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EX-31.1 - AMERICAN TAX CREDIT PROPERTIES LPv191692_ex31-1.htm
EX-31.2 - AMERICAN TAX CREDIT PROPERTIES LPv191692_ex31-2.htm
EX-32.1 - AMERICAN TAX CREDIT PROPERTIES LPv191692_ex32-1.htm
EX-32.2 - AMERICAN TAX CREDIT PROPERTIES LPv191692_ex32-2.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 


FORM 10-Q

(Mark One)
x           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 29, 2010

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: 0-17619

American Tax Credit Properties L.P.
(Exact Name of Registrant as Specified in its Charter)

Delaware
 
13-3458875
(State or Other Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
 
Identification No.)
     
Richman Tax Credit Properties L.P.
   
340 Pemberwick Road
   
Greenwich, Connecticut
 
06831
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant's Telephone Number, Including Area Code:  (203) 869-0900

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 filing requirements for the past 90 days.

Yes  x No  o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes  o   No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  o  Accelerated Filer o  Non-Accelerated Filer o   Smaller Reporting Company   x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o  No x

As of July 29, 2010, there are 41,286 units of limited partnership interest outstanding.

 
 

 

AMERICAN TAX CREDIT PROPERTIES L.P.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Table of Contents
 
Page
     
Balance Sheets
 
3
     
Statements of Operations
 
4
     
Statements of Cash Flows
 
5
     
Notes to Financial Statements
 
6

 
2

 

AMERICAN TAX CREDIT PROPERTIES L.P.
BALANCE SHEETS
(UNAUDITED)
 
   
June 29,
   
March 30,
 
   
2010
   
2010
 
             
ASSETS
           
             
Cash and cash equivalents
  $ 117,573     $ 295,778  
Investment in mutual fund
    1,556,141       1,555,638  
Investment in bond
    97,370          
Interest receivable
    2,292          
Investment in local partnerships
    278,710       270,769  
                 
    $ 2,052,086     $ 2,122,185  
                 
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
               
                 
Liabilities
               
                 
Accounts payable and accrued expenses
  $ 27,306     $ 73,923  
Payable to general partner and affiliates
    457,082       369,406  
                 
      484,388       443,329  
                 
Commitments and contingencies
               
                 
Partners' equity (deficit)
               
                 
General partner
    (349,976 )     (348,912 )
Limited partners (41,286 units of limited partnership interest outstanding)
    1,922,399       2,027,768  
Accumulated other comprehensive loss
    (4,725 )        
                 
      1,567,698       1,678,856  
                 
    $ 2,052,086     $ 2,122,185  

See Notes to Financial Statements.

 
3

 

AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 29, 2010 AND 2009
(UNAUDITED)

   
2010
   
2009
 
             
REVENUE
           
             
Interest
  $ 4,415     $ 226  
Other income from local partnerships
    4,893       14,680  
                 
TOTAL REVENUE
    9,308       14,906  
                 
EXPENSES
               
                 
Administration fees
    45,931       45,931  
Management fee
    43,867       43,867  
Professional fees
    13,876       26,529  
State of New Jersey filing fee
    11,655       12,556  
Printing, postage and other
    8,353       3,187  
                 
TOTAL EXPENSES
    123,682       132,070  
                 
      (114,374 )     (117,164 )
                 
Equity in income (loss) of investment in local partnerships
    7,941       (9,718 )
                 
NET LOSS
    (106,433 )     (126,882 )
                 
Other comprehensive loss
    (4,725 )        
                 
COMPREHENSIVE LOSS
  $ (111,158 )   $ (126,882 )
                 
NET LOSS ATTRIBUTABLE TO
               
                 
General partner
  $ (1,064 )   $ (1,269 )
Limited partners
    (105,369 )     (125,613 )
                 
    $ (106,433 )   $ (126,882 )
                 
NET LOSS per unit of limited partnership interest (41,286 units of limited partnership interest)
  $ (2.55 )   $ (3.04 )

See Notes to Financial Statements.

