Back to GetFilings.com



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended December 31, 2004

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ________ to ___________

Commission file number: 0-20058


WNC CALIFORNIA HOUSING TAX CREDITS, L.P.

California 33-0316953
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

17782 Sky Park Circle
Irvine, CA 92614-6404
(Address of principal executive offices)

(714) 662-5565
(Telephone number)


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 whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act).

Yes No X
--------- ----------







WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

INDEX TO FORM 10 - Q

For the Quarter Ended December 31, 2004



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheets
December 31, 2004 and March 31, 2004...............................2

Statements of Operations
For the Three and Nine Months Ended December 31, 2004 and 2003 ....3

Statement of Partners' Deficit
For the Nine Months Ended December 31, 2004 .......................4

Statements of Cash Flows
For the Nine Months ended December 31, 2004 and 2003 ..............5

Notes to Financial Statements...........................................6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................14

Item 3. Quantitative and Qualitative Disclosures
About Market Risks.............................................15

Item 4. Controls and Procedures....................................... 15

PART II. OTHER INFORMATION

Item 1. Legal Proceedings..............................................16

Item 2. Changes in Securities and Use of Proceeds.....................16

Item 3. Defaults Upon Senior Securities...............................16

Item 4. Submission of Matters to a Vote of Security Holders.......... 16

Item 5. Other Information............................................ 16

Item 6. Exhibits ......................................................16

Signatures.............................................................17




1




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

BALANCE SHEETS





December 31, 2004 March 31, 2004
----------------------- -------------------
(unaudited)

ASSETS

Cash and cash equivalents $ 18,176 $ 7,209
Investments in limited partnerships, net (Note 2) - -
----------------------- -------------------

$ 18,176 $ 7,209
======================= ===================


LIABILITIES AND PARTNERS' DEFICIT

Liabilities:
Accrued fees and expenses due to
General Partner and affiliates (Note 3) $ 1,527,718 $ 1,432,637
----------------------- -------------------

Partners' deficit:
General Partner (79,937) (79,096)
Limited partners (10,000 units authorized;
7,450 units issued and outstanding) (1,429,605) (1,346,332)
----------------------- -------------------

Total partners' deficit: (1,509,542) (1,425,428)
----------------------- -------------------

$ 18,176 $ 7,209
======================= ===================





See accompanying notes to financial statements
2




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended December 31, 2004 and 2003
(unaudited)




2004 2003
------------------------------------------- ---------------------------------------
Three Months Nine months Three Months Nine months
----------------- -------------------- ------------------ ----------------


Interest income $ 6 $ 11 $ 3 $ 7
Distribution income - 10,956 - 2,617
----------------- -------------------- ------------------ ----------------
6 10,967 3 2,624

Operating expenses:
Amortization (Note 2) - - 1,365 4,077
Asset management fees (Note 3) 27,964 83,891 27,963 83,891
Legal and accounting 102 10,134 526 16,451
Other 348 1,056 519 2,267
----------------- -------------------- ------------------ ----------------

Total operating expenses 28,414 95,081 30,373 106,686
----------------- -------------------- ------------------ ----------------

Loss from operations (28,408) (84,114) (30,370) (104,062)

Equity in losses of
limited Partnerships (Note 2) - - (25,434) (76,301)
----------------- -------------------- ------------------ ----------------

Net loss $ (28,408) $ (84,114) $ (55,804) $ (180,363)
================= ==================== ================== ================

Net loss allocated to:
General Partner $ (284) $ (841) $ (558) $ (1,804)
================= ==================== ================== ================

Limited Partners $ (28,124) $ (83,273) $ (55,246) $ (78,559)
================= ==================== ================== ================

Net loss per limited partnership unit $ (4) $ (11) $ (7) $ (24)
================= ==================== ================== ================

Outstanding weighted limited partner
units 7,450 7,450 7,450 7,450
================= ==================== ================== ================







See accompanying notes to financial statements
3




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

STATEMENT OF PARTNERS' DEFICIT

For the Nine Months Ended December 31, 2004
(unaudited)





General Limited
Partner Partners Total
----------------- ---------------- ------------------


Partners' deficit at March 31, 2004 $ (79,096) $ (1,346,332) $ (1,425,428)

