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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2002
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-23908
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
California 33-0563307
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes____ No __X
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
1
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.
INAPPLICABLE
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual reFport 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 III, L.P. ("CHTC III" or the "Partnership")
is a California limited partnership formed under the laws of the State of
California on October 5, 1992. The Partnership was formed to acquire limited
partnership interests in other limited partnerships or limited liability
companies ("Local Limited Partnerships") which own multifamily housing complexes
that are eligible for low-income housing federal and, in certain cases,
California income tax credits ("Low Income Housing Credits").
The general partner of the Partnership is WNC Tax Credit Partners III, L.P. (the
"General Partner" or "TCP III"). The general partner of TCP III is WNC &
Associates, Inc. ("Associates"). Wilfred N. Cooper, Sr., through the Cooper
Revocable Trust, owns 93.65% of the outstanding stock of Associates. Wilfred N.
Cooper, Jr., President of Associates, owns 3.01% of the outstanding stock of
Associates. The business of the Partnership is conducted primarily through
Associates, as TCP III and the Partnership have no employees of their own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission, on February 17, 1993, the Partnership commenced a public offering of
30,000 Units of Limited Partnership Interest ("Units") at a price of $1,000 per
Unit. As of the close of the offering on July 22, 1994, a total of 18,000 Units
representing $18,000,000 had been sold. Holders of Units are referred to herein
as "Limited Partners."
Description of Business
The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner or non-managing member in
Local Limited Partnerships each of which will own and operate a multi-family
housing complex (the "Housing Complex") which will qualify for the Low Income
Housing Credit. In general, under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
to reduce Federal taxes otherwise due in each year of a ten-year period. In
general, under Section 17058 of the California Revenue and Taxation Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against California taxes otherwise due in each year of a four-year period. The
Housing Complex is subject to a fifteen-year compliance period (the "Compliance
Period"), and under state law may have to be maintained as low income housing
for 30 or more years.
In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited Partnership of its Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership's Agreement of Limited
Partnership, as amended by Supplement No. 1 thru Supplement No. 9 thereto (the
"Partnership Agreement"), will be able to be accomplished promptly at the end of
the 15-year period. If a Local Limited Partnership is unable to sell its Housing
Complex, it is anticipated that the local general partner ("Local General
Partner") will either continue to operate such Housing Complex or take such
other actions as the Local General Partner believes to be in the best interest
of the Local Limited Partnership. Notwithstanding the preceding, circumstances
beyond the control of the General Partner or the Local General Partners may
occur during the Compliance Period, which would require the Partnership to
approve the disposition of a Housing Complex prior to the end thereof, possibly
resulting in recapture of Low Income Housing Credits.
3
As of March 31, 2002, the Partnership had invested in eighteen Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is eligible for the federal Low Income Housing Credit and eight of them
were eligible for the California Low Income Housing Credit. Certain Local
Limited Partnerships may also benefit from government programs promoting low- or
moderate-income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness. If a Local Limited Partnership does not 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 eighteen Housing Complexes as of the dates and for
the periods indicated:
4
------------------------- ------------------------
As of March 31, 2002 As of December 31, 2001
------------------------- ------------------------
Partnership's
Total Estimated Encumbrances
Investment Amount of Low Income of Local
Partnership Name Location General Partner Name Partnership's Paid to Date Of Units Occupancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Almond Garden Delhi, Anthony Donovan
Apartment Associates California $ 391,000 $ 391,000 34 88% $ 807,000 $ 1,381,000
Almond View Stockton Daniel C. Logue and
Apartments,Ltd. California Cyrus Youssefi 1,639,000 1,639,000 72 100% 3,523,000 1,754,000
Buccaneer Fernandia Clifford E.
Associates,Limited Beach,Florida Olsen 365,000 365,000 48 94% 768,000 1,468,000
Candleridge
Apartments of Perry Eric A.
Perry L.P. II Iowa Sheldahl 126,000 126,000 24 100% 245,000 695,000
S.P. Thomas
Company of
Colonial Northern California
Village Roseville Inc. and Project Go,
Roseville Calfornia Inc. 2,811,000 2,811,000 56 100% 5,872,000 2,044,000
Thomas H. Cooksey
and Apartment
Dallas County Orrville, Developers,
Housing, Ltd. Alabama Inc. 130,000 130,000 19 100% 287,000 612,000
La Paloma del Sol Deming, New Dean
Limited Partnership Mexico Greenwalt 254,000 254,000 38 95% 625,000 1,424,000
Memory Lane Limited Yankton Skogen - Peterson,
Partnership South Dakota Inc. 151,000 151,000 18 95% 295,000 680,000
Self-Help Enterprises,
Nueva Sierra Vista Richgrove Inc. and Nueva Sierra
Associates California Vista Corporation 1,688,000 1,688,000 35 92% 3,516,000 1,629,000
5
------------------------- ------------------------
As of March 31, 2002 As of December 31, 2001
------------------------- ------------------------
Partnership's
Total Estimated Encumbrances
Investment Amount of Low Income of Local
Local Limited Investment Number Housing Limited
Partnership Name Location General Partner Name Partnership's Paid to Date Of Units Occupancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Old Fort Limited Hidalgo Alan Deke Noftsker and
Partnership Texas ABO Corporation 249,000 249,000 40 93% 547,000 1,270,000
Orosi Apartments Orosi Douglas W.
Ltd. California Young 461,000 461,000 42 98% 902,000 1,929,000
David J. Micheal and
Parlier Parlier Proffesional Apartment
Garden Apts. California Management, Inc. 453,000 453,000 41 100% 917,000 1,699,000
Rosewood Apartments Superior Duffy Development
Limited Partnership Wisconsin Company, Inc. 185,000 185,000 20 95% 375,000 482,000
Sun Manor Itta Bena Glenn D.
L.P. Mississippi Miller 230,000 230,000 36 97% 464,000 1,051,000
David J. Michael, Bucky
South Lake Fong, Dean Pearson, Coy
Tahoe Pines Tahoe Elvis and Dr. Patricia
Apartments California Hatton 1,633,000 1,633,000 28 93% 3,171,000 1,668,000
Venus Retirement Venus W. Joseph
Village,Ltd. Texas Chamy 161,000 161,000 24 100% 318,000 721,000
Walnut Orange Walnut
Pixley, L.P. California Pixley, Inc. 1,078,000 1,078,000 22 100% 2,309,000 1,693,000
Winters Investment Winters, John P.
Group California Casper 531,000 531,000 38 100% 1,072,000 1,824,000
-------- -------- ---- ---- ---------- ---------
$12,536,000 $ 12,536,000 635 97% $ 26,013,000 $24,024,000
============ ============= === === ============= ===========
6
--------------------------------------------------------------------------
For the year ended December 31, 2001
--------------------------------------------------------------------------
Low Income
Housing Credits
Allocated to
Partnership Name Rental Income Net Loss Partnership
-------------------------------------------------------------------------------------------------------------------
Almond Garden Apartment Associates $ 162,000 $ (50,000) 99%
Almond View Apartments, Ltd. 209,000 (230,000) 99%
Buccaneer Associates, Limited 222,000 (46,000) 99%
Candleridge Apartments of Perry L.P. II 151,000 (11,000) 99%
Colonial Village Roseville 450,000 (49,000) 99%
Dallas County Housing, Ltd. 68,000 (17,000) 99%
La Paloma del Sol Limited Partnership 129,000 (38,000) 99%
Memory Lane Limited Partnership 72,000 (20,000) 99%
Nueva Sierra Vista Associates 142,000 (101,000) 99%
Old Fort Limited Partnership 151,000 (40,000) 99%
Orosi Apartments, Ltd. 193,000 (16,000) 99%
Parlier Garden Apts. 202,000 (21,000) 95%
Rosewood Apartments Limited Partnership 80,000 (4,000) 99%
Sun Manor, L.P. 143,000 (26,000) 99%
Tahoe Pines Apartments 182,000 (118,000) 99%
Venus Retirement Village, Ltd. 87,000 (18,000) 99%
Walnut - Pixley, L.P. 150,000 (42,000) 99%
Winters Investment Group 197,000 (29,000) 99%
--------- ------- --------
$ 2,990,000 $ (876,000)
=========== ===========
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, 2002, there were 973 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, 2002.
Item 5b.
