WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 - FORM 10-K - EX-99 - PIONEER 2005 AUDIT - November 15, 2011

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10-K - NAT 4-2 SUPER 10K - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2nat42super10k.htm
EX-31.2 - EXHIBIT312.HTM - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2exhibit312.htm
EX-32.2 - EXHIBIT322.HTM - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2exhibit322.htm
EX-32.1 - EXHIBIT321.HTM - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2exhibit321.htm
EX-31.1 - EXHIBIT311.HTM - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2exhibit311.htm
EX-99 - PIONEER 2007 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2pioneer2007audit.htm
EX-99 - PIONEER 2006 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2pioneer2006audit.htm
EX-99 - APARTMENT HOUSING OF E. BREWTON 2007 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2apthsgebrewton2007audit.htm
EX-99 - APARTMENT HOUSING OF E. BREWTON 2006 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2apthsgebrewton2006audit.htm
EX-99 - APARTMENT HOUSING OF E. BREWTON 2005 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2apthsgebrewton2005audit.htm

INDEPENDENT AUDITOR'S REPORT



TO THE PARTNERS
PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
VISALIA, CALIFORNIA


I have audited the accompanying balance sheets of Pioneer Street Associates (A California Limited Partnership), as of December 31, 2005 and 2004, and the related statements of income, changes in partners capital, 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 auditing standards generally accepted in the United States of America. 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 audit provides 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 Pioneer Street Associates (A California Limited Partnership) as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.


/s/ Bernard E. Rea, CPA

Stockton, California
February 27, 2006


 
1
 


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 capital
8
Statements of cash flows
9-10
Notes to financial statements
11-14


 
2
 

PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)

BALANCE SHEETS
DECEMBER 31, 2005 AND 2004


ASSETS
  
2005
    
2004
  
             
CURRENT ASSETS
            
Cash
   $ 8,049     $ 31,707  
Real estate tax and insurance
     17,512       3,559  
Prepaid expense
     12,519       10,455  
Total current assets
   $ 38,080     $ 45,721  
                 
RESTRICTED DEPOSITS AND FUNDED RESERVES
                
Tenant security deposits held in trust
   $ 44,020     $ 43,565  
Replacement reserve
     148,497       159,069  
    $ 192,517     $ 202,634  
PROPERTY AND EQUIPMENT, AT COST
                
Land
   $ 300,000     $ 300,000  
Buildings
     3,667,343       3,662,431  
Equipment
     178,017       178,017  
    $ 4,145,360     $ 4,140,448  
Less accumulated depreciation
     1,584,945       1,443,082  
    $ 2,560,415     $ 2,697,366  
OTHER ASSETS
                
Deferred charges, less accumulated amortization of $31,907 and $28,823
   $ 33,943     $ 37,027  
                 
    $ 2,824,955     $ 2,982,748  


See Notes to Financial Statements.

 
3
 


PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)

BALANCE SHEETS
DECEMBER 31, 2005 AND 2004


LIABILITIES AND PARTNERS CAPITAL
  
2005
    
2004
  
             
CURRENT LIABILITIES
            
Current maturities of long-term debt
   $ 42,103     $ 33,616  
Accounts payable
     4,733       11,080  
Accrued interest
     -       -  
Accrued reporting and administrative fees
     4,000       4,000  
Accrued partnership management fee
     5,600       -  
Total current liabilities
   $ 56,436     $ 48,696  
                 
DEPOSIT AND PREPAYMENT LIABILITIES
                
Tenant security deposits
   $ 35,890     $ 34,175  
Prepaid rents
     -       -  
    $ 35,890     $ 34,175  
LONG-TERM DEBT
                
Mortgage payable, less current maturities
   $ 1,673,185     $ 1,716,705  
                 
COMMITMENT
                
                 
PARTNERS CAPITAL
   $ 1,059,444     $ 1,183,172  
                 
    $ 2,824,955     $ 2,982,748  


See Notes to Financial Statements.

