Attached files
file | filename |
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10-K - NAT 4-2 SUPER 10K - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | nat42super10k.htm |
EX-31.2 - EXHIBIT312.HTM - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | exhibit312.htm |
EX-32.2 - EXHIBIT322.HTM - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | exhibit322.htm |
EX-32.1 - EXHIBIT321.HTM - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | exhibit321.htm |
EX-31.1 - EXHIBIT311.HTM - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | exhibit311.htm |
EX-99 - PIONEER 2005 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | pioneer2005audit.htm |
EX-99 - PIONEER 2007 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | pioneer2007audit.htm |
EX-99 - APARTMENT HOUSING OF E. BREWTON 2007 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | apthsgebrewton2007audit.htm |
EX-99 - APARTMENT HOUSING OF E. BREWTON 2006 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | apthsgebrewton2006audit.htm |
EX-99 - APARTMENT HOUSING OF E. BREWTON 2005 AUDIT - WNC HOUSING TAX CREDIT FUND IV L P SERIES 2 | apthsgebrewton2005audit.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, 2006 and 2005, 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, 2006 and 2005, and the results of its operations, the changes in partners' capital, 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
April 14, 2007
C O N T E N T S
Page
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INDEPENDENT AUDITOR'S REPORT ON
|
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THE FINANCIAL STATEMENTS
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1
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FINANCIAL STATEMENTS
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Balance sheets
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2-3
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Statements of income
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4-7
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Statements of changes in partners' capital
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8
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Statements of cash flows
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9-10
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Notes to financial statements
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11-14
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PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
ASSETS
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2006
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2005
|
||||||
CURRENT ASSETS
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||||||||
Cash
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$ | 11,028 | $ | 8,049 | ||||
Real estate tax and insurance
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15,429 | 17,512 | ||||||
Prepaid expense
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12,653 | 12,519 | ||||||
Total current assets
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$ | 39,110 | $ | 38,080 | ||||
RESTRICTED DEPOSITS AND FUNDED RESERVES
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||||||||
Tenant security deposits held in trust
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$ | 44,997 | $ | 44,020 | ||||
Replacement reserve
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149,097 | 148,497 | ||||||
$ | 194,094 | $ | 192,517 | |||||
PROPERTY AND EQUIPMENT, AT COST
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||||||||
Land
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$ | 300,000 | $ | 300,000 | ||||
Buildings
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3,689,617 | 3,667,343 | ||||||
Equipment
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179,217 | 178,017 | ||||||
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$ | 4,168,834 | $ | 4,145,360 | ||||
Less accumulated depreciation
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1,729,048 | 1,584,945 | ||||||
$ | 2,439,786 | $ | 2,560,415 | |||||
OTHER ASSETS
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||||||||
Deferred charges, less accumulated amortization of $34,991 and $31,907
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$ | 30,859 | $ | 33,943 | ||||
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$ | 2,703,849 | $ | 2,824,955 |
See Notes to Financial Statements.
1
PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
LIABILITIES AND PARTNERS' CAPITAL
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2006
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2005
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||||||
CURRENT LIABILITIES
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||||||||
Current maturities of long-term debt
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$ | 45,116 | $ | 42,103 | ||||
Accounts payable
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9,634 | 4,733 | ||||||
Accrued interest
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– | – | ||||||
Accrued reporting and administrative fees
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4,000 | 4,000 | ||||||
Accrued partnership management fee
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5,600 | 5,600 | ||||||
Total current liabilities
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$ | 64,350 | $ | 56, | ||||
DEPOSIT AND PREPAYMENT LIABILITIES
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||||||||
Tenant security deposits
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$ | 37,628 | $ | 35,890 | ||||
Prepaid rents
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– | – | ||||||
$ | 37,628 | $ | 35,890 | |||||
LONG-TERM DEBT
|
||||||||
Mortgage payable, less current maturities
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$ | 1,628,068 | $ | 1,673,185 | ||||
COMMITMENT
|
||||||||
PARTNERS' CAPITAL
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$ | 973,803 | $ | 1,059,444 | ||||
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$ | 2,703,849 | $ | 2,824,955 |
See Notes to Financial Statements.