NOT APPLICABLE
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
March 31 December 31
-------------------------------------------------- -----------------------
2002 2001 2000 1999 1998 1997
----------- ----------- ---------- ---------- ---------- -----------
ASSETS
Cash and cash equivalents $ 413,336 $ 437,863 $ 480,598 $ 509,695 $ 561,751 $ 1,451,071
Investments in limited
partnerships, net 6,455,167 7,329,890 8,224,971 9,164,197 9,415,032 10,400,720
Other assets - - - - - 2,242
----------- ----------- ---------- ---------- ---------- ------------
$ 6,868,503 $ 7,767,753 $ 8,705,569 $ 9,673,892 $ 9,976,783 11,854,033
=========== =========== ========== ========== ========== ===========
LIABILITIES
Due to limited partnerships $ - $ - $ - $ 16,836 $ 16,836 $ 16,836
Due to general partner and
affiliates 994,710 849,164 718,279 552,257 561,391 370,223
Due to limited partners - - - - - 900,000
----------- ----------- ---------- ---------- ---------- -----------
994,710 849,164 718,279 569,093 578,227 1,287,059
----------- ----------- ---------- ---------- ---------- -----------
PARTNERS' EQUITY 5,873,793 6,918,589 7,987,290 9,104,799 9,398,556 10,566,974
----------- ----------- ---------- ---------- ---------- -----------
$ 6,868,503 $ 7,767,753 $ 8,705,569 $ 9,673,892 $ 9,976,783 $ 11,854,033
=========== =========== ========== ========== ========== ===========
8
Selected results of operations, cash flows and other information for the
Partnership are as follows:
For the
For the Years Ended Three Months Ended For the Years Ended
March 31 March 31 December 31
--------------------------------------- ------------------------ -------------------------
2002 2001 2000 1999 1998 1998 1997
----------- ----------- --------- ---------- ---------- ----------- -----------
Unaudited
Loss from operations $ (245,989) $ (246,997) $ (244,656) $ (64,061) $ (54,043) $ (249,631) $ (205,576)
Equity in losses of
limited partnerships (798,807) (821,704) (872,853) (229,696) (244,537) (918,787) (1,028,617)
----------- ----------- --------- ---------- ---------- ----------- -----------
Net loss $ (1,044,796) $(1,068,701) $ (1,117,50) $ (293,757) $ (298,580) $ (1,168,418) $ (1,234,193)
=========== =========== ========= ========== ========== =========== ===========
Net loss allocated to:
General partner $ (10,448) $ (10,687) $ (11,175) $ (2,938) $ (2,986) $ (11,684) $ (12,342)
=========== =========== ========= ========== ========== =========== ===========
Limited partners $ (1,034,348) $(1,058,014) $ (1,106,33) $ (290,819) $ (295,594) $ (1,156,734) $ (1,221,851)
=========== =========== ========= ========== ========== =========== ===========
Net loss per limited
partner unit $ (57.46) $ (58.78) $ (61.46) $ (16.16) $ (16.42) $ (64.26) $ (67.88)
=========== =========== ========= ========== ========== ========== ===========
Outstanding weighted 18,000 18,000 18,000 18,000 18,000 18,000 18,000
limited partner units =========== =========== ========= ========== ========== =========== ===========
For the
For the Years Three Months Ended For the Years Ended
March 31 March 31 December 31
-------------------------------------- ------------------------ -------------------------
2002 2001 2000 1999 1998 1998 1997
----------- ----------- --------- ---------- ---------- ----------- -----------
Unaudited
Net cash provided by
(used in):
Operating activities $ (41,575) $ (55,648) $ (18,170) $ (58,079) $ 9,678 $ 4,243 $ (6,960)
Investing activities 17,048 12,913 (10,927) 6,023 3,200 6,437 (40,005)
Financing activities - - - - (900,000) (900,000) -
----------- ----------- --------- ---------- ---------- ----------- -----------
Net decrease in cash
and cash equivalents (24,527) (42,735) (29,097) (52,056) (887,122) (889,320) (46,965)
Cash and cash
equivalents,
beginning of period 437,863 480,598 509,695 561,751 1,451,071 1,451,071 1,498,036
----------- ----------- --------- ---------- ---------- ----------- -----------
Cash and cash
equivalents, end of
period $ 413,336 $ 437,863 $ 480,598 $ 509,695 $ 563,949 $ 561,751 $ 1,451,071
=========== =========== ========= ========== ========== =========== ===========
Low Income Housing Credit per Unit was as follows for the years ended December
31:
2001 2000 1999 1998 1997
------------- -------------- ------------- ------------- -------------
Federal $ 113 $ 113 $ 113 $ 113 $ 113
State - - - 17 66
------------- -------------- ------------- ------------- -------------
Total $ 113 $ 113 $ 113 $ 130 $ 179
============= ============== ============= ============= =============
9
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 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 Financial Statements and the Notes thereto included
elsewhere in this filing.
Financial Condition
The Partnership's assets at March 31, 2002 consisted of $413,000 in cash and
aggregate investments in the eighteen Local Limited Partnerships of $6,455,000.
Liabilities at March 31, 2002 primarily consisted of $995,000 of accrued annual
management fees due to the General Partner.
Results of Operations
Year Ended March 31, 2002 Compared to Year Ended March 31, 2001. The
Partnership's net loss for the year ended March 31, 2002 was $(1,045,000),
reflecting a decrease of $24,000 from the net loss of $(1,069,000) experienced
for the year ended March 31, 2001. The decrease in net loss is primarily due to
equity in losses of limited partnerships which declined by $23,000 to $(799,000)
for the year ended march 31, 2002 from $(822,000) for the year ended March 31,
2001. 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, 2002. Since the Partnership's liability
with respect to its investments is limited, losses in excess of investment are
not recognized.
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 $(1,069,000),
reflecting a decrease of $49,000 from the net loss of $(1,118,000) experienced
for the year ended March 31, 2000. The decrease in net loss is primarily due to
equity in losses from limited partnerships which declined by $51,000 to
$(822,000) for the year ended March 31, 2000 from $(873,000) for the year ended
March 31, 2000. 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.
Cash Flows
Year Ended March 31, 2002 Compared to Year Ended March 31, 2001. Net cash used
during the year ended March 31, 2002 was $(25,000), compared to net cash used
for the year ended March 31, 2001 of $(43,000). The change was due primarily to
a decrease in the amount of cash paid to the General Partner for management fees
compared with the amount paid in the prior year.
10
Year Ended March 31, 2001 Compared to Year Ended March 31, 2000. Net cash used
during the year ended March 31, 2001 was $(43,000), compared to net cash used
for the year ended March 31, 2000 of $(29,000). The change was due primarily to
an increase in the amount of cash paid to the General Partner for management
fees compared with the amount paid in the prior year.
During the years ended March 31, 2002, 2001 and 2000, accrued payables, which
consist primarily of related party management fees due to the General Partner,
increased by $146,000, $131,000 and $166,000, respectively. 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.
The Partnership expects its future cash flows, together with its net available
assets at March 31, 2002, to be sufficient to meet all currently foreseeable
future cash requirements.
Impact of New Accounting Pronouncement
In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
144"), which addresses accounting and financial reporting for the impairment or
disposal of long-lived assets. SFAS 144 is effective for fiscal years beginning
after December 15, 2001, and generally, is to be applied prospectively. We have
not yet completed our evaluation of the impact of SFAS 144 on our financial
position or results of operations.
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 III, L.P.
We have audited the accompanying balance sheets of WNC California Housing Tax
Credits III, L.P. (a California Limited Partnership) (the "Partnership") as of
March 31, 2002 and 2001, and the related statements of operations, partners'
equity (deficit) and cash flows for the years ended March 31, 2002, 2001 and
2000. 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 was 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 investments in limited partnerships audited by other auditors
represented 76% of the total assets of the Partnership at March 31, 2002 and
2001. 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 audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the reports of
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC California Housing Tax Credits III, L.P. (a
California Limited Partnership) as of March 31, 2002 and 2001, and the results
of its operations and its cash flows for the years ended March 31, 2002, 2001
and 2000, in conformity with accounting principles generally accepted in the
United States of America.
/s/ BDO SEIDMAN, LLP
Orange County, California
April 26, 2002
12
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
BALANCE SHEETS
March 31
------------------------------
2002 2001
------------- -------------
ASSETS
Cash and cash equivalents $ 413,336 $ 437,863
Investments in limited partnerships, net
(Notes 2 and 3) 6,455,167 7,329,890
------------- -------------
$ 6,868,503 $ 7,767,753
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Accrued fees and expenses due to General Partner
and affiliates (Note 3) $ 994,710 $ 849,164
------------- -------------
Commitments and contingencies
Partners' equity (deficit):
General partner (111,393) (100,945)
Limited partners (30,000 units authorized; 18,000 units
issued and outstanding) 5,985,186 7,019,534
------------- -------------
Total partners' equity 5,873,793 6,918,589
------------- -------------
$ 6,868,503 $ 7,767,753
============= =============
See accompanying notes to financial statements
13
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Years Ended
March 31
---------------------------------------------------
2002 2001 2000
-------------- ------------- --------------
Interest income $ 11,282 $ 19,599 $ 19,937
Other income 11,444 - -
-------------- ------------- --------------
Total income 22,726 19,599 19,937
-------------- ------------- --------------
Operating expenses:
Amortization (Note 2) 58,868 60,464 60,464
Asset management fees (Note 3) 181,385 181,571 181,385
Other 28,462 24,561 22,744
-------------- ------------- --------------
Total operating expenses 268,715 266,596 264,593
-------------- ------------- --------------
Loss from operations (245,989) (246,997) (244,656)
Equity in losses of limited
partnerships (Note 2) (798,807) (821,704) (872,853)
-------------- ------------- --------------
Net loss $ (1,044,796) $ (1,068,701) $ (1,117,509)
============== ============= ==============
Net loss allocated to:
General partner $ (10,448) $ (10,687) $ (11,175)
============== ============= ==============
Limited partners $ (1,034,348) $ (1,058,014) $ (1,106,334)
============== ============= ==============
Net loss per limited partner unit $ (57.46) $ (58.78) $ (61.46)
============== ============= ==============
Outstanding weighted limited partner units 18,000 18,000 18,000
============== ============= ==============
See accompanying notes to financial statements
14
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended March 31, 2002, 2001 and 2000
General Limited Total
Partner Partners
--------------- --------------- ---------------
Partners' (deficit) equity at March 31, 1999 $ (79,083) $ 9,183,882 $ 9,104,799
Net loss (11,175) (1,106,334) (1,117,509)
--------------- --------------- ---------------
Partners' (deficit) equity at March 31, 2000 (90,258) 8,077,548 7,987,290
Net loss (10,687) (1,058,014) (1,068,701)
--------------- --------------- ---------------
Partners' (deficit) equity at March 31, 2001 (100,945) 7,019,534 6,918,589
Net loss (10,448) (1,034,348) (1,044,796)
--------------- --------------- ---------------
Partners' (deficit) equity at March 31, 2002 $ (111,393) $ 5,985,186 $ 5,873,793
=============== =============== ===============
See accompanying notes to financial statements
15
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Years Ended
March 31
----------------------------------------------
2002 2001 2000
----------- ------------- --------------
Cash flows from operating activities:
Net loss $ (1,044,796) $ (1,068,701)$ (1,117,509)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization 58,868 60,464 60,464
Equity in losses of limited
partnerships 798,807 821,704 872,853
Change in accrued fees and
expenses due to General
Partner and affiliates 145,546 130,885 166,022
----------- ------------- --------------
Net cash used in
operating activities (41,575) (55,648) (18,170)
----------- ------------- --------------
Cash flows from investing activities:
Investments in limited partnerships, net - - (16,836)
Distributions from limited
partnerships 17,048 12,913 5,909
----------- ------------- --------------
Net cash provided by (used in)
investing activities 17,048 12,913 (10,927)
----------- ------------- --------------
Net decrease in cash and cash
equivalents (24,527) (42,735) (29,097)
Cash and cash equivalents,
beginning of year 437,863 480,598 509,695
----------- ------------- --------------
Cash and cash equivalents,
end of year $ 413,336 $ 437,863 $ 480,598
=========== ============= ==============
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION:
Taxes paid $ 800 $ 800 $ 800
=========== ============= ==============
See accompanying notes to financial statements
16
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2002, 2001 and 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------
WNC California Housing Tax Credits III, L.P. a California Limited Partnership
(the "Partnership"), was formed on October 5, 1992 under the laws of the state
of California and began operations on July 19, 1993. 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 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 III, L.P. (the "General
Partner"). WNC & Associates, Inc. ("WNC") is the general partner of WNC Tax
Credit Partners III, L.P. Wilfred N. Cooper Sr., through the Cooper Revocable
Trust owns 93.65% of the outstanding stock of WNC. Wilfred N. Cooper, Jr.,
President of WNC, owns 3.01% of the outstanding stock of WNC.