Net loss (841) (83,273) (84,114)
----------------- ---------------- ------------------

Partners' deficit at December 31, 2004 $ (79,937) $ (1,429,605) $ (1,509,542)
================= ================ ==================







See accompanying notes to financial statements
4




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

STATEMENTS OF CASH FLOWS

For the Nine Months Ended December 31, 2004 and 2003
(unaudited)




2004 2003
--------------------- -----------------

Cash flows from operating activities:

Net loss $ (84,114) $ (180,363)
Adjustments to reconcile net loss to net
Cash used in operating activities:
Amortization - 4,077
Equity in losses of limited partnerships - 76,301
Change in accrued fees and expense due to
General Partner and affiliates 95,081 102,609
--------------------- -----------------

Net cash provided by operating activities 10,967 2,624
--------------------- -----------------

Cash flows from investing activities:
Distributions received from limited partnerships - 1,884
--------------------- -----------------

Net increase in cash and cash equivalents 10,967 4,508

Cash and cash equivalents, beginning of period 7,209 734
--------------------- -----------------

Cash and cash equivalents, end of period $ 18,176 $ 5,242
===================== =================

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION

Taxes paid $ - $ -
===================== =================





See accompanying notes to financial statements
5





WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS
For the Quarter Ended December 31, 2004
(unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------

General
- -------

The accompanying condensed unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act
of 1934. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and nine
months ended December 31, 2004 are not necessarily indicative of the results
that may be expected for the fiscal year ending March 31, 2005. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's annual report on Form 10-K for the fiscal year ended March 31,
2004.

Organization
- ------------

WNC California Housing Tax Credits, L.P., a California Limited Partnership (the
"Partnership"), was formed on September 15, 1988 under the laws of the State of
California. The Partnership was formed to invest primarily in other limited
partnerships (the "Local Limited Partnerships") which own and operate
multi-family housing complexes (the "Housing Complex") that are eligible for
low-income housing tax credits. The local general partners (the "Local General
Partners") of each Local Limited Partnership retain responsibility for
maintaining, operating and managing the Housing Complex.

WNC & Associates, Inc. ("Associates") and Wilfred N. Cooper, Sr. are the general
partners of the Partnership (the "General Partners"). The chairman and president
of Associates own substantially all of the outstanding stock of Associates. The
business of the Partnership is conducted primarily through the General Partners
as the Partnership has no employees of its own.

The Partnership shall continue to be in full force and effect until December 31,
2037 unless terminated prior to that date pursuant to the partnership agreement
or law.

The Partnership Agreement authorized the sale of up to 10,000 units at $1,000
per Unit ("Units"). The offering of Units concluded in October 1990 at which
time 7,450 Units representing subscriptions in the amount of $7,450,000, had
been accepted. The General Partners have a 1% interest in operating profits and
losses, taxable income and losses, in cash available for distribution from the
Partnership and tax credits of the Partnership. The limited partners will be
allocated the remaining 99% of these items in proportion to their respective
investments.

After the limited partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investments (as defined
in the Partnership Agreement) and the General Partners have received proceeds
equal to their capital contributions from the remainder, any additional sale or
refinancing proceeds will be distributed 99% to the limited partners (in
proportion to their respective investments) and 1% to the General Partners.




6




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarter Ended December 31, 2004
(unaudited)


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------

Certain Risks and Uncertainties
- -------------------------------

An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:

The Low-Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low-Income Housing Credit s and
the fractional recapture of Low-Income Housing Credits already taken. In most
cases the annual amount of Low-Income Housing Credits that an individual can use
is limited to the tax liability due on the person's last $25,000 of taxable
income. The Local Limited Partnerships may be unable to sell the Housing
Complexes at a price which would result in the Partnership realizing cash
distributions or proceeds from the transaction. Accordingly, the Partnership may
be unable to distribute any cash to its limited partners. Low-Income Housing
Credits may be the only benefit from an investment in the Partnership.