 
4

 

AMERICAN TAX CREDIT PROPERTIES L.P.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 29, 2010 AND 2009
(UNAUDITED)

   
2010
   
2009
 
             
CASH FLOWS FROM OPERATING ACTIVITIES
           
             
Interest received
  $ 4,078     $ 226  
Cash paid for
               
Administration fees
    (2,122 )     (8,147 )
Professional fees
    (56,313 )     (67,933 )
State of New Jersey filing fee
    (16,684 )     (40,384 )
Printing, postage and other expenses
    (7,504 )     (10,416 )
                 
Net cash used in operating activities
    (78,545 )     (126,654 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
                 
Investments in mutual fund
    (3,613 )        
Investment in bond
    (100,940 )        
Distributions received from local partnerships
    4,893       14,680  
                 
Net cash provided by (used in) investing activities
    (99,660 )     14,680  
                 
Net decrease in cash and cash equivalents
    (178,205 )     (111,974 )
                 
Cash and cash equivalents at beginning of period
    295,778       1,817,949  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 117,573     $ 1,705,975  
                 
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES
               
                 
Net loss
  $ (106,433 )   $ (126,882 )
                 
Adjustments to reconcile net loss to net cash used in operating activities
               
                 
Equity in loss (income) of investment in local partnerships
    (7,941 )     9,718  
Other income from local partnerships
    (4,893 )     (14,680 )
Amortization of premium on investment in bond
    205          
Increase in interest receivable
    (542 )        
Increase in prepaid expenses
            (11,974 )
Decrease in accounts payable and accrued expenses
    (46,617 )     (64,487 )
Increase in due to general partner and affiliates
    87,676       81,651  
                 
NET CASH USED IN OPERATING ACTIVITIES
  $ (78,545 )   $ (126,654 )
                 
SIGNIFICANT NONCASH INVESTING ACTIVITIES
               
                 
Unrealized loss on investment in mutual fund
  $ 3,110          
                 
Unrealized loss on investment in bond
  $ 1,615          

See Notes to Financial Statements.

 
5

 

AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 2010
(UNAUDITED)

1.
Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.  They do not include all information and footnotes required by GAAP for complete financial statements.  The results of operations are impacted, in part, by the combined results of operations of the Local Partnerships, which are provided by the Local Partnerships on an unaudited basis during interim periods.  Accordingly, the accompanying unaudited financial statements are dependent on such unaudited information.  In the opinion of the General Partner, the accompanying unaudited financial statements include all adjustments necessary to present fairly the financial position as of June 29, 2010 and the results of operations and cash flows for the interim periods presented.  All adjustments are of a normal recurring nature.  The results of operations for the three months ended June 29, 2010 are not necessarily indicative of the results that may be expected for the entire year.

2.
Investment in Local Partnerships

The Partnership originally acquired limited partner interests (the “Local Partnership Interests”) in nineteen Local Partnerships representing capital contributions in the aggregate amount of $36,228,149, which includes voluntary advances made to certain Local Partnerships and all of which has been paid.  As of June 29, 2010, the Partnership holds a Local Partnership Interest in ten Local Partnerships (see discussion below regarding the potential sale of a Local Partnership Interest).  The Partnership has no legal obligation to fund any operating deficits of the Local Partnerships.

For the three months ended June 29, 2010, the investment in local partnerships activity consists of the following:

Investment in local partnerships as of March 30, 2010
  $ 270,769  
         
Equity in income of investment in local partnerships
    7,941 *
         
Distributions received from Local Partnerships
    (4,893 )
         
Distributions classified as other income
    4,893  
         
Investment in local partnerships as of June 29, 2010
  $ 278,710  

*
In the event the operations of a Local Partnership result in a loss, equity in loss of each investment in Local Partnership allocated to the Partnership is recognized to the extent of the Partnership’s investment balance in each Local Partnership.  Equity in loss in excess of the Partnership’s investment balance in a Local Partnership is allocated to other partners’ capital in any such Local Partnership.

