $ (1,000,372) $ (244,887) $ (1,046,695)
============= ============ =============== =============
Net loss per limited partner unit $ (68.85) $ (56.44) $ (13.82) $ (59.05)
============= ============ =============== ===============
Outstanding weighted limited
partner units 17,726 17,726 17,726 17,726
============= ============ =============== ===============
14
WNC CALIFORNIA HOUSING TAX CREDITS 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 $ (96,935) $ 6,929,592 $ 6,832,657
Net loss (10,573) (1,046,695) (1,057,268)
--------------- --------------- ---------------
Partners' equity (deficit) at December 31, 1998 (107,508) 5,882,897 5,775,389
Net loss (2,474) (244,887) (247,361)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 1999 (109,982) 5,638,010 5,528,028
Net loss (10,105) (1,000,372) (1,010,477)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2000 (120,087) 4,637,638 4,517,551
Net loss (12,328) (1,220,495) (1,232,823)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2001 $ (132,415) $ 3,417,143 $ 3,284,728
=============== =============== ===============
15
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Years For the For the
Three Months
Ended March Year Ended
Ended March 31 31 December 31
------------------------------ -------------- --------------
2001 2000 1999 1998
------------ -------------- ------------- --------------
Cash flows from operating
activities: )
Net loss $ (1,232,823) $ (1,010,477) $ (247,361 )$ (1,057,268)
Adjustments to reconcile net loss
to
net cash used in operating
activities:
Amortization 53,228 53,215 13,307 53,228
Equity in losses of limited
partnerships 960,469 736,997 178,363 782,729
Change in due from affiliates (21,014) (38,540) - -
Increase in accrued fees and
expenses due to General Partner
and affiliates 169,994 200,857 33,078 207,991
------------ -------------- ------------- --------------
Net cash used in operating activities (70,146) (57,948) (22,613) (13,320)
------------ -------------- ------------- --------------
Cash flows from investing activities:
Distributions from limited
partnerships 37,041 7,725 7,712 15,696
------------ -------------- ------------- --------------
Net cash provided by (used in)
investing activities 37,041 7,725 7,712 15,696
------------ -------------- ------------- --------------
Net increase (decrease) in cash and
cash equivalents (33,105) (50,223) (14,901) 2,376
Cash and cash equivalents, beginning
of period 314,630 364,853 379,754 377,378
------------ -------------- ------------- --------------
Cash and cash equivalents, end of
period $ 281,525 $ 314,630 $ 364,853 $ 379,754
============ ============== ============= ==============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Taxes paid $ 800 $ 800 $ - $ 800
============ ============== ============= ==============
16
WNC CALIFORNIA HOUSING TAX CREDITS 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
24
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
- ------------
WNC California Housing Tax Credits II, L.P. a California Limited Partnership
(the "Partnership"), was formed on September 13, 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
multi-family housing complexes (the "Housing Complex") that are eligible for low
income housing tax credits. The local general partners (the "Local General
Partners") of each Local Limited Partnership retain responsibility for
maintaining, operating and managing the Housing Complex.
The general partner is WNC Tax Credit Partners, L.P. (the "General Partner").
WNC & Associates, Inc. ("WNC") and Wilfred N. Cooper are the general partners of
WNC Tax Credit Partners, L.P. 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 20,000 units at $1,000
per Unit ("Units"). The offering of Units concluded in January 1993 at which
time 17,726 Units, representing subscriptions in the amount of $17,726,000, had
been accepted. The General Partner has a 1% interest in operating profits and
losses, taxable income and losses, 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 90% to the limited partners (in proportion to their
respective investments) and 10% 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.
17
WNC CALIFORNIA HOUSING TAX CREDITS 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 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Risks and Uncertainties
- -----------------------
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not 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 Note 2).
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 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.
18
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. The General Partner is obligated to
pay all offering and organization costs in excess of 15% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of limited partners' capital and amounted to $2,389,519 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 no cash equivalents.
Concentration of Credit Risk
- ----------------------------
At March 31, 2001, the Partnership maintained cash balances at a certain
financial institution in excess of the federally insured maximum.
Net Loss Per Limited Partner Unit
- ---------------------------------
Net loss per limited partner 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.
19
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of the periods presented, the Partnership has acquired limited partnership
interests in fifteen Local Limited Partnerships each of which owns one Housing
Complex consisting of an aggregate of 786 apartment units. The respective
general partners of the Local Limited Partnerships manage the day to day
operations of the entities. Significant Local Limited Partnership business
decisions require approval from the Partnership. The Partnership, as a limited
partner, is generally entitled to 99%, as specified in the Local Limited
Partnership agreements, of the operating profits and losses, taxable income and
losses and tax credits of the Limited Partnerships.
The Partnership's investments in Local Limited Partnerships as shown in the
balance sheets at March 31, 2001 and 2000 are approximately $2,279,000 and
$2,155,000, 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, and acquisition, selection and other costs related
to the acquisition of the investments which have been capitalized in the
Partnership's investment account. 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 estimated 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 months ended March 31, 1999, amounting to approximately
$443,391, $556,141 and $166,072, respectively, have not been recognized. The
Partnership's share of losses during the year ended December 31, 1998 amounting
to approximately $567,892, has not been recognized. As of March 31, 2001, the
aggregate share of net losses not recognized by the Partnership amounted to
$1,886,271.
Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented:
For the Years Ended For the Three For the
Months Ended Year Ended
March 31 March 31 December 31
-------------------------------- --------------- --------------
2001 2000 1999 1998
--------------- --------------- --------------- --------------
Investments per balance sheet, beginning of period $ 5,442,623 $ 6,240,560 $ 6,439,942 $ 7,291,595
Distributions received (37,041) (7,725) (7,712) (15,696)
Equity in losses of limited partnerships (960,469) (736,997) (178,363) (782,729)
Amortization of paid acquisition fees and costs (53,228) (53,215) (13,307) (53,228)
--------------- --------------- --------------- --------------
Investments per balance sheet, end of period $ 4,391,885 $ 5,442,623 $ 6,240,560 $ 6,439,942
=============== =============== =============== ==============
20
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 for 2000 and 1999 of $10,331,000 and
$9,065,000, respectively) $ 28,951,000 $ 30,062,000
Land 2,465,000 2,465,000
Other assets 2,895,000 2,813,000
--------------- ---------------
$ 34,311,000 $ 35,340,000
=============== ===============
LIABILITIES
Mortgage and construction loans payable $ 28,298,000 $ 28,410,000
Due to related parties 757,000 715,000
Other liabilities 2,944,000 2,657,000
--------------- ---------------
31,999,000 31,782,000
--------------- ---------------
PARTNERS' CAPITAL
WNC California Housing Tax Credits II, L.P. 2,113,000 3,288,000
Other partners 199,000 270,000
--------------- ---------------
2,312,000 3,558,000
--------------- ---------------
$ 34,311,000 $ 35,340,000
=============== ===============
21
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2000 1999 1998
--------------- --------------- ---------------
Revenues $ 3,194,000 $ 3,077,000 $ 3,034,000
--------------- --------------- ---------------
Expenses:
Operating expenses 2,210,000 2,252,000 2,220,000
Interest expense 907,000 924,000 924,000
Depreciation and amortization 1,293,000 1,286,000 1,284,000
--------------- --------------- ---------------
Total expenses 4,410,000 4,462,000 4,428,000
--------------- --------------- ---------------
Net loss $ (1,216,000) $ (1,385,000) $ (1,394,000)
=============== =============== ===============
Net loss allocable to the Partnership $ (1,156,000) $ (1,310,000) $ (1,351,000)
=============== =============== ===============
Net loss recorded by the Partnership $ (960,000) $ (737,000) $ (783,000)
=============== =============== ===============
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership 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.
The report of the independent certified public accountants with respect to the
financial statements of one Local Limited Partnership expressed substantial
doubt as to the Local Limited Partnerships' ability to continue as a going
concern. The Partnership had no remaining investment in such Local Limited
Partnership at March 31, 2001 and 2000, respectively. The Partnership's original
investment in the Local Limited Partnership approximated $1,278,000. Through
December 31, 2000, the Local Limited Partnership has had recurring losses and
working capital deficiencies. In the event the Local Limited Partnership is
required to liquidate or sell its property, the net proceeds could be
significantly less than the carrying value of such property. As of December 31,
2000 and 1999, the net carrying value of such property on the books and records
of the Local Limited Partnership totaled $2,267,000 and $2,379,000,
respectively.
The Partnership has advanced approximately $60,000 to three Local Limited
Partnerships as of March 31, 2001 to cover operating cash deficits, which is
presented as Due from Affiliates in the accompanying 2001 balance sheet.
NOTE 3 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partner or its affiliates for the following items:
Acquisition fees equal to 9% of the gross proceeds from the sale of 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 $1,595,340. Accumulated
amortization of these capitalized costs was $755,966 and $417,850 as of
March 31, 2001 and 2000, respectively. Of the accumulated amortization
recorded on the balance sheet at March 31, 2001, $286,112 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 ended March
31, 2001 to reduce the respective net acquisition fee component of
investments in Local Limited Partnerships to zero for those Local Limited
Partnerships which would otherwise be below a zero balance.
22
Reimbursement of costs incurred by an affiliate of the General Partner 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 $1,520
which have been included in investments in limited partnerships. Accumulated
amortization was insignificant for the periods presented.
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 $210,084 and $210,084 were incurred during the
years ended March 31, 2001 and 2000, respectively, $52,521 was incurred during
the three months ended March 31, 1999, and $210,084 was incurred during the year
ended December 31, 1998 of which $40,000 and $10,000 were paid during the years
ended March 31, 2001 and 2000, respectively, $19,400 was paid during the three
months ended March 31, 1999, and $0 was paid during the year ended December 31,
1998.
A subordinated disposition fee in an amount equal to 1% of the sales price of
real estate sold. Payment of this fee to the General Partner is subordinated to
the limited partners who receive a 6% preferred return (as defined in the
Partnership Agreement) and is payable only if the General Partner or its
affiliates render services in the sales effort.
An affiliate of the General Partner provides management services for two of the
properties in the Local Limited Partnerships. Management fees were earned by the
affiliate in the amount of $25,391 and $26,186 for the years ended March 31,
2001 and 2000 and $7,300 for the three months ended March 31, 1999, and $40,513
for the year ended December 31, 1998. In May 1999, the affiliate of the General
Partner refunded $14,503 and $2,076 of the management fees related to 1998 and
1997, respectively, in accordance with the Partnership's prospectus.
The accrued fees and expenses due to General Partner and affiliates consist of
the following:
March 31
--------------------------------
2001 2000
-------------- --------------
Reimbursement for expenses paid by the General Partner
or an affiliate $ - $ 90
Asset management fee payable 1,448,236 1,278,152
-------------- --------------
Total $ 1,448,236 $ 1,278,242
============== ==============
The General Partner does not anticipate that these accrued fees will be paid in
full 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.
23
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 (in thousands, except for per share data).