The Partnership has invested in a limited number of Local Limited Partnerships.
Such limited diversity means that the results of operation of each single
Housing Complex will have a greater impact on the Partnership. With limited
diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage indebtedness. If a Local Limited Partnership failed to
pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
future Low-Income Housing Credits, a fractional recapture of prior Low-Income
Housing Credits, and a loss of the Partnership's investment in the Housing
Complex would occur. The Partnership is a limited partner or non-managing member
of each Local Limited Partnership. Accordingly, the Partnership will have very
limited rights with respect to management of the Local Limited Partnerships. The
Partnership will rely totally on the Local General Partners. Neither the
Partnership's investments in Local Limited Partnerships, nor the Local Limited
Partnerships' investments in Housing Complexes, are 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 interests
in Local Limited Partnerships; limitations on removal of Local General Partners;
limitations on subsidy programs; and possible changes in applicable regulations.
Uninsured casualties could result in loss of property and Low-Income Housing
Credits and recapture of Low-Income Housing Credits previously taken. The value
of real estate is subject to risks from fluctuating economic conditions,
including employment rates, inflation, tax, environmental, land use and zoning
policies, supply and demand of similar properties, and neighborhood conditions,
among others.

The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low-Income Housing
Credits and tax losses allocable to the limited partners could be reduced if the
IRS were successful in such a challenge. The alternative minimum tax could
reduce tax benefits from an investment in the Partnership. Changes in tax laws
could also impact the tax benefits from an investment in the Partnership and/or
the value of the Housing Complexes.

Substantially all of the Low Income Housing Credits anticipated to be realized
from the Local Limited Partnerships have been realized. The Partnership does not
anticipate being allocated a significant amount of Low Income Housing Credits
from the Local Limited Partnerships in the future. Until the Local Limited
Partnerships have completed the 15 year Low Income Housing Credit compliance
period risks exist for potential recapture of prior low Income Housing Credits.



7




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarter Ended December 31, 2004
(unaudited)


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------

No trading market for the Units exists or is expected to develop. Limited
partners may be unable to sell their Units except at a discount and should
consider their Units to be a long-term investment. Individual limited partners
will have no recourse if they disagree with actions authorized by a vote of the
majority of Limited Partners.

Anticipated future and existing cash resources of the Partnership are not
sufficient to pay existing liabilities of the partnership. Substantially all of
the liabilities of the Partnership are payable to the General Partner. Though a
substantial portion of the amounts payable to the General Partner are
contractually currently payable, the Partnership anticipates that the General
Partner will not require the payment of these contractual obligations until
capital reserves are in excess of the future foreseeable working capital
requirements of the Partnership. However, the Partnership is contractually
required to pay these obligations to the General Partner and/or its affiliates
on a current basis. The Partnership would be adversely affected should the
General Partner and/or its affiliates demand current payment of these
contractual obligations and or suspend services for this or any other reason.

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 Partnerships' results of operations
and for any contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by a comparison of the carrying
amount to future undiscounted net cash flows expected to be generated. If an
investment is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the investment exceeds
fair value. The accounting policies of the Local Limited Partnerships are
generally 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 limited partnerships for the periods ended December 31, 2004
and 2003 have been recorded by the Partnership based on nine months of reported
results estimated by management of the Partnership. Management's estimate for
the six-month period is based on either actual unaudited results reported by the
Local Limited Partnerships or historical trends in the operations of the Local
Limited Partnerships. Equity in losses from the 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 are accelerated to
the extent of losses available (see Note 2). 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.

Offering Expenses
- -----------------

Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. WNC is obligated to pay all offering
and organization costs in excess of 15% (including sales commissions) of the
total offering proceeds. Offering expenses are reflected as a reduction of
limited partners' capital and amounted to $946,704 at the end of all periods
presented.



8




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarter Ended December 31, 2004
(unaudited)


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------

Exit Strategy
- -------------

The IRS compliance period for low-income housing tax credit properties is
generally 15 years from occupancy following construction or rehabilitation
completion. WNC was one of the first in the industry to offer investments using
the tax credit. Now these very first programs are completing their compliance
period.

With that in mind, we are continuing our review of the Partnership's holdings,
with special emphasis on the more mature properties including those that have
satisfied the IRS compliance requirements. Our review will consider many factors
including extended use requirements on the property (such as those due to
mortgage restrictions or state compliance agreements), the condition of the
property, and the tax consequences to the limited partners from the sale of the
property.