In September 2009, the Partnership entered into a purchase agreement (the “Purchase Agreement”) to sell its Local Partnership Interest in Federal Apartments Limited Partnership (“Federal”) to an affiliate of the Local General Partner of Federal for $334,000.  The Purchase Agreement is subject to the approval of the United States Department of Housing and Urban Development (“HUD”) and there can be no assurance that the Local Partnership Interest will be sold under the terms of the Purchase Agreement.  The Partnership’s investment balance in Federal, after cumulative equity losses, became zero during the year ended March 30, 1997.
 
 
6

 

AMERICAN TAX CREDIT PROPERTIES L.P.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
JUNE 29, 2010
(UNAUDITED)

2.
Investment in Local Partnerships (Continued)
 
Cobbet Hill Associates Limited Partnership (“Cobbet”) was originally financed with a first mortgage with mandatory monthly payment terms with the Massachusetts Housing Finance Agency (“MHFA”) and a second mortgage with MHFA under the State Housing Assistance for Rental Production Program (the “SHARP Operating Loan”) whereby proceeds would be advanced monthly as an operating subsidy (the “Operating Subsidy Payments”).  The terms of the SHARP Operating Loan called for declining Operating Subsidy Payments over its term (not more than 15 years).  However, due to the economic condition of the Northeast region in the early 1990’s, MHFA instituted an operating deficit loan (the “ODL”) program that supplemented the scheduled reduction in the Operating Subsidy Payments.  Effective October 1, 1997, MHFA announced its intention to eliminate the ODL program, such that Cobbet no longer receives the ODL, without which Cobbet is unable to make the full mandatory debt service payments on its first mortgage.  MHFA issued a formal notice of default dated February 2, 2004.  The Local General Partners of Cobbet have informed MHFA that they would transfer the ownership of the Property to the unaffiliated management agent or to other parties, which might redevelop and recapitalize the Property.  The Partnership does not believe that it will receive any proceeds from such a transfer.  Since the date MHFA ceased funding the ODL through December 31, 2009, Cobbet has accumulated over $9,050,000 of arrearages and other charges on the first mortgage; as a result of the default, principal and accrued interest in excess of $23,000,000 in connection with the first mortgage, the SHARP Operating Loan and the ODL are considered currently due.  Cumulative voluntary advances made by the Partnership to Cobbet as of June 29, 2010 total $392,829, none of which were made during the three months then ended.  Such voluntary advances were recorded as investment in local partnerships and were written off as additional equity in loss of investment in local partnerships.  The Partnership’s investment balance in Cobbet, after cumulative equity losses, became zero during the year ended March 30, 1994.

3.
Investment in Mutual Fund

The Partnership carries its investment in mutual fund (the “Fund”) at estimated fair value.  The fair value of the Partnership’s investment in mutual fund is classified within Level 1 of the fair value hierarchy of the guidance on Fair Value Measurements as defined in Accounting Standards Codification (“ASC”) Topic 820.  Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Partnership has the ability to access.  The Fund’s net asset value (“NAV”) is $9.98 per share as of June 29, 2010.  The unrealized loss of $3,110 is included as a component of accumulated other comprehensive loss in the accompanying unaudited financial statements as of and for the three months ended June 29, 2010.

4.
Investment in Bond

The Partnership carries its investment in bond as available-for-sale because such investment is used to facilitate and provide flexibility for its obligations, including resolving circumstances that may arise in connection with the Local Partnerships.  Investment in bond is reflected in the accompanying unaudited balance sheet as of June 29, 2010 at estimated fair value and is classified within Level 1 of the fair value hierarchy of the guidance on Fair Value Measurements (see discussion in Note 3 above).  The unrealized loss of $1,615 is included as a component of accumulated other comprehensive loss in the accompanying unaudited financial statements as of and for the three months ended June 29, 2010.