The Partnership shall continue in full force and effect until December 31, 2050
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 30,000 units at $1,000
per Unit ("Units"). The offering of Units concluded in July 1994 at which time
17,990 Units, representing subscriptions in the amount of $17,990,000, had been
accepted. During 1995, an additional 10 units amounting to $10,000 was collected
on subscriptions accepted and previously deemed uncollectible. The General
Partner has a 1% interest in operating profits and losses, taxable income and
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.
17
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS -CONTINUED
For The Years Ended March 31, 2002, 2001 and 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Risks and Uncertainties
- -----------------------
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local 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).
Equity in losses of Local Limited Partnerships for the years ended March 31,
2002, 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. Equity in losses
of Local Limited Partnerships allocated to the Partnership are not recognized to
the extent that the investment balance would be adjusted below zero. As soon as
the investment balance reaches zero amortization of the related costs of
acquiring the investment is accelerated to the extent of losses available (see
Note 2).
18
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS -CONTINUED
For The Years Ended March 31, 2002, 2001 and 2000
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. The General Partner is obligated to
pay all offering and organization costs in excess of 15% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of partners' capital and amounted to $2,366,564 at the end of all
periods presented.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 highly liquid investments with remaining maturities of
three months or less when purchased to be cash equivalents. The Partnership had
no cash equivalents at the end of all periods presented.
Concentration of Credit Risk
- ----------------------------
At March 31, 2002, the Partnership maintained a cash balance at a certain
financial institution in excess of the maximum federally insured amounts.
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
- ------------------------------
The Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income established standards for the reporting and display of
comprehensive income (loss) and its components in a full set of general-purpose
financial statements. The Partnership had no items of other comprehensive income
during the years presented, as defined by SFAS No. 130.
New Accounting Pronouncement
- ----------------------------
In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
144"), which addresses accounting and financial reporting for the impairment or
disposal of long-lived assets. SFAS 144 is effective for fiscal years beginning
after December 15, 2001, and generally, is to be applied prospectively. The
Partnership has not yet completed its evaluation of the impact of SFAS 144 on
its financial position or results of operations.
19
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS -CONTINUED
For The Years Ended March 31, 2002, 2001 and 2000
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of the periods presented, the Partnership had acquired limited partnership
interests in eighteen Local Limited Partnerships, each of which owns one Housing
Complex consisting of an aggregate of 635 apartment units. The respective
general partners of the Local Limited Partnerships manage the day-to-day
operations of the entities. Significant Local Limited Partnership business
decisions require approval from the Partnership. The Partnership, as a limited
partner, is generally entitled to 99%, as specified in the Local Limited
Partnership agreements, of the operating profits and losses, taxable income and
losses and tax credits of the Local Limited Partnerships.
The Partnership's investments in Local Limited Partnerships as shown in the
balance sheets at March 31, 2002 and 2001 are approximately $1,291,000 and
$1,308,000, respectively, greater than the Partnership's equity at the preceding
December 31 as shown in the Local Limited Partnerships' combined financial
statements presented below. This difference is primarily due to unrecorded
losses, as discussed below, acquisition, selection and other costs related to
the acquisition of the investments which have been capitalized in the
Partnership's investment account. The Partnership's investment is also lower
than the Partnership's equity as shown in the Local Limited Partnerships'
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 from the Local Limited Partnerships 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, 2002 and 2001, 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,
2002, 2001 and 2000 amounting to approximately $46,080, $23,838 and $51,893,
respectively, have not been recognized. As of March 31, 2002, the aggregate
share of net losses not recognized by the Partnership amounted to $173,670.
Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for periods presented:
For the Years
Ended March 31
----------------------------------------------------
2002 2001 2000
--------------- --------------- --------------
Investments per balance sheet, beginning of period $ 7,329,890 $ 8,224,971 $ 9,164,197
Distributions received from limited partnerships (17,048) (12,913) (5,909)
Equity in losses of limited partnerships (798,807) (821,704) (872,853)
Amortization of capitalized acquisition fees and costs (58,868) (60,464) (60,464)
--------------- --------------- --------------
Investments per balance sheet, end of period $ 6,455,167 $ 7,329,890 $ 8,224,971
=============== =============== ==============
20
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS -CONTINUED
For The Years Ended March 31, 2002, 2001 and 2000
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
2001 2000
--------------- ---------------
ASSETS
Buildings and improvements, net of accumulated depreciation as of
December 31, 2001 and 2000 of $8,764,000 and $7,676,000, respectively. $ 27,296,000 $ 28,334,000
Land 2,380,000 2,380,000
Other assets 2,371,000 2,214,000
--------------- ---------------
$ 32,047,000 $ 32,928,000
=============== ===============
LIABILITIES
Mortgage and construction loans payable $ 24,024,000 $ 24,163,000
Due to related parties 735,000 626,000
Other liabilities 1,222,000 1,164,000
--------------- ---------------
25,981,000 25,953,000
--------------- ---------------
PARTNERS' EQUITY
WNC California Housing Tax Credits III, L.P. 5,164,000 6,022,000
Other partners 902,000 953,000
--------------- ---------------
6,066,000 6,975,000
--------------- ---------------
$ 32,047,000 $ 32,928,000
=============== ===============
21
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS -CONTINUED
For The Years Ended March 31, 2002, 2001 and 2000
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2001 2000 1999
--------------- --------------- ---------------
Revenues $ 3,140,000 $ 3,040,000 $ 2,986,000
--------------- --------------- ---------------
Expenses:
Operating expenses 2,026,000 1,944,000 1,886,000
Interest expense 857,000 814,000 870,000
Depreciation and amortization 1,133,000 1,153,000 1,169,000
--------------- --------------- ---------------
Total expenses 4,016,000 3,911,000 3,925,000
--------------- --------------- ---------------
Net loss $ (876,000)$ (871,000) $ (939,000)
=============== =============== ===============
Net loss allocable to the Partnership $ (845,000)$ (862,000) $ (930,000)
=============== =============== ===============
Net loss recorded by the Partnership $ (799,000)$ (822,000) $ (873,000)
=============== =============== ===============
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partner may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired, and the loss and recapture of the related tax credits could occur.
NOTE 3 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Under the terms of the Partnership Agreement, the Partnership is obligated to
the General Partner or its affiliates for the following items:
Acquisition fees of up to 9% of the gross proceeds from the sale of Units
as compensation for services rendered in connection with the acquisition of
Local Limited Partnerships. At the end of all periods presented, the
Partnership incurred acquisition fees of $1,620,000. Accumulated
amortization of these capitalized costs was $538,090 and $412,391 as of
March 31, 2002 and 2001, respectively. Of the accumulated amortization
recorded on the balance sheet at March 31, 2001 $33,875 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. During the year
ended March 31, 2002, an additional $72,995 was recognized under the same
methodology.
Reimbursement of costs incurred by the General Partner or an affiliate in
connection with the acquisition of Local Limited Partnerships. These
reimbursements have not exceeded 1.5% of the gross proceeds. As of the end
of all periods presented, the Partnership incurred acquisition costs of
$194,019, which have been included in investments in limited partnerships.
Accumulated amortization was $52,887 and $42,738 as of March 31, 2002 and
2001, respectively. Of the accumulated amortization recorded on the balance
sheet at March 31, 2001, $8,994 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 cost component of investments in local limited
partnerships to zero for those Local Limited Partnerships which would
otherwise be below a zero balance. During the year ended March 31, 2002, an
additional $3,985 was recognized under the same methodology.
22
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS -CONTINUED
For The Years Ended March 31, 2002, 2001 and 2000
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
An annual management fee equal to 0.5% of the invested assets of the Local
Limited Partnerships, including the Partnership's allocable share of the
mortgages. Management fees of $181,385, $181,571 and $181,385 were incurred
during the years ended March 31, 2002, 2001 and 2000, respectively, of
which, $37,500, $50,000 and $12,500 were paid during the years ended March
31, 2002, 2001 and 2000, respectively.
A subordinated disposition fee in an amount equal to 1% of the sales price
of real estate sold. Payment of this fee is subordinated to the limited
partners receiving a preferred return of 16% through December 31, 2003 and
6% thereafter (as defined in the Partnership Agreement) and is payable only
if the General Partner or its affiliates render services in the sales
effort.
The accrued fees and expenses due to General Partner and affiliates consisted of
the following at:
March 31
--------------------------------
2002 2001
-------------- --------------
Reimbursement for expenses paid by the General
Partner or its affiliate $ 1,661 $ -
Accrued asset management fees 993,049 849,164
-------------- --------------
$ 994,710 $ 849,164
============== ==============
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 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ----------------------------------------------------
The following is a summary of the quarterly operations for the years ended March
31, 2002 and 2001:
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2002
----
Income $ 3,663 $ 3,276 $ 2,562 $ 13,225
Operating expenses 60,864 77,083 64,323 66,445
Equity in losses of limited
partnerships (187,401) (222,222) (186,828) (202,356)
Net loss (244,602) (296,029) (248,589) (255,576)
Loss available to limited partners (242,156) (293,069) (246,103) (253,020)
Loss per limited partner unit (13) (16) (14) (14)
23
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS -CONTINUED
For The Years Ended March 31, 2002, 2001 and 2000
NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), continued
- ---------------------------------------------------------------
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2001
----
Income $ 5,264 $ 5,220 $ 5,018 $ 4,097
Operating expenses 64,939 71,908 64,907 64,842
Equity in losses of limited
partnerships (218,159) (218,159) (218,159) (167,227)
Net loss (277,834) (284,847) (278,048) (227,972)
Loss available to limited partners (275,056) (281,999) (275,268) (225,691)
Loss per limited partner unit (15) ( 16) (15) (13)
NOTE 5 - INCOME TAXES
- ---------------------
No provision for income taxes has been recorded in the financial statements as
any liability for income taxes is the obligation of the partners of the
Partnership.