Upon identifying those properties with the highest potential for a successful
sale, refinancing or syndication, we expect to proceed with efforts to liquidate
those properties. Our objective is to maximize the limited partners' return
wherever possible and, ultimately, to wind down those funds that no longer
provide tax benefits to limited partners. To date no properties in the
Partnership have been selected.

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 all highly liquid investments with original maturities
of three months or less when purchased to be cash equivalents. As of December 31
and March 31, 2004, the Partnership had no cash equivalents.

Net Loss Per Limited Partner Unit
- ---------------------------------

Net loss per limited partnership unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit
includes no dilution and is computed by dividing loss available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net loss per unit is not required.

Income Taxes
- ------------

No provision for income taxes has been recorded in the accompanying financial
statements as any liability and/or benefits for income taxes as income taxes
flows to the partners of the Partnership and is their obligation and/or benefit.
For income tax purposes the Partnership reports on a calendar year basis.

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
for all periods presented, as defined by SFAS No. 130.


9




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarter Ended December 31, 2004
(unaudited)


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------

New Accounting Pronouncements
- -----------------------------

In January 2003, the FASB issued Interpretation No. 46 ("FIN46"), "Consolidation
of Variable Interest Entities." FIN 46 provides guidance on when a company
should include the assets, liabilities, and activities of a variable interest
entity ("VIE") in its financial statements and when it should disclose
information about its relationship with a VIE. A VIE is a legal structure used
to conduct activities or hold assets, which must be consolidated by a company if
it is the primary beneficiary because it absorbs the majority of the entity's
expected losses, the majority of the expected returns, or both.

In December 2003, the FASB issued a revision of FIN 46 ("FIN 46R") to clarify
some of its provisions. The revision results in multiple effective dates based
on the nature as well as the creation date of the VIE. VIEs created after
January 31, 2003, but prior to January 1, 2004, may be accounted for either
based on the original interpretations or the revised interpretations. However,
all VIEs must be accounted for under the revised interpretations as of March 31,
2004, when FIN 46R is effective for the Partnership.

This Interpretation would require consolidation by the Partnership of certain
Local Limited Partnerships' assets and liabilities and results of operations if
the Partnership determined that the Local Limited Partnership was a VIE and that
the Partnership was the "Primary Beneficiary." Minority interests may be
recorded for the Local Limited Partnerships' ownership share attributable to
other Limited Partners. Where consolidation of Local Limited Partnerships is not
required, additional financial information disclosures of Local Limited
Partnerships may be required. The Partnership has assessed the potential
consolidation effects of the Interpretation and concluded that the adoption of
the Interpretation will not have a material impact on the financial statements
of the Partnerships.

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------

As of the periods presented, the Partnership has acquired limited partnership
interests in eleven Local Limited Partnerships each of which owns one Housing
Complex consisting of an aggregate of 433 apartment units. The respective Local
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.

Equity in losses of the local limited partnerships is recognized in the
financial statements until the related investments account is reduced to a zero
balance. Losses incurred after the investments 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.



10



WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarter Ended December 31, 2004
(unaudited)



NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------

Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income.

The following is a summary of the equity method activity of the investments in
Local Limited Partnerships for the periods presented below:

For the Nine Months For the Year Ended
Ended
December 31, 2004 March 31, 2004
-------------------------- ---------------------


Investments per balance sheet,
beginning of period $ - $ 453,314
Equity in income (losses) of limited
partnerships - 25,028
Distributions received - (2,816)
Impairment loss - (470,093)
Amortization of paid
acquisition fees and costs - (5,433)
-------------------------- ---------------------
Investments per balance sheet,
end of period $ - $ -
========================== =====================




11




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarter Ended December 31, 2004
(unaudited)



NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------

Selected financial information for the nine months ended December 31, 2004 and
2003 from the unaudited combined condensed financial statements of the limited
partnerships in which the partnership has invested is as follows:


COMBINED CONDENSED STATEMENTS OF OPERATIONS
2004 2003
--------------------- --------------------


Revenues $ 1,993,000 $ 1,550,000
--------------------- --------------------

Expenses
Interest expense 286,000 290,000
Depreciation & amortization 504,000 493,000
Operating expenses 1,245,000 1,094,000
--------------------- --------------------
Total expenses 2,035,000 1,877,000
--------------------- --------------------