As of June 29, 2010, certain information concerning investment in bond is as follows:

Description and maturity
 
Amortized
cost
   
Gross
unrealized
gain
   
Gross
unrealized
 loss
   
Estimated
fair value
 
                         
Corporate debt security
                       
After ten years
  $ 98,985     $     $ (1,615 )   $ 97,370  

5.
Additional Information

Additional information, including the audited March 30, 2010 Financial Statements and the Organization, Purpose and Summary of Significant Accounting Policies, is included in the Partnership's Annual Report on Form 10-K for the fiscal year ended March 30, 2010 on file with the Securities and Exchange Commission.

 
7

 

AMERICAN TAX CREDIT PROPERTIES L.P.

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

Material Changes in Financial Condition

As of June 29, 2010, American Tax Credit Properties L.P. (the “Registrant”) has not experienced a significant change in financial condition as compared to March 30, 2010.  Principal changes in assets are comprised of periodic transactions and adjustments and equity in income (loss) from operations of the local partnerships (the “Local Partnerships”), which own low-income multifamily residential complexes (the “Properties”) that qualified for the low-income tax credit in accordance with Section 42 of the Internal Revenue Code (the “Low-income Tax Credit”).  During the three months ended June 29, 2010, Registrant received cash from interest revenue and distributions from Local Partnerships and utilized cash for operating expenses and investments in a mutual fund and a bond.  Cash and cash equivalents, investment in mutual fund and investment in bond decreased, in the aggregate, by approximately $80,000 during the three months ended June 29, 2010 (which includes unrealized losses on investment in mutual fund and investment in bond in the aggregate of approximately $5,000).  Registrant intends to hold the bond until its call date (September 2013) and therefore does not expect to realize significant gains or losses on its investment in bond, if any.  During the three months ended June 29, 2010, the investment in local partnerships increased as a result of Registrant's equity in the Local Partnerships' net income for the three months ended March 31, 2010 of $7,941.  Payable to general partner and affiliates represents deferred administration and management fees in the accompanying unaudited balance sheet as of June 29, 2010.

Results of Operations

Registrant’s operating results are dependent, in part, upon the operating results of the Local Partnerships and are impacted by the Local Partnerships’ policies.  In addition, the operating results herein are not necessarily the same for tax reporting.  Registrant accounts for its investment in local partnerships in accordance with the equity method of accounting.  Accordingly, the investment is carried at cost and is adjusted for Registrant’s share of each Local Partnership’s results of operations and by cash distributions received.  In the event the operations of a Local Partnership result in a loss, equity in loss of each investment in Local Partnership allocated to Registrant is recognized to the extent of Registrant’s investment balance in each Local Partnership.  Equity in loss in excess of Registrant’s investment balance in a Local Partnership is allocated to other partners’ capital in any such Local Partnership.

Cumulative losses and cash distributions in excess of investment in local partnerships may result from a variety of circumstances, including a Local Partnership's accounting policies, subsidy structure, debt structure and operating deficits, among other things.  In addition, the book value of Registrant’s investment in each Local Partnership (the “Local Partnership Carrying Value”) may be reduced if the Local Partnership Carrying Value is considered to exceed the estimated value derived by management.  Accordingly, cumulative losses and cash distributions in excess of the investment or an adjustment to a Local Partnership’s Carrying Value are not necessarily indicative of adverse operating results of a Local Partnership.

Registrant’s operations for the three months ended June 29, 2010 and 2009 resulted in net losses of $106,433 and $126,882, respectively.  The decrease in net loss from fiscal 2009 to fiscal 2010 is primarily attributable to an increase in equity in income of investment in local partnerships of approximately $18,000, which is attributable to an increase in the net operating income of the Local Partnership in which Registrant continues to have an investment balance.  Other comprehensive loss for the three months ended June 29, 2010 resulted from net unrealized losses on investment in mutual fund and investment in bond of $3,110 and $1,615, respectively.

