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 30, 2013

 

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: 0-21897

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

 

California		33-0707612
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

17782 Sky Park Circle, Irvine, CA 92614

(Address of principle executive offices)

 

(714) 622-5565

(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 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 [  ] No [X]

 

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. (Check one):

 

Large accelerated filer [  ] Accelerated filer [  ] Non-accelerated filer [X] Smaller reporting company [  ]

 

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

 

Yes [  ] No [X]

 

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

INDEX TO FORM 10-Q

 

For the Quarterly Period Ended June 30, 2013

 

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements		F-1
	Condensed Balance Sheets
	As of June 30, 2013 and March 31, 2013		F-1
	Condensed Statements of Operations
	For the Three Months Ended June 30, 2013 and 2012		F-2
	Condensed Statement of Partners’ Equity (Deficit)
	For the Three Months Ended June 30, 2013		F-3
	Condensed Statements of Cash Flows
	For the Three Months Ended June 30, 2013 and 2012		F-4
	Notes to Condensed Financial Statements		F-5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		5
Item 4.	Controls and Procedures		5
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		6
Item 1A.	Risk Factors		6
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		6
Item 3.	Defaults Upon Senior Securities		6
Item 4.	Mine Safety Disclosures		6
Item 5.	Other Information		6
Item 6.	Exhibits.		6
Signatures			7

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

CONDENSED BALANCE SHEETS

(Unaudited)

 

		June 30, 2013				March 31, 2013
ASSETS
Cash		$	1,367,803			$	296,821
Other assets			28,472				17,775
Investments in Local Limited Partnerships, net (Notes 2 and 3)			-				650,468
Total Assets		$	1,396,275			$	965,064
LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)
Payables to Local Limited Partnerships (Note 4)		$	22,810			$	33,810
Accrued fees and expenses due to General Partner and affiliates (Note 3)			97,017				194,984
Prepaid disposition proceeds			10,000				260,000
Total Liabilities			129,827				488,794
Partners’ Equity (Deficit):
General Partner			(672,158	)			97,734
Limited Partners (25,000 Partnership Units authorized; 21,952 and 21,955 Partnership Units issued and outstanding, respectively)			1,938,606				378,536
Total Partners’ Equity (Deficit)			1,266,448				476,270
Total Liabilities and Partners’ Equity (Deficit)		$	1,396,275			$	965,064

 

See accompanying notes to condensed financial statements

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

CONDENSED STATEMENT OF OPERATIONS

 

For the Three Months Ended June 30, 2013 and 2012

(Unaudited)

 

		2013				2012
		Three Months				Three Months
Reporting fees		$	-			$	6,000
Distribution income			6,786				5,216
Total operating income			6,786				11,216
Operating expenses and loss:
Amortization (Note 3)			1,800				1,800
Asset management fees (Note 3)			10,989				12,696
Impairment loss			100,779				-
Legal and accounting fees			80,003				354
Write off of advances to Local Limited Partnerships (Note 5)			36,993				2,088
Other			5,799				3,594
Total operating expenses and loss			236,363				20,532
Loss from operations			(229,577	)			(9,316	)
Equity in income of Local Limited Partnerships (Note 2)			-				9,546
Gain on sale of Local Limited Partnerships (Note 2)			1,805,244				-
Interest income			161				1
Net income		$	1,575,828			$	231
Net income allocated to:
General Partner		$	15,758			$	23
Limited Partners		$	1,560,070			$	208
Net income per Partnership Unit		$	71			$	-
Outstanding weighted Partnership Units			21,952				21,955

 

See accompanying notes to condensed financial statements

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

CONDENSED STATEMENT OF PARTNERS’ EQUITY (DEFICIT)

 

For the Three Months Ended June 30, 2013

(Unaudited)

 

		General				Limited
		Partner				Partners				Total
Partners’ equity at March 31, 2013		$	97,734			$	378,536			$	476,270
Net income			15,758				1,560,070				1,575,828
Return of capital (Note 6)			(785,650	)			-				(785,650	)
Partners’ equity (deficit) at June 30, 2013		$	(672,158	)		$	1,938,606			$	1,266,448

 

See accompanying notes to condensed financial statements

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

CONDENSED STATEMENTS OF CASH FLOWS

 

For the Three Months Ended June 30, 2013 and 2012

(Unaudited)

 