2
PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2006 AND 2005
2006
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2005
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|||||||
RENTAL INCOME
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||||||||
Apartments
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$ | 598,428 | $ | 595,045 | ||||
Tenant assistance payments
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– | – | ||||||
Subsidy income
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– | – | ||||||
Miscellaneous
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– | – | ||||||
Sub-total potential rent revenue
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$ | 598,428 | $ | 595,045 | ||||
VACANCIES
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||||||||
Apartments
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$ | (34,149 | ) | $ | (30,191 | ) | ||
Miscellaneous
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– | – | ||||||
Sub-total vacancies
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$ | (34,149 | ) | $ | (30,191 | ) | ||
Net rental revenue
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$ | 564,279 | $ | 564,854 | ||||
FINANCIAL REVENUE
|
||||||||
Interest Income - project operations
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$ | 1,385 | $ | 838 | ||||
Income from investments - replacement reserve
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4,785 | 2,581 | ||||||
Income from investments - operating reserve
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– | – | ||||||
Income from investments - miscellaneous
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– | – | ||||||
Sub-total financial revenue
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$ | 6,170 | $ | 3,419 | ||||
OTHER REVENUE
|
||||||||
Laundry and vending
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$ | 14,572 | $ | 10,252 | ||||
NSF and late charges
|
– | – | ||||||
Damage and cleaning fees
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– | 24 | ||||||
Forfeited tenant security deposits
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5,460 | 3,851 | ||||||
Other revenue
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11,634 | 12,670 | ||||||
Sub-total other revenue
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$ | 31,666 | $ | 26,797 | ||||
Total revenues
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$ | 602,115 | $ | 595,070 |
See Notes to Financial Statements.
3
PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME (CONTINUED)
YEARS ENDED DECEMBER 31, 2006 AND 2005
2006
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2005
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|||||||
OPERATING EXPENSES
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||||||||
Renting expenses
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||||||||
Advertising
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$ | 247 | $ | 659 | ||||
Miscellaneous renting expenses
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4,730 | 4,630 | ||||||
Sub-total renting expenses
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$ | 4,977 | $ | 5,289 | ||||
Administrative expenses
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||||||||
Office salaries
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$ | – | $ | – | ||||
Office supplies
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3,043 | 1,858 | ||||||
Office rent
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– | – | ||||||
Management fee
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51,744 | 48,384 | ||||||
Manager's salary
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31,478 | 26,358 | ||||||
Legal expense
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2,215 | 2,022 | ||||||
Audit expense
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4,900 | 4,725 | ||||||
Bookkeeping / accounting services
|
– | – | ||||||
Telephone and answering service
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1,582 | 1,274 | ||||||
Bad debts
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– | – | ||||||
Miscellaneous administrative expenses
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1,090 | – | ||||||
Sub-total administrative expenses
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$ | 96,052 | $ | 84,621 | ||||
Utilities expense
|
||||||||
Fuel oil / coal
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$ | – | $ | – | ||||
Electricity
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21,349 | 16,371 | ||||||
Water
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20,921 | 15,949 | ||||||
Gas
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– | – | ||||||
Sewer
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– | – | ||||||
Sub-total utilities expense
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$ | 42,270 | $ | 32,320 |
See Notes to Financial Statements.