 
8

 

AMERICAN TAX CREDIT PROPERTIES L.P.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).

Local Partnership Matters

Registrant's primary objective, to provide Low-income Tax Credits to its limited partners (the “Limited Partners”), has been completed.  The relevant state tax credit agency allocated each of the Local Partnerships an amount of Low-income Tax Credits, which are generally available for a ten year period from the year the Property is placed in service (the “Ten Year Credit Period”).  The Ten Year Credit Period was fully exhausted with respect to all of the Properties as of December 31, 2003.  The required holding period of each Property, in order to avoid Low-income Tax Credit recapture, is fifteen years from the year in which the Low-income Tax Credits commence on the last building of the Property (the "Compliance Period").  The Compliance Period of all of the Local Partnerships had expired as of December 31, 2004.  In addition, certain of the Local Partnerships entered into agreements with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period (the “Extended Use Provisions”).  Although the Extended Use Provisions do not extend the Compliance Period of the respective Local Partnerships, such provisions limit the number and availability of potential purchasers of the Properties.  Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted.  Registrant is in the process of disposing of its limited partner interests in the Local Partnerships (the “Local Partnership Interests”).  As of June 29, 2010, Registrant owns ten of the nineteen Local Partnership Interests originally acquired (see discussion below regarding the potential sale of a Local Partnership Interest).  Registrant has served a demand on the local general partners (the “Local General Partners”) of all remaining Local Partnerships to commence a sale process to dispose of the Properties.  In the event a sale cannot be consummated, it is the General Partner’s intention to sell or assign Registrant’s Local Partnership Interests.  Following the final disposition of its Local Partnership Interests, Registrant intends to dissolve.  It is uncertain as to the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments.  There can be no assurance as to when Registrant will dispose of its remaining Local Partnership Interests.

The Properties are principally comprised of subsidized and leveraged low-income multifamily residential complexes located throughout the United States and Puerto Rico.  Many of the Local Partnerships receive rental subsidy payments, including payments under Section 8 of Title II of the Housing and Community Development Act of 1974 ("Section 8”).  The subsidy agreements expire at various times.  Since October 1997, the United States Department of Housing and Urban Development (“HUD”) has issued a series of directives related to project based Section 8 contracts that define owners’ notification responsibilities, advise owners of project based Section 8 properties of what their options are regarding the renewal of Section 8 contracts, provide guidance and procedures to owners, management agents, contract administrators and HUD staff concerning renewal of Section 8 contracts, provide policies and procedures on setting renewal rents and handling renewal rent adjustments and provide the requirements and procedures for opting-out of a Section 8 project based contract.  Registrant cannot reasonably predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs including the Section 8 program.  Such changes could adversely affect the future net operating income before debt service (“NOI”) and debt structure of any or all Local Partnerships currently receiving such subsidy or similar subsidies.  Eight Local Partnerships’ Section 8 contracts are currently subject to renewal under applicable HUD guidelines.  Of the eight Local Partnerships noted above, five have entered into restructuring agreements, resulting in a change to both rent subsidy and mandatory debt service.

The Local Partnerships have various financing structures which include (i) required debt service payments ("Mandatory Debt Service") and (ii) debt service payments that are payable only from available cash flow subject to the terms and conditions of the notes, which may be subject to specific laws, regulations and agreements with appropriate federal and state agencies ("Non-Mandatory Debt Service or Interest").  Registrant has no legal obligation to fund any operating deficits of the Local Partnerships.

In September 2009, Registrant entered into a purchase agreement (the “Purchase Agreement”) to sell its Local Partnership Interest in Federal Apartments Limited Partnership (“Federal”) to an affiliate of the Local General Partner of Federal for $334,000.  The Purchase Agreement is subject to the approval of HUD and there can be no assurance that the Local Partnership Interest will be sold under the terms of the Purchase Agreement.  Registrant’s investment balance in Federal, after cumulative equity losses, became zero during the year ended March 30, 1997.