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2001
Income $ 4,331 $ 4,054 $ 4,204 $ 5,104
Operating expenses 71,481 77,950 69,944 70,672
Equity in losses of limited
partnerships (183,073) (183,072) (183,072) (411,252)
Net loss (250,223) (256,968) (248,812) (476,820)
Loss available to limited partners (247,721) (254,398) (246,324) (472,052)
Loss per limited partner unit (14) (14) (14) (27)
2000
Income $ 3,947 $ 4,187 $ 4,299 $ 5,681
Operating expenses 74,228 74,214 71,290 71,862
Equity in losses of limited
partnerships (178,363) (178,363) (178,363) (201,908)
Net loss (248,644) (248,390) (245,354) (268,089)
Loss available to limited partners (246,158) (245,906) (242,900) (265,408)
Loss per limited partner unit (14) (14) (14) (14)
24
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
Directors of 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, Chairman, Chief Executive
Officer and a Director of WNC & Associates, Inc., a Director of WNC Capital
Corporation, and a general partner in some of the programs previously sponsored
by the Sponsor. Mr. Cooper has been involved in real estate investment and
acquisition activities since 1968. Previously, during 1970 and 1971, he was
founder and principal of Creative Equity Development Corporation, a predecessor
of WNC & Associates, Inc., and of Creative Equity Corporation, a real estate
investment firm. For 12 years prior to that, Mr. Cooper was employed by Rockwell
International Corporation, last serving as its manager of housing and urban
developments where he had responsibility for factory-built housing evaluation
and project management in urban planning and development. Mr. Cooper is a
Director of the National Association of Home Builders (NAHB) and a National
Trustee for NAHB's Political Action Committee, a Director of the National
Housing Conference (NHC) and a member of NHC's Executive Committee and a
Director of the National Multi-Housing Council (NMHC). Mr. Cooper graduated from
Pomona College in 1956 with a Bachelor of Arts degree.
John B. Lester, Jr., age 67, is Vice-Chairman, a Director, 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.
25
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.
26
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or its affiliates during the current or future years for the following
fees:
(a) Annual Asset Management Fee. An annual asset management fee in an amount
equal to 0.5% of the Invested Assets of the Partnership, as defined.
"Invested Assets" means the sum of the Partnership's Investment in Local
Limited 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 $210,084 and
$210,084, $52,521 and $210,084 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, $40,000, $10,000, $19,400 and $0 of those fees during
the year 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 or Local Limited Partnership Interest.
Subordinated disposition fees will be subordinated to the prior return of
the Limited Partners' capital contributions and payment of the Preferred
Return on investment to the Limited Partners. "Preferred Return" means an
annual, cumulative but not compounded, "return" to the Limited Partners
(including Low Income Housing Credits) as a class on their adjusted capital
contributions commencing for each Limited Partner on the last day of the
calendar quarter during which the Limited Partner's capital contribution is
received by the Partnership, calculated at the following rates: (i) 16%
through December 31, 2001, and (ii) 6% for the balance of the Partnerships
term. No disposition fees have been paid.
(c) Operating Expense. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $23,500, $16,000, $0 and
$1,000 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 Tax Housing Credits, which approximated
$21,000, $21,000 and $22,000 for the General Partner 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 own beneficially in excess of 5% of the
outstanding Units.
(b) Security Ownership of Management
Neitherthe 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 its organizational documents, without the
consent or approval of the Limited Partners. In addition, the
Partnership Agreement provides for the admission of one or more
additional and successor General Partners in certain circumstances.
27
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
interest in the Partnership, as discussed in Item 11 and in the notes to the
Partnership's financial statements.
28
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof:
Report of Independent Certified Public Accountants
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 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 Agreement of Limited Partnership dated as of September 13, 1990, included
as Exhibit 28.1 to the Form 10-K filed for the year ended December 31,
1992, is hereby incorporated herein as Exhibit 3.1.
10.1 Amended and Restated Agreement of Limited Partnership of Orland
Associates dated June 15, 1991 filed as exhibit 10.1 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit
10.1.
10.2 Amended and Restated Agreement of Limited Partnership of Ukiah Terrace a
California Limited Partnership dated June 15, 1991 filed as exhibit 10.2
to Form 10-K dated December 31, 1992 is hereby incorporated herein by
reference as exhibit 10.2.
10.3 Amended and Restated Agreement of Limited Partnership of Northwest Tulare
Associates dated July 3, 1991 filed as exhibit 10.3 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit
10.3.
10.4 Second Amended and Restated Agreement of Limited Partnership of Yucca
Warren Vista, Ltd. dated July 15, 1991 filed as exhibit 10.4 to Form 10-K
dated December 31, 1992 is hereby incorporated herein by reference as
exhibit 10.4.
10.5 Amended and Restated Agreement of Limited Partnership of Woodlake Garden
Apartments dated July 17, 1991 filed as exhibit 10.5 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit
10.5.
10.6 Amended and Restated Agreement of Limited Partnership of 601 Main Street
Investors dated December 22, 1991 filed as exhibit 10.6 to Form 10-K
dated December 31, 1992 is hereby incorporated herein by reference as
exhibit 10.6.
29
10.7 Amended and Restated Agreement of Limited Partnership of ADI Development
Partners dated January 2, 1992 filed as exhibit 10.7 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit
10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Bayless Garden
Apartment Investors dated January 2, 1992 filed as exhibit 10.8 to Form
10-K dated December 31, 1992 is hereby incorporated herein by reference
as exhibit 10.8.