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
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. is a trust established by Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., age 71, is the founder, Chief Executive Officer,
Chairman, 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.
Wilfred N. Cooper, Jr., age 39, 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 50, 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 47, 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 56, 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.
Michael J. Gaber, age 36, is Vice President - Acquisitions and a member of the
Acquisitions Committee of WNC & Associates, Inc. Mr. Gaber has been involved in
real estate acquisition, valuation and investment activities since 1989 and has
been employed with WNC since 1997. Prior to joining WNC & Associates, Inc., he
was involved in the valuation and classification of major assets, restructuring
of debt and analysis of real estate taxes with the H.F. Ahmanson company, parent
to Home Savings of America. Mr. Gaber graduated from the California State
University, Fullerton in 1991 with a Bachelor of Science degree in Business
Administration - Finance.
David Turek, age 47, 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 65, 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., and the mother of Wilfred N. Cooper, Jr. Ms. Cooper graduated from
the University of Southern California in 1958 with a Bachelor of Science degree.
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or 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 $181,385,
$181,571 and $181,385 were incurred during each of the years ended March
31, 2002, 2001 and 2000, respectively. The Partnership paid the General
Partner or its affiliates, $37,500, $50,000 and $12,500 of those fees
during the years ended March 31, 2002, 2001 and 2000, 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 Return on
Investment to the Limited Partners. "Return on Investment" means an annual,
cumulative but not compounded, "return" to the Limited Partners (including
Low Income Housing Credits) as a class on their adjusted capital
contributions commencing for each Limited Partner on the last day of the
calendar quarter during which the Limited Partner's capital contribution is
received by the Partnership
26
calculated at the following rates: (i) 16%
through December 31, 2003, and (ii) 6% for the balance of the Partnerships
term. No disposition fees have been paid.
(c) Operating Expense. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $20,000, $23,000 and
$9,000, during the years ended March 31, 2002, 2001 and 2000, respectively.
(d) Interest in Partnership. The General Partner receives 1% of the
Partnership's allocated Low Income Housing Credits, which approximated
$20,000, $21,000 and $20,000 for the General Partner for the calendar years
ended December 31, 2001, 2000 and 1999, respectively. The General Partner
is also entitled to receive 1% of cash distributions. There were no
distributions of cash to the General Partner during the years ended March
31, 2002, 2001 and 2000.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
-----------------------------------------------
No person is known to the General Partner to own beneficially in excess of
5% of the outstanding Units.
(b) Security Ownership of Management
--------------------------------
Neither the General Partner, its affiliates, nor any of the officers or
directors of the General Partner or its affiliates own directly or
beneficially any Units in the Partnership.
(c) Changes in Control
------------------
The management and control of the General Partner may be changed at any
time in accordance with its organizational documents, without the consent
or approval of the Limited Partners. In addition, the Partnership Agreement
provides for the admission of one or more additional and successor General
Partners in certain circumstances.
First, with the consent of any other General Partners and a
majority-in-interest of the Limited Partners, any General Partner may
designate one or more persons to be successor or additional General
Partners. In addition, any General Partner may, without the consent of any
other General Partner or the Limited Partners, (i) substitute in its stead
as General Partner any entity which has, by merger, consolidation or
otherwise, acquired substantially all of its assets, stock or other
evidence of equity interest and continued its business, or (ii) cause to be
admitted to the Partnership an additional General Partner or Partners if it
deems such admission to be necessary or desirable so that the Partnership
will be classified a partnership for Federal income tax purposes. Finally,
a majority-in-interest of the Limited Partners may at any time remove the
General Partner of the Partnership and elect a successor General Partner.
Item 13. Certain Relationships and Related Transactions
The General 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.
27
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 as of March 31, 2002 and 2001
Statements of Operations for the years ended March 31, 2002, 2001 and
2000
Statements of Partners' Equity (Deficit) for the years ended March
31, 2002, 2001 and 2000
Statements of Cash Flows for the years ended
March 31, 2002, 2001 and 2000
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 October 5, 1992; included as
Exhibit B to the Prospectus, which was filed as Exhibit 28.1 to Form
10-K for the year ended December 31, 1994 is hereby incorporated herein
as Exhibit 3.1.
10.1 Amended and Restated Agreement of Limited Partnership of Colonial
Village Roseville (1) filed as exhibit 10.1 to Form 8-K/A Amendment No.
1 to Current Report dated December 27, 1993 is hereby incorporated
herein by reference as exhibit 10.1.
10.2 Amended and Restated Agreement of Limited Partnership of Almond Garden
Apartment Associates filed as exhibit 10.2 to Form 8-K/A Amendment No.
1 to Current Report dated December 27, 1993 is hereby incorporated
herein by reference as exhibit 10.2.
10.3 Amended and Restated Agreement of Limited Partnership of Winters
Investment Group filed as exhibit 10.3 to Form 8-K/A Amendment No. 1 to
Current Report dated December 27, 1993 is hereby incorporated herein by
reference as exhibit 10.3.
10.4 Third Amended and Restate Articles of Limited Partnership of Buccaneer
Associates, Limited filed as exhibit 10.2 to Post-Effective Amendment
No. 2 to Form S-11 dated September 17, 1993 is hereby incorporated
herein by reference as exhibit 10.4.
10.5 Amended and Restated Agreement and Certificate of Limited Partnership
of Dallas County Housing, Ltd. filed as exhibit 10.3 to Post-Effective
Amendment No. 2 to Form S-11 dated September 17, 1993 is hereby
incorporated herein by reference as exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of La Paloma Del
Sol Phase II Limited Partnership filed as exhibit 10.4 to
Post-Effective Amendment No. 2 to Form S-11 dated September 17, 1993 is
hereby incorporated herein by reference as exhibit 10.6.
10.7 Second Amended and Restated Agreement of Limited Partnership of Old
Fort Limited Partnership filed as exhibit 10.5 to Post-Effective
Amendment No. 2 to Form S-11 dated September 17, 1993 is hereby
incorporated herein by reference as exhibit 10.7.
28
10.8 Amended and Restated Agreement of Limited Partnership of Orosi
Apartments, Ltd. filed as exhibit 10.6 to Post-Effective Amendment No.
2 to Form S-11 dated September 17, 1993 is hereby incorporated herein
by reference as exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership of Sun Manor,
L.P. filed as exhibit 10.7 to Post-Effective Amendment No. 2 to Form
S-11 dated September 17, 1993 is hereby incorporated herein by
reference as exhibit 10.9.
10.10 Amended and Restated Agreement of Limited Partnership of Venus
Retirement Village, Ltd. filed as exhibit 10.8 to Post-Effective
Amendment No. 2 to Form S-11 dated September 17, 1993 is hereby
incorporated herein by reference as exhibit 10.10.
10.11 Second Amended and Restated Agreement of Limited Partnership of
Walnut-Pixley, L.P. filed as exhibit 10.9 to Post-Effective Amendment
No. 2 to Form S-11 dated September 17, 1993 is hereby incorporated
herein by reference as exhibit 10.11.
10.12 Amended and Restated Agreement of Limited Partnership of Almond View
Apartments, Ltd. filed as exhibit 10.11 to Form 10K dated December 31,
1993 is hereby incorporated herein by reference as exhibit 10.12.
10.13 Amended and Restated Agreement of Limited Partnership of Candleridge
Apartments of Perry, L.P. II filed as exhibit 10.1 to Form 8-K dated
May 26, 1994 is hereby incorporated herein by reference as exhibit
10.13.
10.14 Second Amended and Restated Agreement of Limited Partnership of Parlier
Garden Apts. filed as exhibit 10.2 to Form 8-K dated May 26, 1994 is
hereby incorporated herein by reference as exhibit 10.14.
10.15 Agreement of Limited Partnership of Rosewood Apartments Limited
Partnership filed as exhibit 10.3 to Form 8-K dated May 26, 1994 is
hereby incorporated herein by reference as exhibit 10.15.
10.16 Agreement of Limited Partnership of Limited Partnership of Nueva Sierra
Vista Associates filed as exhibit 10.4 to Form 8-K/A Amendment No. 1 to
Current Report dated May 26, 1994 is hereby incorporated herein by
reference as exhibit 10.16.
10.17 Amended and Restated Agreement of Limited Partnership of Memory Lane
Limited Partnership filed as exhibit 10.1 to Form 8-K dated July 7,
1994 is hereby incorporated herein by reference as exhibit 10.17.
10.18 Second Amended and Restated Agreement of Limited Partnership of Tahoe
Pines Apartments filed as exhibit 10.1 to Form 8-K dated July 27, 1994
is hereby incorporated herein by reference as exhibit 10.18.
21.1 Financial Statements of Colonial Village Roseville for the years ended
December 31, 2000 and 1999 together with independent auditors' report
thereon filed as exhibit 21.1 on Form 10-K dated March 31, 2001 is
hereby incorporated as exhibit 21.1; a significant subsidiary of the
Partnership.
21.2 Financial Statements of Colonial Village Roseville for the years ended
December 31, 2001 and 2000 together with independent auditors' report
thereon; a significant subsidiary of the Partnership.
21.3 Financial Statements of Almond View Apartments, Ltd. for the years
ended December 31, 2001 and 2000 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.
29
Report of Independent Certified Public Accountants on Financial Statement
Schedules
To the Partners
WNC California Housing Tax Credits III, L.P.
The audits referred to in our report dated April 26, 2002, relating to the 2002,
2001 and 2000 financial statements of WNC California Housing Tax Credits III,
L.P. (the "Partnership"), which are contained in Item 8 of this Form 10-K,
included the audits of the accompanying financial statement schedules. The
financial statement schedules are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statement schedules based upon our audits.
In our opinion, such financial statement schedules present fairly, in all
material respects, the financial information set forth therein.