 
9

 

AMERICAN TAX CREDIT PROPERTIES L.P.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued).

Cobbet Hill Associates Limited Partnership (“Cobbet”) was originally financed with a first mortgage with mandatory monthly payment terms with the Massachusetts Housing Finance Agency (“MHFA”) and a second mortgage with MHFA under the State Housing Assistance for Rental Production Program (the “SHARP Operating Loan”) whereby proceeds would be advanced monthly as an operating subsidy (the “Operating Subsidy Payments”).  The terms of the SHARP Operating Loan called for declining Operating Subsidy Payments over its term (not more than 15 years).  However, due to the economic condition of the Northeast region in the early 1990’s, MHFA instituted an operating deficit loan (the “ODL”) program that supplemented the scheduled reduction in the Operating Subsidy Payments.  Effective October 1, 1997, MHFA announced its intention to eliminate the ODL program, such that Cobbet no longer receives the ODL, without which Cobbet is unable to make the full mandatory debt service payments on its first mortgage.  MHFA issued a formal notice of default dated February 2, 2004.  The Local General Partners of Cobbet have informed MHFA that they would transfer the ownership of the Property to the unaffiliated management agent or to other parties, which might redevelop and recapitalize the Property.  Registrant does not believe that it will receive any proceeds from such a transfer.  Since the date MHFA ceased funding the ODL through December 31, 2009, Cobbet has accumulated over $9,050,000 of arrearages and other charges on the first mortgage; as a result of the default, principal and accrued interest in excess of $23,000,000 in connection with the first mortgage, the SHARP Operating Loan and the ODL are considered currently due.  Registrant’s investment balance in Cobbet, after cumulative equity losses, became zero during the year ended March 30, 1994.

Critical Accounting Policies and Estimates

The accompanying unaudited financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which requires Registrant to make certain estimates and assumptions.  The following section is a summary of certain aspects of those accounting policies that may require subjective or complex judgments and are most important to the portrayal of Registrant’s financial condition and results of operations.  Registrant believes that there is a low probability that the use of different estimates or assumptions in making these judgments would result in materially different amounts being reported in the accompanying unaudited financial statements.

 
·
Registrant accounts for its investment in local partnerships in accordance with the equity method of accounting.

 
·
If the book value of Registrant’s investment in a Local Partnership exceeds the estimated value derived by management, Registrant reduces its investment in any such Local Partnership and includes such reduction in equity in loss of investment in local partnerships.  Registrant makes such assessment at least annually in the fourth quarter of its fiscal year or whenever there are indications that a permanent impairment may have occurred.  A loss in value of an investment in a Local Partnership other than a temporary decline would be recorded as an impairment loss.  Impairment is measured by comparing the investment carrying amount to the estimated residual value of the investment.

 
·
Registrant does not consolidate the accounts and activities of the Local Partnerships, which are considered Variable Interest Entities as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810; Subtopic 10, because Registrant is not considered the primary beneficiary.  Registrant’s balance in investment in local partnerships represents the maximum exposure to loss in connection with such investments.  Registrant’s exposure to loss on the Local Partnerships is mitigated by the condition and financial performance of the underlying Properties as well as the financial strength of the Local General Partners.

Forward-Looking Information

As a cautionary note, with the exception of historical facts, the matters discussed in this quarterly report on Form 10-Q are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”).  Forward-looking statements may relate to, among other things, current expectations, forecasts of future events, future actions, future performance generally, business development activities, capital expenditures, strategies, the outcome of contingencies, future financial results, financing sources and availability and the effects of regulation and competition.  Words such as “anticipate,” “expect,” “intend,” “plan,” “seek,” “estimate” and other words and terms of similar meaning in connection with discussions of future operating or financial performance signify forward-looking statements.  Registrant may also provide written forward-looking statements in other materials released to the public.  Such statements are made in good faith by Registrant pursuant to the “Safe Harbor” provisions of the Reform Act.  Registrant undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise.  Such forward-looking statements involve known risks, uncertainties and other factors that may cause Registrant’s actual results of operations or actions to be materially different from future results of operations or actions expressed or implied by the forward-looking statements.