10.9 Third Amended and Restated Agreement of Limited Partnership of Twin Pines
Apartment Associates dated January 2, 1992 filed as exhibit 10.9 to Form
10-K dated December 31, 1992 is hereby incorporated herein by reference
as exhibit 10.9.
10.10 Amended and Restated Agreement of Limited Partnership of Blackberry Oaks,
Ltd. dated January 15, 1992 filed as exhibit 10.10 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit
10.10.
10.11 Amended and Restated Agreement of Limited Partnership of Mecca Apartments
II dated January 15, 1992 filed as exhibit 10.11 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit
10.11.
10.12 Amended and Restated Agreement of Limited Partnership of Silver Birch
Limited Partnership dated November 23, 1992 filed as exhibit 10.12 to
Form 10-K dated December 31, 1992 is hereby incorporated herein by
reference as exhibit 10.12.
10.13 Amended and Restated Agreement of Limited Partnership of Jacob's Square
dated January 2, 1992 filed as exhibit 10.1 to Form 10-K dated December
31, 1993 is hereby incorporated herein by reference as exhibit 10.13.
10.14 Amended and Restated Limited Partnership Agreement of Nevada Meadows, A
California Limited Partnership as exhibit 10.2 to Form 10-K dated
December 31, 1993 is hereby incorporated herein by reference as exhibit
10.14.
21.1 Financial Statements of Mecca Apartments II, 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.
30
Report of Independent Certified Public Accountants on Financial Statement
Schedules
To the Partners
California Housing Tax Credits II, L.P.
The audits referred to in our report dated May 11, 2001 relating to the 2001,
2000, 1999 and 1998 financial statements of WNC California Housing Tax Credits
II, L.P. (the "Partnership"), which are 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 11, 2001
31
WNC California Housing Tax Credits II, L.P.
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
- ------------------------------------------------------------------------------------------------------------------------------------
601 Main Street Investors Stockton,
California $ 1,656,00 $ 1,656,000 $ 3,984,000 $ 5,559,000 $ 1,693,000 $ 3,866,000
ADI Development Delhi,
Partners California 699,000 699,000 1,214,000 1,904,000 437,000 1,467,000
Bayless Garden Red Bluff,
Apartments Investors California 1,110,000 1,110,000 1,276,000 2,576,000 849,000 1,727,000
Blackberry Oaks, Lodi,
Ltd California 463,000 463,000 1,920,000 2,443,000 464,000 1,979,000
Jacob's Square Exeter,
California 1,324,000 1,324,000 1,580,000 2,860,000 697,000 2,163,000
Mecca Apartments II Mecca,
California 2,200,000 2,200,000 2,498,000 4,361,000 669,000 3,692,000
Nevada Meadows Grass Valley,
California 459,000 459,000 1,925,000 2,599,000 416,000 2,183,000
Northwest Tulare Ivanhoe,
Associates California 1,226,000 1,226,000 1,768,000 2,967,000 954,000 2,013,000
Orland Associates Orland,
California 432,000 432,000 1,709,000 2,259,000 481,000 1,778,000
Pine Gate Limited Ahoskie,
Partnership California 272,000 272,000 1,447,000 1,873,000 293,000 1,580,000
32
WNC California Housing Tax Credits II, L.P.
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
- ------------------------------------------------------------------------------------------------------------------------------------
Silver Birch Associates Huron,
California 378,000 378,000 1,339,000 1,714,000 491,000 1,223,000
Twin Pines Apartments Groveland,
Associates California 1,278,000 1,278,000 1,788,000 3,332,000 1,065,000 2,267,000
Ukiah Terrace Ukiah,
California 349,000 349,000 1,770,000 2,301,000 752,000 1,549,000
Woodlake Garden Woodlake,
Apartments California 548,000 548,000 1,924,000 2,471,000 552,000 1,919,000
Yucca-Warren Vista Joshua Tree,
Associates California 520,000 520,000 2,156,000 2,529,000 518,000 2,011,000
------- ------- --------- --------- ------- ---------
$12,914,000 $ 12,914,000 $28,298,000 $41,748,000 $10,331,000 $31,417,000
=========== ============= =========== =========== ========== ===========
33
WNC California Housing Tax Credits II, L.P.
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)
- ----------------------------------------------------------------------------------------------------------------------------------
601 Main Street Investors $ 388,000 $ (328,000) 1991 Completed 39
ADI Development Partners 121,000 (52,000) 1991 Completed 40
Bayless Garden
Apartments Investors 176,000 (96,000) 1992 Completed 27.5
Blackberry Oaks, Ltd. 218,000 (15,000) 1992 Completed 40
Jacob's Square 193,000 (103,000) 1993 Completed 27.5
Mecca Apartments II 263,000 (177,000) 1993 Completed 40
Nevada Meadows 196,000 (41,000) 1993 Completed 40
Northwest Tulare Associates 168,000 (123,000) 1991 Completed 27.5
Orland Associates 202,000 (22,000) 1991 Completed 40
Pine Gate Limited Partnership 226,000 18,000 1994 Completed 50
Silver Birch Associates 139,000 (42,000) 1992 Completed 27.5
Twin Pines Apartments Associates 134,000 (134,000) 1991 Completed 27.5
Ukiah Terrace 185,000 (60,000) 1991 Completed 27.5
Woodlake Garden Apartments 183,000 (33,000) 1991 Completed 40
Yucca-Warren Vista
Associates, Ltd. 219,000 (8,000) 1991 Completed 50
-------- ------
$ 3,011,000 $(1,216,000)
============= ============
34
WNC California Housing Tax Credits II, L.P.