Net loss $ (42,000) $ (327,000)
===================== ====================
Net loss allocable to the Partnership $ (42,000) $ (324,000)
===================== ====================
Net loss recorded by the Partnership $ - $ (76,000)
===================== ====================


Certain Local Limited Partnerships have incurred significant operating losses
and/or have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partners may be
required to sustain operations of such Local Limited Partnerships. If additional
capital contributions are not made when they are required, the Partnership's
investments 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
- -----------------------------------

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 investments in Local
Limited Partnerships and the Partnership's allocable share of the amount of
the mortgage loans on and other debts related to the Housing Complexes
owned by such Local Limited Partnerships. Fees of $83,891 were incurred
during each of the nine months ended December 31, 2004 and 2003. The
Partnership paid the General Partners and or their affiliates $0 of those
fees during each of the nine months ended December 31, 2004 and 2003.

(b) The Partnership reimburses the General Partner or its affiliates for
operating expenses incurred in behalf of the Partnership. Operating expense
reimbursements were $0 during the nine months ended December 31, 2004 and
2003.




12




WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Quarter Ended December 31, 2004
(unaudited)



NOTE 3 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------

The accrued fees and expenses due to the General Partners and affiliates consist
of the following at:

December 31, 2004 March 31, 2004
---------------------- -----------------


Reimbursement for expenses paid by the General
Partners and affiliates $ 41,442 $ 30,252
Asset management fee payable 1,486,276 1,402,385
---------------------- -----------------

$ 1,527,718 $ 1,432,637
====================== =================

The General Partners do not anticipate that the accrued fees will be paid until
such time as capital reserves are in excess of future foreseeable working
capital requirements of the Partnership.

The Partnership currently has insufficient working capital to fund its
operations. WNC has agreed to continue providing advances sufficient enough to
fund the operations and working capital requirements of the Partnership through
at least December 31, 2005.




13




Item 2. 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-Q 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-Q and in other reports we filed with the
Securities and Exchange Commission. The following discussion should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto
included elsewhere in this filing.

The following discussion and analysis compares the results of operations for the
three and nine months ended December 31, 2004 and 2003, and should be read in
conjunction with the condensed consolidated financial statements and
accompanying notes included within this report.

Financial Condition

The Partnership's assets at December 31, 2004 consisted of $18,000 in cash.
Liabilities at December 31, 2004 primarily consisted of $1,528,000 of accrued
asset management fees and expenses due to the General Partner and affiliates.

Results of Operations

Three Months Ended December 31, 2004 Compared to the Three Months Ended December
31, 2003. The Partnership's net loss for the three months ended December 31,
2004 was $(28,000), reflecting a decrease of approximately $28,000 from the net
loss of $(56,000) experienced for the three months ended December 31, 2003. The
decrease in net loss is primarily due to a decrease of equity in losses from
limited partnerships of $26,000 due to losses of $(26,000) for the three months
ended December 31, 2003 compared to the loss of $0 for the three months ended
December 31, 2004. This decrease was a result of the Partnership not recognizing
any losses of the Local Limited Partnerships. The investments in all Local
Limited Partnerships remained at $0 at December 31, 2004. Since the
Partnership's liability with respect to its investments is limited, losses in
excess of investments are not recognized. In addition to the decrease in equity
in losses from Limited Partnerships there was also a decrease of $2,000 in loss
from operations to $(28,000) for the three months ended December 31, 2004 from
$(30,000) for the three months ended December 31, 2003. The decrease in losses
from operations was due to a decrease of $1,000 in amortization, along with a
combined decrease of approximately $1,000 in legal, accounting and other
operating expense.