BDO SEIDMAN, LLP
Orange County, California
April 26, 2002
30
WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2002
---------------------------------- ---------------------------------
As of March 31, 2002 As of December 31, 2001
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Almond Garden Delhi,
Apartment Associates California $ 391,000 $ 391,000 $ 1,381,000 $ 1,757,000 $ 510,000 $ 1,247,000
Almond View Stockton,
Apartments, Ltd. California 1,639,000 1,639,000 1,754,000 3,526,000 934,000 2,592,000
Buccaneer Associates, Fernandia
Limited Beach, Florida 365,000 365,000 1,468,000 2,218,000 460,000 1,758,000
Candleridge Apartments Perry
of Perry L.P. II Iowa 126,000 126,000 695,000 901,000 234,000 667,000
Colonial Village Roseville
Roseville California 2,811,000 2,811,000 2,044,000 5,299,000 1,366,000 3,933,000
Dallas County Orrville
Housing, Ltd. Alabama 130,000 130,000 612,000 789,000 182,000 607,000
La Paloma del Sol Deming, New
Limited Partnership Mexico 254,000 254,000 1,424,000 1,789,000 367,000 1,422,000
Memory Lane Yankton,
Limited Partnership South Dakota 151,000 151,000 680,000 874,000 375,000 499,000
Nueva Sierra Richgrove
Vista Associates California 1,688,000 1,688,000 1,629,000 3,252,000 531,000 2,721,000
Old Fort Highway Hidalgo
Limited Partnership Texas 249,000 249,000 1,270,000 1,699,000 357,000 1,342,000
31
WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2002
---------------------------------- ---------------------------------
As of March 31, 2002 As of December 31, 2001
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- -----------------------------------------------------------------------------------------------------------------------------------
Orosi Apartments Orosi
Ltd. California 461,000 461,000 1,929,000 2,450,000 363,000 2,087,000
Parlier Garden Parlier
Apts California 453,000 453,000 1,699,000 2,195,000 427,000 1,768,000
Rosewood Apartments Superior
Limited Partnership Wisconsin 185,000 185,000 482,000 767,000 157,000 610,000
Sun Manor Itta Bena
L.P. Mississippi 230,000 230,000 1,051,000 1,344,000 361,000 983,000
Tahoe South Lake
Pines Tahoe
Apartments California 1,633,000 1,633,000 1,668,000 3,292,000 895,000 2,397,000
Venus Retirement Venus
Village, Ltd. Texas 161,000 161,000 721,000 928,000 262,000 666,000
Walnut Orange
Pixley, L.P. California 1,078,000 1,078,000 1,693,000 2,768,000 577,000 2,191,000
Winters Investment Winters
Group California
531,000 531,000 1,824,000 2,592,000 406,000 2,186,000
-------------- ------------ ------------ ------------- ----------- ------------
$ 12,536,000 $ 12,536,000 $ 24,024,000 $ 38,440,000 $ 8,764,000 $ 29,676,000
============== ============ ============ ============= =========== ============
32
WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2002
------------------------------------------------------------------------
For the year ended December 31, 2001
------------------------------------------------------------------------
Year Estimated
Investment Useful Life
Partnership Name Rental Income Net Loss Acquired Status (Years)
- -----------------------------------------------------------------------------------------------------------
Almond Garden Apartment Associates $ 162,000 $ (50,000) 1994 Completed 27.5
Almond View Apartments, Ltd. 209,000 (230,000) 1994 Completed 27.5
Buccaneer Associates, Limited 222,000 (46,000) 1994 Completed 40
Candleridge Apartments of Perry
L.P. II 151,000 (11,000) 1994 Completed 27.5
Colonial Village Roseville 450,000 (49,000) 1993 Completed 27.5
Dallas County Housing, Ltd. 68,000 (17,000) 1993 Completed 40
La Paloma del Sol Limited
Partnership 129,000 (38,000) 1993 Completed 40
Memory Lane Limited Partnership
72,000 (20,000) 1994 Completed 25
Nueva Sierra Vista Associates 142,000 (101,000) 1994 Completed 40
Old Fort Limited Partnership 151,000 (40,000) 1993 Completed 40
Orosi Apartments, Ltd. 193,000 (16,000) 1993 Completed 50
Parlier Garden Apts. 202,000 (21,000) 1994 Completed 40
Rosewood Apartments Limited
Partnership 80,000 (4,000) 1994 Completed 40
Sun Manor, L.P. 143,000 (26,000) 1993 Completed 27.5
Tahoe Pines Apartments 182,000 (118,000) 1994 Completed 27.5
Venus Retirement Village, Ltd. 87,000 (18,000) 1993 Completed 25
Walnut - Pixley, L.P. 150,000 (42,000) 1993 Completed 40
Winters Investment Group 197,000 (29,000) 1994 Completed 50
----------- ----------
$ 2,990,000 $(876,000)
============ ==========
33
WNC California Housing Tax Credits III, 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 Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Almond Garden Delhi,
Apartment Associates California $ 391,000 $ 391,000 $ 1,386,000 $ 1,757,000 $ 448,000 $ 1,309,000
Almond View Stockton,
Apartments, Ltd. California 1,639,000 1,639,000 1,761,000 3,525,000 809,000 2,716,000
Buccaneer Associates, Fernandia
Limited Beach, Florida 365,000 365,000 1,473,000 2,218,000 406,000 1,812,000
Candleridge Apartments Perry
of Perry L.P. II Iowa 126,000 126,000 698,000 892,000 200,000 692,000
Colonial Village Roseville
Roseville California 2,811,000 2,811,000 2,073,000 5,300,000 1,174,000 4,126,000
Dallas County Orrville
Housing, Ltd. Alabama 130,000 130,000 613,000 760,000 161,000 599,000
La Paloma del Sol Deming, New
Limited Partnership Mexico 254,000 254,000 1,429,000 1,784,000 320,000 1,464,000
Memory Lane Yankton,
Limited Partnership South Dakota 151,000 151,000 682,000 875,000 341,000 534,000
Nueva Sierra Richgrove
Vista Associates California 1,688,000 1,688,000 1,631,000 3,288,000 471,000 2,817,000
Old Fort Highway Hidalgo
Limited Partnership Texas 249,000 249,000 1,275,000 1,671,000 312,000 1,359,000
34
WNC California Housing Tax Credits III, 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 Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Orosi Apartments Orosi
Ltd. California 461,000 461,000 1,943,000 2,443,000 315,000 2,128,000
Parlier Garden Parlier
Apts California 453,000 453,000 1,705,000 2,193,000 376,000 1,817,000
Rosewood Apartments Superior
Limited Partnership Wisconsin 185,000 185,000 495,000 767,000 138,000 629,000
Sun Manor Itta Bena
L.P. Mississippi 230,000 230,000 1,055,000 1,341,000 313,000 1,028,000
Tahoe South Lake
Pines Tahoe
Apartments California 1,633,000 1,633,000 1,680,000 3,291,000 769,000 2,522,000
Venus Retirement Venus
Village, Ltd. Texas 161,000 161,000 724,000 928,000 247,000 681,000
Walnut Orange
Pixley, L.P. California 1,078,000 1,078,000 1,710,000 2,765,000 518,000 2,247,000
Winters Investment Winters
Group California
531,000 531,000 1,830,000 2,592,000 358,000 2,234,000
-------------- ------------ ------------ ------------- ----------- ------------
$ 12,536,000 $ 12,536,000 $ 24,163,000 $ 38,390,000 $ 7,676,000 $ 30,714,000
============== ============ ============ ============= =========== ============
35
WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
------------------------------------------------------------------------
For the year ended December 31, 2000
------------------------------------------------------------------------
Year Estimated
Investment Useful Life
Partnership Name Rental Income Net Loss Acquired Status (Years)
- -----------------------------------------------------------------------------------------------------------
Almond Garden Apartment Associates $ 162,000 $ (55,000) 1994 Completed 27.5
Almond View Apartments, Ltd. 196,000 (212,000) 1994 Completed 27.5
Buccaneer Associates, Limited 206,000 (48,000) 1994 Completed 40
Candleridge Apartments of Perry
L.P. II 144,000 (17,000) 1994 Completed 27.5
Colonial Village Roseville 425,000 (66,000) 1993 Completed 27.5
Dallas County Housing, Ltd. 65,000 (18,000) 1993 Completed 40
La Paloma del Sol Limited
Partnership 125,000 (34,000) 1993 Completed 40
Memory Lane Limited Partnership
61,000 (36,000) 1994 Completed 25
Nueva Sierra Vista Associates 149,000 (108,000) 1994 Completed 40
Old Fort Limited Partnership 161,000 (24,000) 1993 Completed 40
Orosi Apartments, Ltd. 189,000 (15,000) 1993 Completed 50
Parlier Garden Apts. 203,000 (5,000) 1994 Completed 40
Rosewood Apartments Limited
Partnership 83,000 6,000 1994 Completed 40
Sun Manor, L.P. 141,000 (24,000) 1993 Completed 27.5
Tahoe Pines Apartments 174,000 (123,000) 1994 Completed 27.5
Venus Retirement Village, Ltd. 87,000 (23,000) 1993 Completed 25
Walnut - Pixley, L.P. 146,000 (46,000) 1993 Completed 40
Winters Investment Group 192,000 (23,000) 1994 Completed 50
----------- ----------
$ 2,909,000 $(871,000)
============ ==========
36
WNC California Housing Tax Credits III, 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 Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Almond Garden Delhi,
Apartment Associates California $ 391,000 $ 391,000 $ 1,390,000 $ 1,757,000 $ 383,000 $ 1,374,000
Almond View Stockton,
Apartments, Ltd. California 1,639,000 1,639,000 1,767,000 3,525,000 682,000 2,843,000
Buccaneer Associates, Fernandia
Limited Beach, Florida 365,000 365,000 1,477,000 2,218,000 353,000 1,865,000
Candleridge Apartments Perry
of Perry L.P. II Iowa 126,000 126,000 701,000 891,000 167,000 724,000
Colonial Village Roseville
Roseville California 2,811,000 2,811,000 2,101,000 5,292,000 981,000 4,311,000
Dallas County Orrville
Housing, Ltd. Alabama 130,000 130,000 615,000 760,000 139,000 621,000
La Paloma del Sol Deming, New
Limited Partnership Mexico 254,000 254,000 1,434
,000 1,780,000 274,000 1,506,000
Memory Lane Yankton,
Limited Partnership South Dakota 151,000 151,000 685,000 874,000 299,000 575,000
Nueva Sierra Richgrove
Vista Associates California 1,688,000 1,688,000 1,633,000 3,253,000 373,000 2,880,000