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
- ------------------------------------------------------------------------------------------------------------------------------------
601 Main Street Investors Stockton,
California $ 1,656,000 $ 1,656,000 $ 3,997,000 $ 5,553,000 $ 1,496,000$ 4,057,000
ADI Development Partners Delhi,
California 699,000 699,000 1,220,000 1,904,000 392,000 1,512,000
Bayless Garden Red Bluff,
Apartments Investors California 1,110,000 1,110,000 1,284,000 2,570,000 754,000 1,816,000
Blackberry Oaks, Ltd Lodi,
California 463,000 463,000 1,930,000 2,430,000 403,000 2,027,000
Jacob's Square Exeter,
California 1,324,000 1,324,000 1,586,000 2,860,000 597,000 2,263,000
Mecca Apartments II Mecca,
California 2,200,000 2,200,000 2,512,000 4,361,000 553,000 3,808,000
Nevada Meadows Grass Valley,
California 459,000 459,000 1,778,000 2,599,000 354,000 2,245,000
Northwest Tulare Ivanhoe,
Associates California 1,226,000 1,226,000 1,933,000 2,959,000 856,000 2,103,000
Orland Associates Orland,
California 432,000 432,000 1,714,000 2,250,000 425,000 1,825,000
Pine Gate Limited Ahoskie,
Partnership California 272,000 272,000 1,452,000 1,803,000 243,000 1,560,000
35
WNC California Housing Tax Credits II, L.P.
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
- -----------------------------------------------------------------------------------------------------------------------------------
Silver Birch Associates Huron,
California 378,000 378,000 1,343,000 1,714,000 431,000 1,283,000
Twin Pines Apartments Groveland,
Associates California 1,278,000 1,278,000 1,788,000 3,316,000 938,000 2,378,000
Ukiah Terrace Ukiah,
California 349,000 349,000 1,775,000 2,301,000 673,000 1,628,000
Woodlake Garden Woodlake,
Apartments California 548,000 548,000 1,936,000 2,458,000 481,000 1,977,000
Yucca-Warren Vista Joshua Tree,
Associates California 520,000 520,000 2,162,000 2,514,000 469,000 2,045,000
------- ------- --------- --------- ------- ---------
$12,914,000 $12,914,000 $28,410,000 $41,592,000 $9,065,000 $32,527,000
=========== =========== =========== =========== ========== ==========
36
WNC California Housing Tax Credits II, L.P.
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)
- ------------------------------------------------------------------------------------------------------------------------------------
601 Main Street Investors $ 360,000 $ (351,000) 1991 Completed 39
ADI Development Partners 121,000 (56,000) 1991 Completed 40
Bayless Garden
Apartments Investors 163,000 (124,000) 1992 Completed 27.5
Blackberry Oaks, Ltd. 214,000 (19,000) 1992 Completed 40
Jacob's Square 186,000 (109,000) 1993 Completed 27.5
Mecca Apartments II 261,000 (158,000) 1993 Completed 40
Nevada Meadows 195,000 (37,000) 1993 Completed 40
Northwest
Tulare Associates 171,000 (123,000) 1991 Completed 27.5
Orland Associates 202,000 (11,000) 1991 Completed 40
Pine Gate
Limited Partnership 226,000 8,000 1994 Completed 50
Silver Birch Associates 134,000 (29,000) 1992 Completed 27.5
Twin Pines
Apartments Associates 99,000 (236,000) 1991 Completed 27.5
Ukiah Terrace 184,000 (56,000) 1991 Completed 27.5
Woodlake
Garden Apartments 182,000 (59,000) 1991 Completed 40
Yucca-Warren
Vista Associates, Ltd. 223,000 (25,000) 1991 Completed 50
-------- --------
$2,921,000 $(1,385,000)
========== ============
37
WNC California Housing Tax Credits II, L.P.
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
- -------------------------------------------------------------------------------------------------------
601 Main Street Investors Stockton,
California $1,656,000 $1,656,000 $4,011,000 $5,553,000 $1,294,000 $4,259,000
ADI Development Partners Delhi,
California 699,000 699,000 1,226,000 1,898,000 348,000 1,550,000
Bayless Garden Red Bluff,
Apartments Investors California 1,110,000 1,110,000 1,291,000 2,560,000 655,000 1,905,000
Blackberry Oaks, Ltd Lodi,
California 463,000 463,000 1,934,000 2,419,000 344,000 2,075,000
Jacob's Square Exeter,
California 1,324,000 1,324,000 1,717,000 2,860,000 497,000 2,363,000
Mecca Apartments II Mecca,
California 2,200,000 2,200,000 2,519,000 4,361,000 436,000 3,925,000
Nevada Meadows Grass Valley,
California 459,000 459,000 1,940,000 2,593,000 292,000 2,301,000
Northwest Tulare Associates Ivanhoe,
California 1,226,000 1,226,000 1,787,000 2,952,000 754,000 2,198,000
Orland Associates Orland,
California 432,000 432,000 1,718,000 2,246,000 371,000 1,875,000
Pine Gate Limited Partnership Ahoskie,
California 272,000 272,000 1,458,000 1,801,000 204,000 1,597,000
38
WNC California Housing Tax Credits II, L.P.