		2013				2012
Cash flows from operating activities:
Net income		$	1,575,828			$	231
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Amortization			1,800				1,800
Impairment loss			100,779				-
Increase in prepaid expenses			(10,697	)			-
Equity in income of Local Limited Partnerships			-				(9,546	)
Increase (decrease) in accrued fees and expenses due to General Partner and affiliates			(97,967	)			16,644
Gain on sale of Local Limited Partnership			(1,805,244	)			-
Net cash provided by (used in) operating activities			(235,501	)			9,129
Cash flows from investing activities:
Capital Contributions paid to Local Limited Partnerships			(11,000	)			-
Net proceeds from sale of Local Limited Partnerships			2,103,133				-
Advances made to Local Limited Partnerships			(36,993	)			(2,088	)
Write off of advances made to Local Limited Partnerships			36,993				2,088
Distributions received from Local Limited Partnerships			-				9,851
Net cash provided by investing activities			2,092,133				9,851
Cash flows from financing activities:
Return of capital			(785,650	)			-
Net cash used in financing activities			(785,650	)			-
Net increase in cash			1,070,982				18,980
Cash, beginning of period			296,821				20,488
Cash, end of period		$	1,367,803			$	39,468
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid		$	-			$	-

 

See accompanying notes to condensed financial statements

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS

 

For the Quarterly Period Ended June 30, 2013

(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 months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2014. 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, 2013.

 

Organization

 

WNC Housing Tax Credit Fund, V, L.P., Series 4 (the “Partnership”) was formed under the California Revised Limited Partnership Act on July 26, 1995 and commenced operations on July 1, 1996. The Partnership was formed to invest primarily in other limited partnerships (“Local Limited Partnerships”) which own and operate multi-family housing complexes (“Housing Complexes”) that are eligible for Federal low-income housing tax credits (“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 Complexes. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local Limited Partnership Agreement”).

 

The general partner of the Partnership is WNC & Associates, Inc. (the “General Partner” or “Associates”). 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 Partner, as the Partnership has no employees of its own.

 

The Partnership shall continue to be in full force and effect until December 31, 2050, unless terminated prior to that date, pursuant to the partnership agreement or law.

 

The financial statements include only activity relating to the business of the Partnership, and do not give effect to any assets that the partners may have outside of their interests in the Partnership, or to any obligations, including income taxes, of the partners.

 

The partnership agreement authorized the sale of up to 25,000 units of limited partnership interest (“Partnership Units”) at $1,000 per Partnership Unit. The offering of Partnership Units concluded on July 11, 1997 at which time 22,000 Partnership Units representing subscriptions in the amount of $21,914,830, net of discounts of $79,550 for volume purchases and $5,620 for dealer discounts, had been accepted. As of June 30, 2013 the Partnership Units that remain outstanding were 21,952. The General Partner has a 1% interest in operating profits and losses, taxable income and losses and in cash available for distribution from the Partnership and Low Income Housing Tax Credits. The investors (“Limited Partners”) in the Partnership will be allocated the remaining 99% of these items in proportion to their respective investments.

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

The proceeds from the disposition of any of the Housing Complexes will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement. Any remaining proceeds will then be paid to the partners of the Local Limited Partnership, including the Partnership, in accordance with the terms of the particular Local Limited Partnership Agreement. The sale of a Housing Complex may be subject to other restrictions and obligations. Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, there can be no assurance that any significant amounts of cash will be distributed to the Partnership. Should such distributions occur, the Limited Partners will be entitled to receive distributions from the proceeds remaining after payment of Partnership obligations and funding reserves, equal to their capital contributions and their return on investment (as defined in the Partnership Agreement). The General Partner would then be entitled to receive proceeds equal to their capital contributions from the remainder. Any additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments) and 10% to the General Partner.

 

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 Tax Credits rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Tax Credits and the fractional recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax 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 Tax 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 “Compliance Period”), the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of prior Low Income Housing Tax Credits, and a loss of the Partnership’s investment in the Housing Complex would occur. The Partnership is a limited partner 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 Tax Credits and recapture of Low Income Housing Tax 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

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

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 Tax 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.

 

No trading market for the Partnership Units exists or is expected to develop. Limited Partners may be unable to sell their Partnership Units except at a discount and should consider their Partnership 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.