Old Fort Highway Hidalgo
Limited Partnership Texas 249,000 249,000 1,279,000 1,657,000 266,000 1,391,000
37
WNC California Housing Tax Credits III, 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 Investment of Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
Orosi Apartments Orosi
Ltd. California 461,000 461,000 1,955,000 2,442,000 268,000 2,174,000
Parlier Garden Parlier
Apts California 453,000 453,000 1,710,000 2,190,000 325,000 1,865,000
Rosewood Apartments Superior
Limited Partnership Wisconsin 185,000 185,000 507,000 767,000 118,000 649,000
Sun Manor Itta Bena
L.P. Mississippi 230,000 230,000 1,058,000 1,340,000 265,000 1,075,000
Tahoe South Lake
Pines Tahoe
Apartments California 1,633,000 1,633,000 1,692,000 3,289,000 642,000 2,647,000
Venus Retirement Venus
Village, Ltd. Texas 161,000 161,000 726,000 929,000 212,000 717,000
Walnut Orange
Pixley, L.P. California 1,078,000 1,078,000 1,727,000 2,766,000 459,000 2,307,000
Winters Investment Winters
Group California
531,000 531,000 1,836,000 2,592,000 311,000 2,281,000
-------------- ------------ ------------ ------------- ----------- ------------
$ 12,536,000 $ 12,536,000 $ 24,293,000 $ 38,322,000 $ 6,517,000 $ 31,805,000
============== ============ ============ ============= =========== ============
38
WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
------------------------------------------------------------------------
For the year ended December 31, 1999
------------------------------------------------------------------------
Year Estimated
Investment Useful Life
Partnership Name Rental Income Net Loss Acquired Status (Years)
- -----------------------------------------------------------------------------------------------------------
Almond Garden Apartment Associates $ 158,000 $ (52,000) 1994 Completed 27.5
Almond View Apartments, Ltd. 183,000 (230,000) 1994 Completed 27.5
Buccaneer Associates, Limited 197,000 (43,000) 1994 Completed 40
Candleridge Apartments of Perry
L.P. II 140,000 (12,000) 1994 Completed 27.5
Colonial Village Roseville 402,000 (30,000) 1993 Completed 27.5
Dallas County Housing, Ltd. 61,000 (19,000) 1993 Completed 40
La Paloma del Sol Limited
Partnership 137,000 (22,000) 1993 Completed 40
Memory Lane Limited Partnership
64,000 (36,000) 1994 Completed 25
Nueva Sierra Vista Associates 146,000 (139,000) 1994 Completed 40
Old Fort Limited Partnership 163,000 (17,000) 1993 Completed 40
Orosi Apartments, Ltd. 183,000 (19,000) 1993 Completed 50
Parlier Garden Apts. 190,000 (48,000) 1994 Completed 40
Rosewood Apartments Limited
Partnership 73,000 (10,000) 1994 Completed 40
Sun Manor, L.P. 139,000 (27,000) 1993 Completed 27.5
Tahoe Pines Apartments 178,000 (122,000) 1994 Completed 27.5
Venus Retirement Village, Ltd. 83,000 (22,000) 1993 Completed 25
Walnut - Pixley, L.P. 141,000 (45,000) 1993 Completed 40
Winters Investment Group 188,000 (46,000) 1994 Completed 50
----------- ----------
$ 2,826,000 $(939,000)
============ ==========
39
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
By: WNC California Tax Credit Partners III, L.P.
General Partner of the Registrant
By: WNC & Associates, Inc.
General Partner of WNC California Tax Credit Partners III, L.P.
By: /s/ Wilfred N. Cooper, Jr.
--------------------------
Wilfred N. Cooper, Jr., President
Chief Operating Officer of WNC & Associates, Inc.
Date: May 16, 2002
By: /s/ Thomas J. Riha
------------------
Thomas J. Riha, Vice-President
Chief Financial Officer of WNC & Associates, Inc.
Date: May 16, 2002
By: /s/ Wilfred N. Cooper, Sr.
--------------------------
Wilfred N. Cooper, Sr., General Partner
Date: May 16, 2002
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: May 16, 2002
By: /s/ David N. Shafer
--------------------
David N Shafer, Director of WNC & Associates, Inc.
Date: May 16, 2002
40
Exhibit
Number Exhibit Description
EX-21.2 Financial Statements of Colonial Village
Roseville.
Exhibit
Number Exhibit Description
EX-21.2 Financial Statements of Colonial Village Roseville.
C O N T E N T S
Page
INDEPENDENT AUDITOR'S REPORT ON
THE FINANCIAL STATEMENTS..................................................1
FINANCIAL STATEMENTS
Balance sheets......................................................... 2-3
Statements of income................................................. 4-7
Statements of changes in partners' equity................................ 8
Statements of cash flows.............................................. 9-10
Notes to financial statements.........................................11-14
INDEPENDENT AUDITOR'S REPORT
To the Partners
Colonial Village Roseville
(A California Limited Partnership)
Roseville, California
I have audited the accompanying balance sheets of Colonial Village Roseville (A
California Limited Partnership), as of December 31, 2001 and 2000, and the
related statements of income, partners' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audits 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Colonial Village Roseville (A
California Limited Partnership) as of December 31, 2001 and 2000, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Bernard E. Rea, CPA
Bernard E. Rea, CPA
Stockton, California
March 8, 2002
-1-
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
BALANCE SHEETS
December 31, 2001 and 2000
ASSETS 2000 1999
----- -----
CURRENT ASSETS
Cash $ 150,390 $ 128,354
Rents receivable - - - -
Other receivables - - - -
Prepaid expense 3,250 2,768
----------- ----------
Total current assets $ 153,640 $ 131,122
----------- ----------
RESTRICTED DEPOSITS AND FUNDED RESERVES
Tenants' security deposits $ 27,413 $ 25,692
Replacement reserve escrow 112,611 97,897
----------- ----------
$ 140,024 $ 123,589
----------- ----------
PROPERTY AND EQUIPMENT, AT COST
Land $ 315,303 $ 315,303
Building 4,808,665 4,808,665
Equipment 175,386 175,386
----------- ----------
$5,299,354 $5,299,354
Less accumulated depreciation 1,366,364 1,173,502
----------- ----------
$3,932,990 $4,125,852
----------- ----------
OTHER ASSETS
Deferred charges, less accumulated
amortization of $34,088 and $28,875 $ 99,334 $ 104,547
----------- ---------
$ 99,334 $ 104,547
----------- ---------
$4,325,988 $4,485,110
=========== ===========
See Notes to Financial Statements.
- 2 -
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
BALANCE SHEETS
December 31, 2001 and 2000
LIABILITIES AND PARTNERS' EQUITY 2001 2000
----- ----
CURRENT LIABILITIES
Current maturities of long-term debt $ 32,038 $ 29,679
Accounts payable 7,803 3,264
Accounts payable - general partner 7,737 9,768
Accrued expense 800 800
Developer fees payable 27,500 26,500
Advances from general partner, without
interest, due date, or collateral - - - -
Accrued interest - - - -
------------ -----------
Total current liabilities $ 75,878 $ 70,011
------------ -----------
DEPOSIT AND PREPAYMENT LIABILITIES
Tenants' security deposits $ 27,054 $ 26,164
Prepaid rents - - - -
------------ -----------
$ 27,054 $ 26,164
------------ -----------
LONG-TERM DEBT
Mortgage payable, less current maturities $ 2,011,619 $ 2,043,658
Developer fees payable 287,553 355,053
------------ ------------
$ 2,299,172 $ 2,398,711
------------ ------------
COMMITMENT
PARTNERS' EQUITY $ 1,923,884 $ 1,990,224
------------ ------------
$ 4,325,988 $ 4,485,110
============ ============
See Notes to Financial Statements.
- 3 -
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF INCOME
Years Ended December 31, 2001 and 2000
2001 2000
----- ----
RENTAL INCOME
Apartments $ 450,465 $ 424,721
Tenant assistance payments - - - -
Furniture and equipment - - - -
Commercial - - - -
Parking spaces - - - -
Subsidy income - - - -
Miscellaneous - - - -
---------- ----------
Net rental revenue $ 450,465 $ 424,721
---------- ----------
FINANCIAL REVENUE
Interest Income - project operations $ 4,541 $ 1,708
Income from investments - replacement reserve 3,905 4,525
Income from investments - operating reserve 4,028 1,884
Income from investments - miscellaneous - - - -
--------- ----------
Sub-total financial revenue $ 12,474 $ 8,117
--------- ----------
OTHER REVENUE
Laundry and vending $ 6,848 $ 7,921
NSF and late charges 1,511 2,339
Damage and cleaning fees 5,463 4,204
Forfeited tenant security deposits - - - -
Other revenue 1,654 3,094
---------- ----------
Sub-total other revenue $ 15,476 $ 17,558
---------- ----------
Total revenues $ 478,415 $ 450,396
---------- ----------
See Notes to Financial Statements.
- 4 -
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF INCOME (CONTINUED)
Years Ended December 31, 2001 and 2000
2001 2000
----- ----
OPERATING EXPENSES
Renting expenses
Advertising $ - - $ - -
Miscellaneous renting expenses 550 4,505
----------- ----------
Sub-total renting expenses $ 550 $ 4,505
----------- ----------
Administrative expenses
Office salaries $ - - $ - -
Office supplies 1,743 1,957
Office rent - - - -
Management fee 24,192 24,192
Manager's salary 23,647 20,147
Manager rent free unit 9,792 - -
Legal expense - - 210
Audit expense 4,900 4,868
Bookkeeping / accounting services - - - -
Telephone and answering service 1,401 2,099
Bad debts 2,207 3,673
Miscellaneous administrative expenses 8,702 5,815
----------- ----------
Sub-total administrative expenses $ 76,584 $ 62,961
----------- ----------
Utilities expense
Fuel oil / coal $ - - $ - -
Electricity 4,468 5,493
Water 3,052 3,363
Gas 3,806 2,088
Sewer 5,390 5,843
----------- ----------
Sub-total utilities expense $ 16,716 $ 16,787
----------- ----------
See Notes to Financial Statements.