 
4
 

PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2005 AND 2004


   
2005
    
2004
  
             
RENTAL INCOME
            
Apartments
   $ 595,045     $ 581,172  
Tenant assistance payments
     -       -  
Subsidy income
     -       -  
Miscellaneous
     -       -  
Sub-total potential rent revenue
   $ 595,045     $ 581,172  
                 
VACANCIES
                
Apartments
   $ (30,191 )   $ (47,932 )
Miscellaneous
     -       -  
Sub-total vacancies
   $ (30,191 )   $ (47,932 )
                 
Net rental revenue
   $ 564,854     $ 533,240  
                 
FINANCIAL REVENUE
                
Interest Income - project operations
   $ 838     $ 672  
Income from investments - replacement reserve
     2,581       1,115  
Income from investments - operating reserve
     -       -  
Income from investments - miscellaneous
     -       -  
Sub-total financial revenue
   $ 3,419     $ 1,787  
                 
OTHER REVENUE
                
Laundry and vending
   $ 10,252     $ 12,754  
NSF and late charges
     -       -  
Damage and cleaning fees
     24       2  
Forfeited tenant security deposits
     3,851       8,915  
Other revenue
     12,670       12,438  
Sub-total other revenue
   $ 26,797     $ 34,109  
                 
Total revenues
   $ 595,070     $ 569,136  


See Notes to Financial Statements.


 
5
 

PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENTS OF INCOME (CONTINUED)
YEARS ENDED DECEMBER 31, 2005 AND 2004


   
2005
    
2004
  
OPERATING EXPENSES
            
             
Renting expenses
            
Advertising
   $ 659     $ 895  
Miscellaneous renting expenses
     4,630       3,429  
Sub-total renting expenses
   $ 5,289     $ 4,324  
                 
Administrative expenses
                
Office salaries
   $ -     $ -  
Office supplies
     1,858       4,607  
Office rent
     -       -  
Management fee
     48,384       46,704  
Manager's salary
     26,358       30,016  
Legal expense
     2,022       9,408  
Audit expense
     4,725       4,532  
Bookkeeping / accounting services
     -       -  
Telephone and answering service
     1,274       1,145  
Bad debts
     -       -  
Miscellaneous administrative expenses
     -       4,958  
Sub-total administrative expenses
   $ 84,621     $ 101,370  
                 
Utilities expense
                
Fuel oil / coal
   $ -     $ -  
Electricity
     16,371       12,012  
Water
     15,949       14,709  
Gas
     -       -  
Sewer
     -       -  
Sub-total utilities expense
   $ 32,320     $ 26,721  


See Notes to Financial Statements.


 
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PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENTS OF INCOME (CONTINUED)
YEARS ENDED DECEMBER 31, 2005 AND 2004


   
2005
    
2004
  
Operating and maintenance expense
            
Janitor and cleaning payroll
   $ -     $ -  
Janitor and cleaning supplies
     -       -  
Janitor and cleaning contract
     -       -  
Exterminating payroll / contract
     -       -  
Exterminating supplies
     -       -  
Garbage and trash removal
     18,339       17,594  
Security payroll / contract
     -       -  
Grounds payroll
     -       -  
Grounds supplies
     -       -  
Grounds contract
     29,967       23,727  
Repairs payroll
     45,494       37,938  
Repairs material
     32,121       20,742  
Repairs contract
     40,896       23,644  
Heating / cooling repairs and maintenance
     -       -  
Decorating payroll / contract
     -       -  
Decorating supplies
     -       1,079  
Vehicle and maintenance equipment o & r
     -       -  
Miscellaneous operating and maint. expenses
     8,304       19,720  
Sub-total operating & maint. expense
   $ 175,121     $ 144,444  
                 
Taxes and insurance
                
Real estate taxes
   $ 17,323     $ 25,744  
Payroll taxes
     6,809       7,511  
Miscellaneous taxes, licenses, and permits
     1,035       1,005  
Property and liability insurance
     12,958       12,832  
Fidelity bond insurance
     -       -  
Workman's compensation
     8,292       7,776  
Health insurance and other employee benefits
     8,470       8,086  
Other insurance
     -       -  
Sub-total taxes & insurance
   $ 54,887     $ 62,954  
                 
                 
Total operating expenses
   $ 352,238     $ 339,813  


See Notes to Financial Statements.