 

Exit Strategy

 

The Compliance Period for a Housing Complex is generally 15 years following construction or rehabilitation completion. Associates was one of the first in the industry to offer syndicated investments in Low Income Housing Tax Credits. The initial programs have completed their Compliance Periods.

 

Upon the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits. A sale prior to the end of the Compliance Period could result in recapture if certain conditions are not met. Ten of the Housing Complexes have completed their 15-year Compliance Period.

 

With that in mind, the General Partner is continuing its review of the Housing Complexes. The review considers many factors, including extended use requirements (such as those due to mortgage restrictions or state compliance agreements), the condition of the Housing Complexes, and the tax consequences to the Limited Partners from the sale of the Housing Complexes.

 

Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership expects to proceed with efforts to liquidate them. The objective is to maximize the Limited Partners’ return wherever possible and, ultimately, to wind down the Partnership as Low Income Housing Tax Credits are no longer available. Local Limited Partnership interests may be disposed of any time by the General Partner in its discretion. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of June 30, 2013.

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

The proceeds from the disposition of any of the Housing Complexes will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement. Any remaining proceeds will then be paid to the partners of the Local Limited Partnership, including the Partnership, in accordance with the terms of the particular Local Limited Partnership Agreement. The sale of a Housing Complex may be subject to other restrictions and obligations. Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex. Even if it does so, there can be no assurance that any significant amounts of cash will be distributed to the Partnership, as the proceeds first would be used to pay Partnership obligations and funding of reserves.

 

As of March 31, 2013, the Partnership sold the Housing Complexes of Mesa Verde Apartments, L.P, The North Central Limited Partnership, and its Local Limited Partnership Interest in Lamar Plaza Apartments, LP and D. Hilltop Apartments, Ltd. The Compliance Period for Mesa Verde Apartments, L.P, The North Central Limited Partnership, and Lamar Plaza Apartments, LP expired after the date of sale. The Purchaser have guaranteed that the Local Limited Partnership will stay in compliance with the Low Income Housing Tax Credit code, therefore there was no risk of recapture.

 

During the three months ended June 30, 2013, the Local Limited Partnership sold its Housing Complex of Blessed Rock of El Monte, a CA Partnership (“Blessed Rock”). Blessed Rock was appraised for $6,910,000 and had a mortgage note balance of $2,054,000 as of December 31, 2012. Proceeds in the amount of $2,355,384 were received from the sale, of which, $250,000 was received in advance and was included in prepaid disposition proceeds on the condensed balance sheet as of March 31, 2013. The Partnership used the cash proceeds to pay $181,045 in accrued asset management fees, $25,852 to reimburse the General Partner or affiliates for expenses paid on its behalf, $785,650 to reimburse the General Partner or its affiliates for debts previously written off, and $150,001 was placed in the Partnership’s reserves for future operating expenses. The Partnership also incurred $2,251 in sales related expenses which was netted against the proceeds from sale in calculating the gain on sale. No cash distributions were made as a result of this sale. The Compliance Period has been completed therefore there is no risk of recapture.

 

Subsequent to June 30, 2013, the Partnership sold its Local Limited Partnership interests in Woodland, Ltd., Greyhound Associates I, L.P, and Crescent City Apartment, a California Limited Partnership. The investment balance was zero at the time of sale for each Local Limited Partnership listed below. The Compliance Period for the Local Limited Partnerships has been completed so there is no risk of tax credit recapture to the investors in the Partnership.

 

The following table reflects dispositions that occurred subsequent to June 30, 2013:

 

Local Limited Partnership		Debt at prior 12/31 from sale date				Appraisal Value				Date of Sale				Sales Proceeds				Actual Sale Related Expenses				Gain on sale
Woodland, Ltd		$	1,341,720			$	226,000				7/31/2013			$	28,001			$	2,500			$	25,501
Greyhound Associates I, L.P			435,203				115,000				8/31/2013				5,000				2,600				2,400
Crescent City Apartment, a California Limited Partnership			2,681,206				320,000				10/1/2013				50,000				7,334				42,666

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

The following table represents the use of the cash proceeds from the disposition of the Local Limited Partnerships that were disposed of subsequent to June 30, 2013:

 

Local Limited Partnership		Cash Proceeds				Reimburse GP or affiliates for expenses				Payment of accrued asset management fees				Remaining cash to remain in reserves for future expenses
Woodland, Ltd		$	28,001			$	23,000				-			$	5,001
Greyhound Associates I, L.P			5,000				-				-				5,000
Crescent City Apartment, a California Limited Partnership			50,000				-				21,868				28,132

 

As of June 30, 2013, the Partnership has identified the following Local Limited Partnerships for possible disposition as listed in the table below. Once the sales are finalized, the Partnership will use the cash proceeds to reimburse the General Partner or an affiliate for expenses paid on its behalf or pay accrued asset management fees. Any remaining proceeds will be placed in the Partnership’s reserves for future operating expenses. No distributions will be made to the Limited Partners.