4
PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME (CONTINUED)
YEARS ENDED DECEMBER 31, 2006 AND 2005
2006
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2005
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|||||||
Operating and maintenance expense
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||||||||
Janitor and cleaning payroll
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$ | – | $ | – | ||||
Janitor and cleaning supplies
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– | – | ||||||
Janitor and cleaning contract
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– | – | ||||||
Exterminating payroll / contract
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– | – | ||||||
Exterminating supplies
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– | – | ||||||
Garbage and trash removal
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20,859 | 18,339 | ||||||
Security payroll / contract
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– | – | ||||||
Grounds payroll
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– | – | ||||||
Grounds supplies
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– | – | ||||||
Grounds contract
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26,417 | 29,967 | ||||||
Repairs payroll
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44,300 | 45,494 | ||||||
Repairs material
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37,905 | 32,121 | ||||||
Repairs contract
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35,224 | 40,896 | ||||||
Heating / cooling repairs and maintenance
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– | – | ||||||
Decorating payroll / contract
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– | – | ||||||
Decorating supplies
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– | – | ||||||
Vehicle and maintenance equipment o & r
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– | – | ||||||
Miscellaneous operating and maint. expenses
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11,223 | 8,304 | ||||||
Sub-total operating & maint. expense
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$ | 175,928 | $ | 175,121 | ||||
Taxes and insurance
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||||||||
Real estate taxes
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$ | 18,254 | $ | 17,323 | ||||
Payroll taxes
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12,660 | 6,809 | ||||||
Miscellaneous taxes, licenses, and permits
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1,005 | 1,035 | ||||||
Property and liability insurance
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15,049 | 12,958 | ||||||
Fidelity bond insurance
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99 | – | ||||||
Workman's compensation
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9,789 | 8,292 | ||||||
Health insurance and other employee benefits
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9,337 | 8,470 | ||||||
Other insurance
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– | – | ||||||
Sub-total taxes & insurance
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$ | 66,193 | $ | 54,887 | ||||
Total operating expenses
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$ | 385,420 | $ | 352,238 |
See Notes to Financial Statements.
5
PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME (CONTINUED)
YEARS ENDED DECEMBER 31, 2006 AND 2005
2006
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2005
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|||||||
OTHER EXPENSES
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||||||||
Interest expense - mortgage
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$ | 117,549 | $ | 136,413 | ||||
Interest expense - notes
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– | – | ||||||
Miscellaneous financial expense
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– | – | ||||||
Depreciation and amortization
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147,187 | 144,947 | ||||||
Reporting fee
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2,000 | 2,000 | ||||||
Admistrative fee
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2,000 | 2,000 | ||||||
Partnership management fee
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5,600 | 11,200 | ||||||
Sub-total other expenses
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$ | 274,336 | $ | 296,560 | ||||
Total expenses
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$ | 659,756 | $ | 648,798 | ||||
Net income (loss)
|
$ | (57,641 | ) | $ | (53,728 | ) |
See Notes to Financial Statements.
6
PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 2006 AND 2005
General
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Limited
|
|||||||||||
Total
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Partners
|
Partner
|
||||||||||
Partners' capital
|
||||||||||||
December 31, 2004
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$ | 1,183,172 | $ | (489,270 | ) | $ | 1,672,442 | |||||
Partners' capital
|
||||||||||||
contributions
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– | – | – | |||||||||
Partners' capital
|
||||||||||||
distributions
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(70,000 | ) | (70,000 | ) | – | |||||||
Net income (loss)
|
(53,728 | ) | (537 | ) | (53,191 | ) | ||||||
Partners' capital
|
||||||||||||
December 31, 2005
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$ | 1,059,444 | $ | (559,807 | ) | $ | 1,619,251 | |||||
Partners' capital
|
||||||||||||
contributions
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– | – | – | |||||||||
Partners' capital
|
||||||||||||
distributions
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(28,000 | ) | (28,000 | ) | – | |||||||
Net income (loss)
|
(57,641 | ) | (576 | ) | (57,065 | ) | ||||||
Partners' capital
|
||||||||||||
December 31, 2006
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$ | 973,803 | $ | (588,383 | ) | $ | 1,562,186 | |||||
Percentage at
|
||||||||||||
December 31, 2006
|
100 | % | 1 | % | 99 | % |
See Notes to Financial Statements.