- 5 -
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF INCOME (CONTINUED)
Years Ended December 31, 2001 and 2000
2001 2000
----- ----
Operating and maintenance expense
Janitor and cleaning payroll $ 7,025 $ - -
Janitor and cleaning supplies 934 896
Janitor and cleaning contract 1,665 1,965
Exterminating payroll / contract 867 741
Exterminating supplies - - - -
Garbage and trash removal 7,031 8,278
Security payroll / contract - - - -
Grounds payroll - - - -
Grounds supplies 224 551
Grounds contract 7,395 6,020
Repairs payroll 18,980 23,916
Repairs material 3,258 4,016
Repairs contract 6,395 3,314
Elevator maintenance / contract - - - -
Heating / cooling repairs and maintenance - - - -
Swim pool maintenance / contract - - - -
Snow removal - - - -
Decorating payroll / contract 859 1,041
Decorating supplies 1,220 978
Vehicle and maintenance equipment o & r - - - -
Miscellaneous operating and maint. expenses 1,665 2,668
------------ ----------
Sub-total operating & maint. expense $ 57,518 $ 54,384
------------ ----------
Taxes and insurance
Real estate taxes $ 313 $ 1,850
Payroll taxes 4,616 4,088
Miscellaneous taxes, licenses, and permits 800 800
Property and liability insurance 4,374 4,349
Fidelity bond insurance - - - -
Workman's compensation 3,524 2,646
Health insurance and other employee benefits 6,688 5,992
Other insurance - - - -
---------- ----------
Sub-total taxes & insurance $ 20,315 $ 19,725
---------- ----------
Total operating expenses $ 171,683 $ 158,362
---------- ---------
See Notes to Financial Statements.
- 6 -
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF INCOME (CONTINUED)
Years Ended December 31, 2001 and 2000
2001 2000
----- ----
OTHER EXPENSES
Interest expense - mortgage $ 157,997 $ 160,180
Interest expense - notes - - - -
Miscellaneous financial expense - - - -
Depreciation and amortization 198,075 197,448
Non project expenses - - - -
---------- ---------
Sub-total other expenses $ 356,072 $ 357,628
---------- ---------
Total expenses $ 527,755 $ 515,990
---------- ---------
Net income (loss) $ (49,340) $ (65,594)
========== ==========
See Notes to Financial Statements.
- 7 -
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
Years Ended December 31, 2001 and 2000
General Limited
Total Partner Partner
----- ------- -------
Partners' equity
December 31, 1999 $2,055,818 $ 45,999 $ 2,009,819
Partners' capital
Contributions - - - - - -
Partners' capital
Distributions - - - - - -
Net income (loss) (65,594) (656) (64,938)
------------ --------- ---------
Partners' equity
December 31, 2000 $1,990,224 $ 45,343 $1,944,881
Partners' capital
Contributions - - - - - -
Partners' capital
Distributions (17,000) - - (17,000)
Net income (loss) (49,340) (493) (48,847)
----------- ---------- -----------
Partners' equity
December 31, 2001 $1,923,884 $ 44,850 $1,879,034
=========== ========= ===========
Percentage at
December 31, 2001 100% 1% 99%
=========== ========== ===========
See Notes to Financial Statements.
- 8 -
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2001 and 2000
2001 2000
----- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (49,340) $ (65,594)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 198,075 197,448
Change in assets and liabilities:
Decrease (increase) in:
Prepaid expenses (482) 171
Tenants' security deposits (1,721) (789)
Rents receivable - - 587
Other receivables - - - -
Increase (decrease) in:
Accounts payable 4,539 (4,757)
Accounts payable - general partner (2,031) 9,768
Accrued expenses - - - -
Accrued interest - - - -
Prepaid rents - - - -
Tenants' security deposits 890 2,200
----------- ----------
Net cash provided by (used in)
operating activities $ 149,930 $ 139,034
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Funding of replacement reserve escrow $ (14,714) $ (21,137)
Withdrawals from replacement reserve escrow - - - -
Acquisition of property and equipment - - (7,721)
------------ ----------
Net cash provided by (used in)
investing activities $ (14,714) $ (28,858)
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Partner contributions $ - - $ - -
Partner distributions (17,000) - -
Advances from general partner - - (7,355)
Payment of development fees payable (66,500) (25,500)
Principal payments on long-term debt (29,680) (27,495)
------------ ----------
Net cash provided by (used in)
financing activities $ (113,180) $ (60,350)
------------ ----------
See Notes to Financial Statements.
- 9 -
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS (CONTINUED)
Years Ended December 31, 2001 and 2000
2001 2000
----- ----
Increase (decrease) in cash and
cash equivalents $ 22,036 $ - 49,826
Cash and cash equivalents
Beginning 128,354 78,528
---------- --------
Ending $ 150,390 $ 128,354
=========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for interest $ 157,997 $ 160,180
=========== ==========
See Notes to Financial Statements.
- 10 -
COLONIAL VILLAGE ROSEVILLE
- --------------------------
(A California Limited Partnership)
- ----------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Partnership's significant accounting policies consistently
applied in the preparation of the accompanying financial statements
follows.
Capitalization and Depreciation
-------------------------------
Land, buildings and improvements are recorded at cost. Depreciation of
buildings and equipment is computed principally using the Modified
Accelerated Cost Recovery System which approximates straight-line for
buildings and double-declining balance for equipment over the following
estimated useful lives:
Years
-----
Buildings 27.5
Equipment 7
Improvements are capitalized, while expenditures for maintenance and
repairs are charged to expense as incurred. Upon disposal of depreciable
property, the appropriate property accounts are reduced by the related
costs and accumulated depreciation. The resulting gains and losses are
reflected in the statement of operations.
Cash and cash equivalents
-------------------------
For purposes of reporting the statements of cash flows, the Partnership
includes all cash accounts which are not subject to withdrawal restrictions
or penalties, and all highly liquid debt instruments purchased with a
maturity of three months or less as cash and cash equivalents on the
accompanying balance sheet.
Amortization
------------
Deferred charges are amortized over the following estimated useful lives
using the straight-line method:
Years
Deferred debt expense 30
Tax credit monitoring fee 15
Income Taxes
------------
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss passes through to, and is
reportable by, the partners individually.
- 11 -
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
Note 1 - Summary of Significant Accounting Policies (continued)
Estimates
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Personal Assets and Liabilities
-------------------------------
In accordance with the generally accepted method of presenting partnership
financial statements, the financial statements do not include the personal
assets and liabilities of the partners, including their obligation for
income taxes on their distributive shares of the net income of the
Partnership, nor any provision for income tax expense.
NOTE 2 - ORGANIZATION
Colonial Village Roseville is a California Limited Partnership which was
formed in April 1993, to develop, construct, own, maintain and operate a
56-unit multi-family apartment complex and is located in the city of
Roseville, California. The Partnership Agreement and the loan agreement
with the California Community Reinvestment Corporation (CCRC), a California
nonprofit public benefit corporation governs the major activities of the
Partnership. Under the agreements, the Partnership is required to provide
low cost housing to very low-income or lower-income households.
The Partnership has one general partners, Project Go Inc., a 501(c)(3) tax
exempt, non-profit community service organization and one investing
limited partner, WNC Housing Tax Credits III, L.P., a California limited
partnership. Partnership transactions with the partners are described in
other notes to these financial statements.
NOTE 3 - Deferred charges
Deferred charges as of December 31, 2001 and 2000, consists of the
following:
2001 2000
--------------- -----------------
Deferred debt expense $ 110,462 $ 110,462
Tax credit monitoring fee 22,960 22,960
--------------- -----------------
$ 133,422 $ 133,422
Less accumulated amortization 34,088 28,875
---------------- -----------------
$ 99,334 $ 104,547
=============== =================
- 12 -
NOTES TO FINANCIAL STATEMENTS
Note 4 - Restricted deposits and Funded reserves
In accordance with the Partnership Agreement and the Rider to Multifamily
Instrument with CCRC, the Partnership is required to maintain a replacement
reserve account. The replacement reserve account is to be funded annually
in the amount of $16,800.
Note 5 - Long-Term Debt
Long-Term debt consisted of a permanent loan with CCRC in face amount of
$2,200,000.
Under the terms of the 30-year Promissory Note with CCRC, the loan provides
for an initial interest rate of 7.67% and monthly payments of $15,639.62
commencing on September 1, 1995, and continuing through August 2025. The
interest rate and monthly payment will be adjusted at year eleven (11) and
year twenty-one (21), at which time the interest rate will be adjusted
based on the Current Index plus 2.75% and the payment will be adjusted and
determined by the amount of the monthly payment that would be sufficient to
repay the note within 360 months of the initial payment date. As Of
December 31, 2001, the current interest rate, and minimum monthly payment
due is 7.67% and $15,639.62, respectively.
The apartment complex is pledged as collateral for the mortgage and is
secured by deeds of trust, assignment of rents, security agreements and
fixture filings against the property.
Aggregate maturities of Long-term debt for the next five years are as
follows:
December 31, 2002 $ 32,038
2003 34,583
2004 37,331
2005 40,297
2006 43,499
Thereafter 1,855,909
---------
TOTAL $ 2,043,657
NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Developer Fees
--------------
In accordance with the Partnership Agreement, the Partnership agreed to pay
the general partner a development fee of $648,000 for services rendered to
the Partnership for overseeing the development and construction of the
project. However, during 1995, $3,526, of this amount was waived by the
general partner in accordance with the limitations imposed by the
California Tax Credit Allocation Committee.
Payment of the development fee is to be paid from future operational cash
flows.
The developer fee has been capitalized into the basis of the building.
Management Fee
--------------
In accordance with the Management Agreement, the Partnership paid Project
Go, Inc., the general partner, a management fee during 2001 in the amount
of $24,192, for services rendered in connection with the leasing and
operation of the project. The fee for its services is approximately 6% of
the project's rental income.
- 13 -
NOTES TO FINANCIAL STATEMENTS
Note 7 - Commitment
The Partnership entered into a Regulatory Agreement with the Tax Credit
Allocation Committee (TCAC), established under Section 50185 of the Health
and Safety Code of the State of California. Under this Agreement, the
Partnership shall maintain the project as a Qualified Low-income Housing
Project for a period of 55 consecutive taxable years beginning with 1995,
the first taxable year of the Credit Period. In exchange for this
agreement, TCAC has authorized an allocation relating to the low-income
housing credit under the provisions of Section 42 of the Internal Revenue
Code.
Note 8 - Current VULNERABILITY due to certain concentrations
The Partnership's sole asset is Colonial Village Roseville Apartments. The
Partnership's operations are concentrated in the multifamily real estate
market.