 
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PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENTS OF INCOME (CONTINUED)
YEARS ENDED DECEMBER 31, 2005 AND 2004


   
2005
    
2004
  
OTHER EXPENSES
            
Interest expense - mortgage
   $ 136,413     $ 144,390  
Interest expense - notes
     -       -  
Miscellaneous financial expense
     -       -  
Depreciation and amortization
     144,947       143,936  
Reporting fee
     2,000       2,000  
Administrative fee
     2,000       2,000  
Partnership management fee
     11,200       -  
Sub-total other expenses
   $ 296,560     $ 292,326  
                 
Total expenses
   $ 648,798     $ 632,139  
                 
Net income (loss)
   $ (53,728 )   $ (63,003 )


See Notes to Financial Statements.


 
8
 

PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENTS OF CHANGES IN PARTNERS CAPITAL
YEARS ENDED DECEMBER 31, 2005 AND 2004


         
General
    
Limited
  
   
Total
    
Partners
    
Partner
  
Partners capital December 31, 2003
   $ 1,324,175     $ (410,640 )   $ 1,734,815  
                         
Partners capital contributions
     -       -       -  
                         
Partners capital distributions
     (78,000 )     (78,000 )     -  
                         
Net income (loss)
     (63,003 )     (630 )     (62,373 )
Partners capital December 31, 2004
   $ 1,183,172     $ (489,270 )   $ 1,672,442  
                         
Partners capital contributions
     -       -       -  
                         
Partners capital distributions
     (70,000 )     (70,000 )     -  
                         
Net income (loss)
     (53,728 )     (537 )     (53,191 )
Partners capital December 31, 2005
   $ 1,059,444     $ (559,807 )   $ 1,619,251  
                         
                         
Percentage at December 31, 2005
     100 %     1 %     99 %

See Notes to Financial Statements.


 
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PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2005 AND 2004


   
2005
    
2004
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Net income (loss)
   $ (53,728 )   $ (63,003 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                
Depreciation and amortization
     144,947       143,936  
Change in assets and liabilities:
                
Decrease (increase) in:
                
Rents receivable
     -       -  
Prepaid expenses
     (2,064 )     286  
Tenants' security deposits
     (455 )     (366 )
Tax and insurance impounds
     (13,953 )     5,896  
Increase (decrease) in:
                
Accounts payable
     (6,347 )     5,837  
Bank overdraft
     -       -  
Accrued reporting and administrative fee
     -       -  
Accrued partnership management fee
     5,600       -  
Accrued interest
     -       -  
Prepaid rents
     -       -  
Tenants' security deposits
     1,715       (1,425 )
Net cash provided by (used in) operating activities
   $ 75,715     $ 91,161  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Funding of replacement reserve
   $ (29,874 )   $ (28,458 )
Withdrawals from replacement reserve
     40,446       18,150  
Acquisition of property and equipment
     (4,912 )     (15,542 )
Net cash provided by (used in) investing activities
   $ 5,660     $ (25,850 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
Partner contributions
   $ -     $ -  
Partner distributions
     (70,000 )     (78,000 )
Principal payments on long-term debt
     (35,033 )     (30,987 )
Net cash provided by (used in) financing activities
   $ (105,033 )   $ (108,987 )


See Notes to Financial Statements.


 
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PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 2005 AND 2004


   
2005
    
2004
  
Increase (decrease) in cash and cash equivalents
   $ (23,658 )   $ (43,676 )
                 
Cash and cash equivalents
                
Beginning
     31,707       75,383  
                 
Ending
   $ 8,049     $ 31,707  
                 
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
                
Cash paid during the year for interest
   $ 136,413     $ 144,390  


See Notes to Financial Statements.


 
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PIONEER STREET ASSOCIATES
(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.

BASIS OF ACCOUNITNG

The financial statements of the partnership are prepared on the accrual basis of accounting and in accordance with accounting principles generally accepted in the United States of America.

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.

 
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NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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.  These assumptions affect the reported amounts of assets, liabilities and the amount of any contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from the estimates made.

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.