 
10

 

AMERICAN TAX CREDIT PROPERTIES L.P.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

Registrant’s investment in mutual fund (the “Fund”) is subject to certain risk.  The fixed income securities in which the Fund invests are subject to interest rate risk, credit risk, prepayment risk, counterparty risk, municipal securities risk, liquidity risk, management risk, government security risk and valuation risk.  Typically, when interest rates rise, the market prices of fixed income securities go down.  The Fund is classified as “non-diversified,” and thus may invest most of its assets in securities issued by or representing a small number of issuers.  As a result, the Fund may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.  These risks could adversely affect the Fund’s net asset value (“NAV”), yield and total return.

The market value of Registrant’s investment in bond is subject to fluctuation based upon changes in interest rates relative to the investment’s maturity date and the associated bond rating.  Since Registrant’s investment in bond is callable in 2013, the value of such investment may be adversely impacted in an environment of rising interest rates in the event Registrant decides to liquidate the investment prior to its call date.  Although Registrant may utilize the investment to pay for its operating expenses and/or for certain Local Partnership matters, it otherwise intends to hold such investment to its call date.  Therefore, Registrant does not anticipate any material adverse impact in connection with such investment.

Item 4.  Controls and Procedures.

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed by Registrant in reports that Registrant files or submits under the Exchange Act is recorded, processed, summarized and timely reported as provided in SEC rules and forms.  Registrant periodically reviews the design and effectiveness of its disclosure controls and procedures, including compliance with various laws and regulations that apply to its operations.  Registrant makes modifications to improve the design and effectiveness of its disclosure controls and procedures, and may take other corrective action, if its reviews identify a need for such modifications or actions.  In designing and evaluating the disclosure controls and procedures, Registrant recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Registrant has carried out an evaluation, under the supervision and the participation of its management, including the Chief Executive Officer and Chief Financial Officer of the general partner of the General Partner, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the three months ended June 29, 2010.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of the general partner of the General Partner concluded that Registrant’s disclosure controls and procedures were effective as of June 29, 2010.

Item 4T.  Internal Control Over Financial Reporting.

There were no changes in Registrant’s internal control over financial reporting during the three months ended June 29, 2010 that have materially affected, or are reasonably likely to materially affect, Registrant’s internal control over financial reporting.

 
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AMERICAN TAX CREDIT PROPERTIES L.P.

Part II - OTHER INFORMATION

Item 1.
Legal Proceedings.

None.
  
Item 1A.
Risk Factors.
 
There have been no material changes from the risk factors previously disclosed in Item 1A of Registrant’s Annual Report on Form 10-K for the year ended March 30, 2010.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.
Defaults Upon Senior Securities.

 
None; see Item 2 of Part I regarding the mortgage default of a certain Local Partnership.

Item 4.
Removed and Reserved.

Item 5.
Other Information.

 
None.

Item 6.
Exhibits.

Exhibit 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
Exhibit 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
Exhibit 32.1 Section 1350 Certification of Chief Executive Officer.
Exhibit 32.2 Section 1350 Certification of Chief Financial Officer.

 
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SIGNATURES

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

 
AMERICAN TAX CREDIT PROPERTIES L.P.
 
(a Delaware limited partnership)
     
 
By:
Richman Tax Credit Properties L.P.,
   
General Partner
     
 
By:
Richman Tax Credit Properties Inc.,
   
general partner
     
Dated: July 29, 2010
/s/David Salzman
 
By:
David Salzman
   
Chief Executive Officer
     
Dated: July 29, 2010
/s/James Hussey
 
By:
James Hussey
   
Chief Financial Officer
     
Dated: July 29, 2010
/s/Richard Paul Richman
 
By:
Richard Paul Richman
   
Director

 
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