- 14 -
Exhibit
Number Exhibit Description
EX-21.3 Financial Statements of Almond
View Apartments, Ltd.
C O N T E N T S
Page
INDEPENDENT AUDITORS' REPORT ON THE
FINANCIAL STATEMENTS 1
FINANCIAL STATEMENT
Balance sheets 2
Statements of income 3
Statements of partners' equity 4
Statements of cash flows 5
Notes to financial statements 6-8
INDEPENDENT AUDITORS' REPORT
To the Partners
Almond View Apartments, Ltd.
(A California Limited Partnership)
Sacramento, California
We have audited the accompanying balance sheets of Almond View Apartments, Ltd.,
A California Limited Partnership, as of December 31, 2001 and 2000, and the
related statements of income, partners' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Almond View Apartments, Ltd., A
California Limited Partnership, as of December 31, 2001 and 2000 and the results
of its operations and cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Bowman & Company, LLP
Bowman & Company, LLP
Stockton, California
January 22, 2002
-1-
ALMOND VIEW APARTMENTS, LTD.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 2001 and 2000
ASSETS 2001 2000
-------------------- --------------------
Cash $ 300 $ 300
Rent receivable 4,228 4,228
Reserve for replacements 709 799
Utility deposit 8,340 8,340
-------------------- --------------------
13,577 13,667
-------------------- ---------------------
PROPERTY AND EQUIPMENT, at cost
Land 110,000 110,000
Building and improvements 3,313,023 3,311,743
Furniture and fixtures 103,489 103,489
-------------------- --------------------
3,526,512 3,525,232
Less accumulated depreciation 934,428 809,139
-------------------- --------------------
2,592,084 2,716,093
-------------------- --------------------
$ 2,605,661 $ 2,729,760
==================== ====================
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Outstanding checks in excess of bank balance $ 11,405 $ 6,411
Accounts payable and accrued expenses 33,151 32,191
Due to affiliate of general partner 219,237 177,985
Tenant security deposits 10,750 9,216
Accrued interest 480,496 415,772
Mortgages payable 1,753,600 1,760,757
-------------------- --------------------
Total liabilities 2,508,639 2,402,332
PARTNERS' EQUITY 97,022 327,428
-------------------- --------------------
$ 2,605,661 $ 2,729,760
==================== ====================
See Notes to Financial Statements.
-2-
ALMOND VIEW APARTMENTS, LTD.
(A California Limited Partnership)
STATEMENTS OF INCOME
Years Ended December 31, 2001 and 2000
2001 2000
------------------- ---------------------
REVENUE:
Rental income $ 208,799 $ 196,101
Other income 1,979 9,541
------------------- -------------------
Total revenue 210,778 205,642
------------------- -------------------
OPERATING EXPENSES:
Depreciation 125,289 127,201
Interest 97,515 95,858
Utilities 73,402 49,120
Payroll 72,105 71,151
Property taxes 23,480 22,471
Management fee 15,552 15,552
Repairs and maintenance 10,227 11,930
Insurance 7,239 8,021
Payroll taxes 6,915 8,556
Office and administration 5,493 4,064
Telephone 2,214 2,290
Other taxes 1,018 982
Legal and accounting 735 822
------------------- -------------------
Total operating expenses 441,184 418,018
------------------- -------------------
Net loss $ (230,406) $ (212,376)
=================== ===================
See Notes to Financial Statements.
-3-
ALMOND VIEW APARTMENTS, LTD.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
Years Ended December 31, 2001 and 2000
Limited General
Total Partner Partners
--------------- ---------------- ----------------
Balance, December 31, 1999 $ 539,804 $ 435,311 $ 104,493
Less: Net loss (212,376) (210,252) (2,124)
-------------- --------------- ---------------
Balance, December 31, 2000 327,428 225,059 102,369
Less: Net loss (230,406) (209,346) (21,060)
-------------- --------------- ---------------
Balance, December 31, 2001 $ 97,022 $ 15,713 $ 81,309
============== =============== ===============
See Notes to Financial Statements.
-4-
ALMOND VIEW APARTMENTS, LTD.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2001 and 2000
2001 2000
---------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (230,406) $ (212,376)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 125,289 127,201
Change in assets and liabilities:
(Increase) decrease in:
Replacement reserve 90 76
Increase (decrease) in:
Outstanding checks in excess of bank balance 4,993 3,700
Accounts payable and accrued expenses 961 (5,824)
Due to affiliate of general partner 41,252 28,764
Tenant security deposits 1,534 2,477
Accrued interest 64,724 62,568
------------------ -----------------
Net cash provided by operating activities 8,437 6,586
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of building improvements (1,280) - -
------------------ -----------------
Net cash used in investing activities (1,280) - -
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term borrowings (7,157) (6,658)
------------------ -----------------
Net cash used in financing activities (7,157) (6,658)
------------------ -----------------
Increase (decrease) in cash - - (72)
Cash
Beginning 300 372
----------------- -----------------
Ending $ 300 $ 300
================== =================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for interest $ 32,791 $ 33,290
================= =================
See Notes to Financial Statements.
-5-
ALMOND VIEW APARTMENTS, LTD.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Summary of Significant Accounting Policies
Organization:
Almond View Apartments, Ltd. (A California Limited Partnership) was
formed in September 1992 to own and operate a 72-unit efficiency
facility, known as the Main Street Manor, located in Stockton,
California. The project was completed and placed in service in December
1994. The project provides low-cost housing to low and very low-income
residents. Below-market rents are made possible because of below-market
interest rates and deferred payments on the Partnership's debt with the
City of Stockton. Rents from tenants are restricted under Regulatory
Agreements with the City of Stockton and the California Tax Credit
Allocation Committee.
As of January 1, 2001, one of the general partners, Daniels C. Logue,
retired from the Partnership. The sole remaining general partner, Cyrus
Youssefi, assumed his partnership interest.
Summary of significant accounting policies:
Cash
----
For purposes of reporting the statements of cash flows, the Partnership
includes all cash accounts which are not subject to withdrawal
restrictions or penalties, and all highly liquid debt instruments
purchased with a maturity of three months or less as cash on the
accompanying balance sheet.
Depreciation
------------
Depreciation is computed principally using the straight-line method for
the building and improvements and double-declining balance method for
furniture and fixtures over the following estimated useful lives:
Years
-----
Building and improvements 27.5
Furniture and fixtures 7
Personal assets and liabilities
-------------------------------
In accordance with the generally accepted method of presenting
partnership financial statements, the financial statement does not
include the personal assets and liabilities of the partners, including
their obligation for income taxes on their distributive shares of the
net income of the Partnership, nor any provision for income tax
expense.
-6-
NOTES TO FINANCIAL STATEMENTS
Note 1.Organization and Summary of Significant Accounting Policies (cont.)
Estimates
---------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from
those estimates.
Note 2.Mortgages Payable
2001 2000
---- ----
Mortgage loan payable to the California Federal Bank payable in monthly
installments of $3,329 through March 2025, with interest at 7.25% per
year. This note is secured by a first deed of trust on the Partnership's
property. Accrued interest is $2,708 at December 31, 2001. $ 448,373 $ 455,530
Mortgage loan payable to the Redevelopment Agency of the City of
Stockton, interest at 3%, secured by a second deed of trust on the
Partnership's property, in accordance with the Intercreditor Agreement
between the City of Stockton and the Redevelopment Agency of the City of
Stockton. Interest is payable to the extent of net cash flow, only to the
extent that income exceeds 115% of expenses, as defined in the note. If
cash flow is insufficient, debt service payments are deferred. Principal
will be amortized over a 15 year period once all accrued interest is
paid. All principal and interest is due November 2033. Accrued interest
is $138,729 at December 31, 2001. 550,000 550,000
Mortgage loan payable to the City of Stockton, interest at 5.84%, secured
by a second deed of trust on the Partnership's property, in accordance
with the Intercreditor Agreement between the City of Stockton and the
Redevelopment Agency of the City of Stockton. Interest is payable to the
extent of net cash flow, only to the extent that in- come exceeds 115% of
expenses, as defined in the note. If cash flow is insufficient, debt
service payments are de- ferred. Principal will be amortized over a 30
year period once all accrued interest is paid. Accrued interest is
$260,966 at December 31, 2001. 444,878 444,878
-7-
NOTES TO FINANCIAL STATEMENTS
Note 2. Mortgages Payable (cont.)
Mortgage loan payable to the Redevelopment Agency of the City of
Stockton, interest at 3%, secured by a second deed of trust on the
Partnership's property, in accordance with the Intercreditor Agreement
between the City of Stockton and the Redevelopment Agency of the City of
Stockton. Interest is payable to the extent of net cash flow, only to the
extent that income exceeds 115% of expenses, as defined in the note. If
cash flow is insufficient, debt service payments are deferred. Principal
will be amortized over a 15 year period once all accrued interest is
paid. All principal and interest is due November 2033. Accrued interest
is $78,093 at December 31, 2001.
310,349 310,349
---------------- ----------------
$ 1,753,600 $ 1,760,757
================ ================
The aggregate amounts of principal payments under these mortgage notes at
December 31, 2001, are as follows:
2002 $ 7,696
2003 8,270
2004 8,617
2005 9,556
2006 10,273
Thereafter 1,709,188
----------------
$ 1,753,600
================
The loan agreement with the California Federal Bank requires the Partnership to
maintain a replacement and general operating reserve. The Partnership did not
generate sufficient cash flow to fund these accounts.
Note 3. Related Party Transactions / Economic Dependence
The Partnership utilizes management and administrative services of CFY
Development, Inc. ("CFY"), which is owned by the general partner. Property
management fees and other overhead charges payable for the years ended December
31, 2001 and 2000 to CFY were $17,952 and $17,884, respectively. At December 31,
2001, $219,237 is due to CFY for management fees and operating expenses paid on
behalf of the Partnership.
The Partnership has incurred operating deficits and cash flow losses since the
inception of the project. In order to support the Partnership, CFY has agreed to
defer management fees and make advances to the Partnership when necessary to
facilitate cash flow. Without the assistance of the general partner or CFY, the
Partnership would not be able to pay its operating expenses. CFY deferred
$17,952 in management fees and made $23,300 in cash advances to the Partnership
in 2001, and deferred $17,798 in management fees and made $10,966 in cash
advances to the Partnership in 2000.
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