7
PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2006 AND 2005
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2006
|
2005
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income (loss)
|
$ | (57,641 | ) | $ | (53,728 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
147,187 | 144,947 | ||||||
Change in assets and liabilities:
|
||||||||
Decrease (increase) in:
|
||||||||
Rents receivable
|
– | – | ||||||
Prepaid expenses
|
(134 | ) | (2,064 | ) | ||||
Tenants' security deposits
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(977 | ) | (455 | ) | ||||
Tax and insurance impounds
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2,083 | (13,953 | ) | |||||
Increase (decrease) in:
|
||||||||
Accounts payable
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4,901 | (6,347 | ) | |||||
Accrued reporting and administrative fee
|
– | – | ||||||
Accrued partnership management fee
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– | 5,600 | ||||||
Accrued interest
|
– | – | ||||||
Prepaid rents
|
– | – | ||||||
Tenants' security deposits
|
1,738 | 1,715 | ||||||
Net cash provided by (used in) operating activities
|
$ | 97,157 | $ | 75,715 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Funding of replacement reserve
|
$ | (32,982 | ) | $ | (29,874 | ) | ||
Withdrawals from replacement reserve
|
32,382 | 40,446 | ||||||
Acquisition of property and equipment
|
(23,474 | ) | (4,912 | ) | ||||
Net cash provided by (used in) investing activities
|
$ | (24,074 | ) | $ | 5,660 | |||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Partner contributions
|
$ | – | $ | – | ||||
Partner distributions
|
(28,000 | ) | (70,000 | ) | ||||
Principal payments on long-term debt
|
(42,104 | ) | (35,033 | ) | ||||
Net cash provided by (used in) financing activities
|
$ | (70,104 | ) | $ | (105,033 | ) | ||
See Notes to Financial Statements.
|
8
PIONEER STREET ASSOCIATES
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 2006 AND 2005
2006
|
2005
|
|||||||
Increase (decrease) in cash and cash equivalents
|
$ | 2,979 | $ | (23,658 | ) | |||
Cash and cash equivalents
|
||||||||
Beginning
|
8,049 | 31,707 | ||||||
Ending
|
$ | 11,028 | $ | 8,049 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||
Cash paid during the year for interest
|
$ | 117,549 | $ | 136,413 | ||||
See Notes to Financial Statements.
9
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 ACCOUNTING
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.
10
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 earnings, financial condition or cash flows.
NOTE 2 - ORGANIZATION
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.
11
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - DEFERRED CHARGES
Deferred charges as of December 31, 2006 and 2005, consists of the following:
2006
|
2005
|
|||||||
Deferred debt expense
|
$ | 39,200 | $ | 39,200 | ||||
Tax credit monitoring fee
|
26,650 | 26,650 | ||||||
$ | 65,850 | $ | 65,850 | |||||
Less accumulated amortization
|
34,991 | 31,907 | ||||||
|
$ | 30,859 | $ | 33,943 | ||||
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, 2006, 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, 2007
|
$ | 45,116 | ||
2008
|
48,343 | |||
2009
|
51,802 | |||
2010
|
55,508 | |||
2011
|
59,479 | |||
Thereafter
|
1,412,936 | |||
TOTAL
|
$ | 1,673,184 | ||
12
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 2006 and 2005 in the amounts of $51,744 and $48,384, 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 years ended December 31, 2006 and 2005, $5,200 and $11,200 (which includes a back charge of $5,600), respectively, was accrued and charged to operations.
NOTE 7 - CONCENTRATION OF CREDIT RISK
The Partnership maintains its cash and cash equivalents at two financial institutions located in California, which at times, may exceed federally insured limits. The Partnership has not experienced any losses in such accounts and believes it is not exposed at any significant credit risk on cash.
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.
13