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
- ------------------------------------------------------------------------------------------------------------------------------------
Silver Birch Associates Huron,
California 378,000 378,000 1,347,000 1,714,000 368,000 1,346,000
Twin Pines Apartments Groveland,
Associates California 1,278,000 1,278,000 1,789,000 3,285,000 812,000 2,473,000
Ukiah Terrace Ukiah,
California 349,000 349,000 1,779,000 2,280,000 596,000 1,684,000
Woodlake Garden Woodlake,
Apartments California 548,000 548,000 1,943,000 2,423,000 412,000 2,011,000
Yucca-Warren Vista Joshua Tree,
Associates California 520,000 520,000 2,167,000 2,513,000 410,000 2,103,000
------- ------- --------- --------- ------- ---------
$12,914,000 $12,914,000 $28,626,000 $41,458,000$ 7,793,000 $33,665,000
=========== =========== =========== ========== ========== ==========
39
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
----------------------------------------------------------------------------------------
For the year ended December 31,1998
-------------------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Loss Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
601 Main Street Investors $366,000 $(353,000) 1991 Completed 39
ADI Development Partners 119,000 (44,000) 1991 Completed 40
Bayless Garden
Apartments Investors 168,000 (99,000) 1992 Completed 27.5
Blackberry Oaks, Ltd. 206,000 (17,000) 1992 Completed 40
Jacob's Square 183,000 (109,000) 1993 Completed 27.5
Mecca Apartments II 252,000 (164,000) 1993 Completed 40
Nevada Meadows 192,000 (20,000) 1993 Completed 40
Northwest
Tulare Associates 183,000 (117,000) 1991 Completed 27.5
Orland Associates 187,000 (21,000) 1991 Completed 40
Pine Gate
Limited Partnership 225,000 (6,000) 1994 Completed 50
Silver Birch Associates 129,000 (36,000) 1992 Completed 27.5
Twin Pines
Apartments Associates 95,000 (263,000) 1991 Completed 27.5
Ukiah Terrace 179,000 (54,000) 1991 Completed 27.5
Woodlake Garden Apartments 181,000 (52,000) 1991 Completed 40
Yucca-Warren
Vista Associates, Ltd. 214,000 (39,000) 1991 Completed 50
------- --------
$ 2,879,000 $ (1,394,000)
=========== ============
40
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
---------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
601 Main Street Investors Stockton,
California $1,656,000 $1,656,000 $4,011,000 $5,553,000 $1,294,000 $4,259,000
ADI Development Partners Delhi,
California 699,000 699,000 1,226,000 1,898,000 348,000 1,550,000
Bayless Garden Red Bluff,
Apartments Investors California 1,110,000 1,110,000 1,291,000 2,560,000 655,000 1,905,000
Blackberry Oaks, Ltd Lodi,
California 463,000 463,000 1,934,000 2,419,000 344,000 2,075,000
Jacob's Square Exeter,
California 1,324,000 1,324,000 1,717,000 2,860,000 497,000 2,363,000
Mecca Apartments II Mecca,
California 2,200,000 2,200,000 2,519,000 4,361,000 436,000 3,925,000
Nevada Meadows Grass Valley,
California 459,000 459,000 1,940,000 2,593,000 292,000 2,301,000
Northwest Tulare Associates Ivanhoe,
California 1,226,000 1,226,000 1,787,000 2,952,000 754,000 2,198,000
Orland Associates Orland,
California 432,000 432,000 1,718,000 2,246,000 371,000 1,875,000
Pine Gate Limited Ahoskie,
Partnership California 272,000 272,000 1,458,000 1,801,000 204,000 1,597,000
41
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
----------------------------------------------------------------------------
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
- -----------------------------------------------------------------------------------------------------------------------------------
Silver Birch Associates Huron,
California 378,000 378,000 1,347,000 1,714,000 368,000 1,346,000
Twin Pines Apartments Groveland,
Associates California 1,278,000 1,278,000 1,789,000 3,285,000 812,000 2,473,000
Ukiah Terrace Ukiah,
California 349,000 349,000 1,779,000 2,280,000 596,000 1,684,000
Woodlake Garden Woodlake,
Apartments California 548,000 548,000 1,943,000 2,423,000 412,000 2,011,000
Yucca-Warren Joshua Tree,
Vista Associates California 520,000 520,000 2,167,000 2,513,000 410,000 2,103,000
------- ------- --------- --------- ------- ---------
$12,914,000 $12,914,000 $28,626,000 $41,458,000 $7,793,000 $33,665,000
=========== =========== =========== =========== ========== ===========
42
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
-------------------------------------------------------------------------------------------------
For the year ended December 31,1998
-------------------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Loss Acquired Status Life (Years)
- -----------------------------------------------------------------------------------------------------------------------------------
601 Main Street Investors $366,000 $(353,000) 1991 Completed 39
ADI Development Partners 119,000 (44,000) 1991 Completed 40
Bayless Garden
Apartments Investors 168,000 (99,000) 1992 Completed 27.5
Blackberry Oaks, Ltd. 206,000 (17,000) 1992 Completed 40
Jacob's Square 183,000 (109,000) 1993 Completed 27.5
Mecca Apartments II 252,000 (164,000) 1993 Completed 40
Nevada Meadows 192,000 (20,000) 1993 Completed 40
Northwest
Tulare Associates 183,000 (117,000) 1991 Completed 27.5
Orland Associates 187,000 (21,000) 1991 Completed 40
Pine Gate
Limited Partnership 225,000 (6,000) 1994 Completed 50
Silver Birch Associates 129,000 (36,000) 1992 Completed 27.5
Twin Pines
Apartments Associates 95,000 (263,000) 1991 Completed 27.5
Ukiah Terrace 179,000 (54,000) 1991 Completed 27.5
Woodlake Garden Apartments 181,000 (52,000) 1991 Completed 40
Yucca-Warren Vista
Associates, Ltd. 214,000 (39,000) 1991 Completed 50
------- --------
$ 2,879,000 $ (1,394,000)
=========== =============
43
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
By: WNC Tax Credit Partners, L.P., General Partner
By: WNC & Associates, Inc., General Partner
By: /s/ Wilfred N. Cooper, Jr.