14




Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued


Nine Months Ended December 31, 2004 Compared to Nine Months Ended December 31,
2003. The Partnership's net loss for the nine months ended December 31, 2004 was
$(84,000), reflecting a decrease of $96,000 from the net loss of $(180,000)
experienced for the nine months ended December 31, 2003. The decrease in net
loss is primarily due to a decrease of equity in losses from limited
partnerships of $76,000 due to losses of $(76,000) for the nine months ended
December 31, 2003 compared to the loss of $0 for the nine months ended December
31, 2004. This decrease was a result of the Partnership not recognizing any
losses of the Local Limited Partnerships. The investments in all Local Limited
Partnerships remained at $0 at December 31, 2004. Since the Partnership's
liability with respect to its investments is limited, losses in excess of
investments are not recognized. In addition to the decrease in equity in losses
from Limited Partnerships there was also a decrease of $20,000 in loss from
operations to $(84,000) for the nine months ended December 31, 2004 from
$(104,000) for the nine months ended December 31, 2003. The decrease in losses
from operations was due to a decrease of $4,000 in amortization, a $1,000
decrease in other operating expenses, a $7,000 decrease in legal and accounting
expense along with a $8,000 increase in distribution income.

Cash Flows

Nine Months Ended December 31, 2004 Compared to Nine Months Ended December 31,
2003. Net increase in cash during the nine months ended December 31, 2004 was
$11,000 compared to an increase in cash for the nine months ended December 31,
2003 of $5,000 reflect a net change of $6,000. The change in net cash is
primarily due to a decrease of $8,000 in accrued fees and expenses due to
General Partner and affiliates. Which was offset by a decrease in distributions
from limited partnerships of $(2,000).

During the nine months ended December 31, 2004, accrued payables, which consist
primarily of related party management fees and advances due to the General
Partner, increased by $95,000. The General Partner does not anticipate that
these accrued fees and advances will be paid until such time as capital reserves
are in excess of foreseeable working capital requirements of the partnership.

Anticipated future and existing cash resources of the Partnership are not
sufficient to pay existing liabilities of the partnership. Substantially all of
the liabilities of the Partnership are payable to the General Partner. Though a
substantial portion of the amounts payable to the General Partner are
contractually currently payable, the Partnership anticipates that the General
Partner will not require the payment of these contractual obligations until
capital reserves are in excess of the future foreseeable working capital
requirements of the Partnership. However, the Partnership is contractually
required to pay these obligations to the General Partner and/or its affiliates
on a current basis. The Partnership would be adversely affected should the
General Partner and/or its affiliates demand current payment of these
contractual obligations and or suspend services for this or any other reason.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

NOT APPLICABLE

Item 4. Controls and Procedures.

As of the end of the period covered by this report, the Partnership's General
Partner, under the supervision and with the participation of the Chief Executive
Officer and Chief Financial Officer of Associates carried out an evaluation of
the effectiveness of the Fund's "disclosure controls and procedures" as defined
in Securities Exchange Act of 1934 Rule 13a-15 and 15d-15. Based on that
evaluation, the Chief Executive Officer and Principal Financial Officer have
concluded that as of the end of the period covered by this report, the
Partnership's disclosure controls and procedures were adequate and effective in
timely alerting them to material information relating to the Partnership
required to be included in the Partnership's periodic SEC filings.

Changes in internal controls. There were no changes in the Partnership's
internal control over financial reporting that occurred during the quarter ended
December 31, 2004 that materially affected, or are reasonably likely to
materially affect, the Partnership's internal control over financial reporting.



15




Part II. Other Information

Item 1. Legal Proceedings

NONE

Item 2. Changes in Securities and Use of Proceeds

NONE

Item 3. Defaults Upon Senior Securities

NONE

Item 4. Submission of Matters to a Vote of Security Holders

NONE

Item 5. Other Information

NONE

Item 6. Exhibits

31.1 Certification of the Principal Executive Officer pursuant to Rule
13a-15(e) and 15d-15(e), as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002. (filed herewith)

31.2 Certification of the Principal Financial Officer pursuant to Rule
13a-15(e) and 15d-15(e), as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002. (filed herewith)

32.1 Section 1350 Certification of the Chief Executive Officer. (filed
herewith)

32.2 Section 1350 Certification of the Chief Financial Officer. (filed
herewith)



16




Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

WNC CALIFORNIA HOUSING TAX CREDITS, L.P.

By: WNC & Associates, Inc. General Partner





By: /s/ Wilfred N. Cooper, Jr.
---------------------------

Wilfred N. Cooper, Jr.
President and Chief Executive Officer of WNC & Associates, Inc.
Date: January 25, 2005






By: /s/ Thomas J. Riha
------------------

Thomas J. Riha
Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc.

Date: January 25, 2005



17