SFAS NO. 144

Statement of Financial Accounting Standards (SFAS) NO. 144 requires that long-lived assets and certain identifiable intangibles held and used by a entity be reviewed for impairment whenever events or changes in circumstances that the carrying amount of an asset may not be recoverable.  The adoption of SFAS No, 144 has not materially affected the partnership’s reported earning, financial condition or cash flows.

RECLASSIFICATIONS
NOTE 2 - ORGANIZATION
Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation in the current-year financial statements.

Pioneer Street Associates is a California Limited Partnership which was formed in February 1994, to develop, construct, own, maintain and operate a 112-unit multi-family apartment complex known as Foothill Vista Apartments and is located in the city of Bakersfield, California. The major activities of the Partnership are governed by the Partnership Agreement and Loan Agreement with the Pacific Life. Under the Loan Agreement, the Partnership is required to provide low cost housing to moderate or low-income households.

The Partnership has three general partners and one investing limited partner. Partnership transactions with the general partners are described in other notes to this financial statement.

 
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NOTES TO FINANCIAL STATEMENTS


NOTE 3 - DEFERRED CHARGES

Deferred charges as of December 31, 2005 and 2004, consists of the following:

   
2005
    
2004
  
Deferred debt expense
   $ 39,200     $ 39,200  
Tax credit monitoring fee
     26,650       26,650  
    $ 65,850     $ 65,850  
Less accumulated amortization
     31,907       28,823  
    $ 33,943     $ 37,027  

NOTE 4 - RESTRICTED DEPOSITS AND FUNDED RESERVES

In accordance with the Partnership and the Pacific Life replacement Reserve Agreements, the Partnership is required to maintain a replacement reserve account. The account is to be funded annually in the amount of $28,000 until the aggregate balance of the account reaches $182,000.

NOTE 5 - LONG-TERM DEBT

Long-Term debt consisted of a permanent loan with Pacific Life in face amount of $1,960,000.

Under the terms of the 30-year Promissory Note with Pacific Life, the loan provides for an initial interest rate of 8.17% and monthly payments of $14,614.74 commencing on November 1, 1995, and continuing through September 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, 2005, the current interest rate and minimum monthly payment due is 6.93% and $13,304.35, 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, 2006
   $ 42,103  
2007
     45,116  
2008
     48,343  
2009
     51,802  
2010
     55,508  
Thereafter
     1,472,416  
TOTAL
   $ 1,715,288  


 
14
 

NOTES TO FINANCIAL STATEMENTS


NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

MANAGEMENT FEE

In accordance with the management agreement, the Partnership paid Tetra Property Management Company, affiliates of one of the general partners, a management fee during 2005 and 2004 in the amounts of $48,384 and $46,704, respectively, for services rendered in connection with the leasing and operation of the project. The fee for its services is approximately 8% of the project's rental income.

ANNUAL REPORTING FEE

An annual reporting fee of $2,000 is payable to the limited partner, WNC California Housing Tax Credit Fund IV, L.P. Series 2, an investor limited partner which holds a 99% interest in the partnership, for services to be rendered for accounting matters relating to preparation of tax returns and other reports required.

ANNUAL PARTNERSHIP ADMINISTRATIVE FEE
An annual partnership administrative fee of $2,000 is payable to the general partners, for their services to be rendered in connection with the administration of the day to day business of the Partnership.

PARTNERSHIP MANAGEMENT FEE

An annual partnership management fee of $5,600 is payable to the Central Valley Coalition for Affordable Housing (A California Nonprofit Corporation) for services rendered for partnership administrative matters relating to day to day operations of the partnership. For the year ended December 31, 2005, $11,200 was accrued (which includes a back charge of $5,600) and charged to operations.

NOTE 7 - CONCENTRATION OF CREDIT RISK

The Partnership maintains cash and cash equivalents at two financial institutions located in California. The accounts are insured by the Federal Deposit Insurance Corporation up to $100,000 per financial institution. At December 31, 2005, the Partnership's uninsured cash balances totaled $18,078.

NOTE 8 - 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 9 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

The Partnership's sole asset is Foothill Vista Apartments. The Partnership's operations are concentrated in the multifamily real estate market.


 
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WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 Reports