Wilfred N. Cooper, Jr., President-Chief
Operating Officer of WNC & Associates, Inc.
Date: June 21, 2001
By: /s/ Thomas J. Riha
Thomas J. Riha, Vice-President - Chief Financial
Officer of WNC & Associates, Inc.
Date: June 21, 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.
Date: June 21, 2001
By: /s/ John B. Lester, Jr.
John B. Lester, Jr., Director of WNC & Associates, Inc.
Date June 21, 2001
By: /s/ David N. Shafer
David N Shafer, Director of WNC & Associates, Inc.
Date: June 21, 2001
44
Exhibit
Number Exhibit Description
EX-21.1Financial Statements of Mecca Apartments II, for the years ended
December 31, 2000 and 1999 together with Independent Auditors Report
thereon; a significant subsidiary of the Partnership.
45
Mecca Apartments II
Table of Contents
Page
Independent Auditors' Report 48
Financial Statements
Balance Sheet 49
Statement of Income 50
Statement of Cash Flows 52
Notes to Financial Statements 53
46
Mecca Apartments II
(A California Limited Partnership)
Financial Statements
For The Years Ended December 31, 2000 and 1999
47
January 22, 2001
To the Partners of
Mecca Apartments II
Independent Auditor's Report
We have audited the accompanying balance sheets of Mecca Apartments II,
as of December 31, 2000, and 1999, and the related statements of income and
changes in partners' capital and cash flows for the years then ended. These
financial statements are the responsibility of the project's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards, 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 audit provides 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 Mecca Apartments II,
as of December 31, 2000, and 1999, and the results of its operations and its
cash flows for the years then ended in conformity with generally accepted
accounting principles.
Our audit was conducted for the purposes of forming an opinion on the
basic financial statements taken as a whole. The supporting information included
in the report are presented for the purposes of additional analysis and are 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 financial statements taken as a whole.
ROBERT G. CLAPHAM
ACCOUNTANCY CORPORATION
By
President
48
Mecca Apartments II
-------------------
BALANCE SHEETS
--------------
At December 31, 2000, and 1999
------------------------------
Assets 2000 1999
------ ---- ----
Cash - on hand $ 100 100
- revenue accounts 135,914 136,014 159,497 159,597
------- -------
Accounts receivable
- tenants 6,272 520
Prepaid expenses and deposits 4,007 3,160
Deposits for taxes and insurance 9,247 10,059
Tenants' security deposits 24,446 22,453
------ -------
Total current assets 179,986 195,789
Replacement reserve 80,761 65,119
Operating reserve 87,691 77,522
Land 259,698 259,698
Buildings and improvements 3,961,851 3,961,851
Furniture and equipment 139,749 139,749
------- -------
4,361,298 4,361,298
Less accumulated depreciation 669,164 3,692,134 552,809 3,808,489
------- -------
Deferred organization and financing
costs, less accumulated amortization 177,179 191,284
------- -------
$4,217,751 4,338,203
========== =========
The accompanying notes are an integral part
of the financial statements
49
Mecca Apartments II
-------------------
BALANCE SHEETS
--------------
At December 31, 2000, and 1999
------------------------------
Liabilities 2000 1999
----------- ----
Accounts payable, trade $ 7,207 14,138
Accrued interest 5,328 5,379
Tenant's security deposits 23,438 22,680
Prepaid rent 1,396 22,261
Portion of notes payable
due within one year 7,341 6,694
----- -----
Total current liabilities 44,710 51,152
Deferred laundry income 1,500
Notes payable, secured by real property 2,505,729 2,512,423
Less current portion due within one year 7,341 2,498,388 6,694 2,505,729
----- ------
Deferred interest 379,750 307,813
Pertners'capital 1,294,903 1,472,009
--------- ---------
4,417,751 4,338,203
========= =========
50
Mecca Apartments II
STATEMENT OF INCOME
For the Years ended December 31, 2000, and 1999
2000 1999
Tenants' rent, gross potential $263,784 263,784
Less vacancy loss 610 263,174 2,677 261,107
-- ------- ----- -------
Laundry concession 10,601 10,206
Interest income 10,948 8,924
Other income 3,167 24,716 4,244 23,374
----- ------ ------ ------
287,890 284,481
Salaries 22,171 -------- 21,540
Office expenses 3,413 3,475
Management fee 14,080 454
Telephone 1,715 494
Legal - 325
Auditing 5,800 5,800
Bad debts 78 650
Other 5,480 52,737 2,995 35,733
Utilities ----- -----
Electricity 6,119 5,908
Water and sewer 11,044 11,454
Gas 1,989 19,152 1,853 19,215
Operating and Maintenance ----- -----
Exterminating 1,434 1,091
Rubbish 9,736 10,108
Grounds 12,454 13,387
Materials and supplies 10,299 3,097
Repairs contract and payroll 18,174 38,785
Painting and decorating 7,591 59,688 3,693 70,161
Depreciation ----- 116,355 ----- 116,675
The accompanying notes are an integral part
of the financial statements
51
2000 1999
Taxes and Insurance
Real property taxes 14,263 13,731
Other taxes 3,944 4,070
Insurance 13,119 31,326 11,320 29,121
------ ------
Interest 136,157 136,751
Amortization 14,105 34,332
------- ------
429,520 441,988
Net operating los for the year -------
(141,630) (157,507)
Partners' fees 35,000 -
Net (loss) for the year ------ --------
$(176,630) (157,507)
========== ========
52
Mecca Apartments II
STATEMENT OF CASH FLOWS
For the Years ended December 31, 2000, and 1999
1999 2000
Cash Flows provided by (Used for)
Operating Activities
Cash collected from tenants
and concessionaires $264,401 272,891
Cash paid to suppliers and employees (200,499) (141,762)
Interest paid - mortgage (64,271) (64,861)
Interest collected 10,948 8,924
Withdrawals from (deposits to)
restricted cash, net (1,181) 8,241
Net cash flows provided by (used
for) operating activities 9,398 83,433
Cash Flows Provided by (Used for)
Financing Activities
Payments on loans (6,694) (6,106)
Distributions (476) -
Net cash flows provided by (used --------- ---------
for) financing activities (7,170) (6,106)
Cash Flows Provided by (Used for)
Investing Activities
Deposits to restricted cash (25,811) (24,937)
Net cash flows provided by (used
for) investing activities (25,811) (24,937)
-------- ---------
Increase (decrease) in cash - (23,583) 52,390
Unrestricted cash, beginning of year 159,597 107,207
------- ----------
Unrestricted cash, end of year $ 136,014 159,597
========== =========
The accompanying notes are an integral part
of the financial statements
53
2000 1999
------ ------
Reconcilation of Net Income eith Cash
Provided by(Used for) Operating Activities
Net incom(loss) for the year $(176,630) (157,507)
Add deprciation and amortization 130,460 151,007
Deferred interest 71,937 71,937
Deferred income (1,500) 24,267 (1,920) 63,517
-------- ------- ------
(Increase) decrease in assets:
Accounts receivable (5,752) 203
Prepaid expenses and deposits (847) 218
Restricted cash (1,181) 8,241
Increase (decrease)in liabilities:
Accounts payable and
accrued liabilities (6,982) 8,469
Other libilities 107 (14,869) 2,785 19,916
------- -------- ----- -------
Cash flows provided by(used for) operating activisies $ 9,398 83,433
======= =======
54
Mecca Apartments II
NOTES TO FINANCIAL STATEMENTS
December 31, 2000
Note 1. Organization
The partnership was organized to develop and operate low-income housing
in the City of Mecca, California. The property included in the financial
statements consists of sixty units of rental housing placed in service in 1995.
The partnership has entered into an agreement with the State of California Tax
Credit Allowance Committee; under the terms of which the partnership will be
allocated federal low-income housing credits which will be passed through to the
partners for the ten year period following initial occupancy of the housing. The
credits are to be 8.72% of the eligible basis up to a maximum credit of $387,873
per year. Agreements with the Tax Credit Allocation Committee and the lender
place substantial restrictions on the use and operation of the housing,
including restrictions on rents, expenditures and withdrawals and requirements
that various restricted cash deposits be maintained.
Note 2. Accounting Principles
The partnership uses the accrual basis, in that income is recorded as
earned and expenses as they are incurred.
Income from rents is recorded at the gross potential amount, with
losses due to vacancy of bad debts shown as reductions of income and free or
reduced-rate occupancy by on-site employees is shown as an expense. Losses from
bad debts are recorded at the time a tenant vacates a unit owing more than the
amount of the security deposit.
Expenses incurred that expire over a period of time are pro-rated over
the time period.
Property and equipment is recorded at cost; depreciation is provided
using the straight-line method over estimated lives of 40 years for the building
and 5 to 7 years for furnishings. Repairs and routine replacement of assets will
be recorded as a current expense. Major renovations or replacements of a
significant part of a group of assets are recorded as additions to property and
disposal of the assets being replaced.
55
Estimates are used to determine amounts in financial statements. Actual
results may vary from those estimates. Expenses being incurred during
the construction period related to financing have been deferred. These
costs will be
amortized over a thirty-year period on the straight-line.
Note 3. Accounts Receivable
The details of accounts receivable are presented in the supplementary
data following the financial statements.
Note 4. Prepaid Expenses and Deposits
At December 31, 2000, prepaid expenses consisted of the following:
Insurance $4,006
Note 5. Replacement Reserve Deposits
The partnership is required to make deposits of $1,193 per month to a
savings account at Southern California Bank to accumulate funds for the
replacement of assets, and $554 to another account as an operating reserve. A
schedule of the activity in these reserve accounts is included in the
supplementary data.
Note 6. Notes Payable
The notes payable consist of a loan with an original balance of
$715,000 payable in monthly installments of $5,914, including interest at 9.25%
per annum, due January 1, 2026, a loan with a balance of $500,000 from the
County of Riverside Home Funds, payable together with accumulated simple
interest of 6.5% per annum, over a fifteen-year period beginning May, 2010, in
monthly payments of $8,469 including interest at 6.5% per annum, and a loan with
a balance of $1,314,577 from the Rental Housing construction program of the
State of California Department of Housing and Community Development, bearing
simple interest at 3% per annum, on which payments of interest and principal
will be deferred, unless the operation of the property generates surplus cash in
excess of allowable distributions. The amounts of principal due in each of the
five years after December 31, 2000, except for payments that might be required
from surplus cash, and the amount due after five years are as follows:
2001 $ 7,341
2002 8,050
2003 8,827
2004 9,679
2005 10,612
Total thereafter 2,461,220
56
Note 7. Property Taxes
The managing general partner is Indio Housing Development Corporation,
an organization exempt from income taxes under the provisions of Internal
Revenue Code Section 501(c)(3). As a provider of rental housing to qualifying
low income families, the partnership qualifies for a welfare exemption from a
portion of the property taxes assessed by the County of Riverside.
57