 

Local Limited Partnership		Expected closing date		Appraisal value				Mortgage balance of Local Limited Partnership				Estimated sales price				Appraisal expense				Estimated gain on sale
Ashford Place Limited Partnership		1/31/2014		$	2,560,000			$	2,612,803			$	5,000			$	3,000			$	2,000
Cleveland Apartments, L.P		12/31/2013			1,070,000				1,471,060				50,000				-				50,000

 

The Compliance Period for Ashford Place Limited Partnership has expired as of June 30, 2013 so there is no risk of tax credit recapture to the investors in the Partnership. The Compliance period for Cleveland Apartments expires December 31, 2014. The purchaser has agreed to guarantee that the Local Limited Partnerships will stay in compliance with the Low Income Housing Tax Credit code, therefore there is no risk of recapture to the investors of the Partnership.

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Method of Accounting for Investments in Local Limited Partnerships

 

The Partnership accounts for its investments in Local 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 at least annually or 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 the estimated value derived by management, generally consisting of the sum of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments were capitalized as part of the investment account and were being amortized over 27.5 years (see Notes 2 and 3).

 

“Equity in income of Local Limited Partnerships” for each year of the periods ended June 30, 2013 and 2012 has been recorded by the Partnership. Management’s estimate for the three 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 Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero. 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 the net losses not recognized during the period(s) the equity method was suspended. For the three months ended June 30, 2013, as soon as the investment balance reached zero, the related costs for acquiring the investment were written off.

 

In accordance with the accounting guidance for the consolidation of variable interest entities, the Partnership determines when it 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. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. 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 has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.

 

Based on this guidance, the Local Limited Partnerships in which the Partnership invests meet the definition of a VIE because the owners of the equity at risk in these entities do not have the power to direct their operations. However, management does not consolidate the Partnership’s interests in these VIEs, as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. The Partnership currently records the amount of its investment in these Local Limited Partnerships as an asset on its balance sheets, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Partnership’s balance in investment in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss. The Partnership’s exposure to loss on these Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners and their guarantee against credit recapture to the investors in the Partnership.

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Distributions received from the Local Limited Partnerships are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as distribution income. As of June 30, 2013 and March 31, 2013, nine investment accounts in Local Limited Partnerships had reached a zero balance.

 

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. For all periods presented, the Partnership had no cash equivalents.

 

Reporting Comprehensive Income

 

The Partnership had no items of other comprehensive income for all periods presented.

 

Income Taxes

 

The Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. Income tax returns filed by the Partnership are subject to examination by the Internal Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue Service, tax years since 2009 remain open.

 

Net Loss Per Partnership Unit

 

Net loss per Partnership Unit includes no dilution and is computed by dividing loss available to Limited Partners by the weighted average number of Partnership Units outstanding during the period. Calculation of diluted net loss per Partnership Unit is not required.

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Impairment

 

The Partnership reviews its investments in Local Limited Partnerships for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of such investments may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the investment to the sum of the total amount of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investment. No impairment loss was recorded against the investments for any of the periods presented.

 

The Partnership also evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. Impairment loss of $100,779 and $0 was recorded against the related intangibles for the three months ended June 30, 2013 and 2012, respectively.

 

Amortization

 

Acquisition fees and costs were being amortized over 30 years using the straight-line method. Amortization expense for the three months ended June 30, 2013 and 2012 was $1,800 and $1,800, respectively.

 

Revenue Recognition

 

The Partnership is entitled to receive reporting fees from the Local Limited Partnerships. The intent of the reporting fees is to offset (in part) administrative costs incurred by the Partnership in corresponding with the Local Limited Partnerships. Due to the uncertainty of the collection of these fees, the Partnership recognizes reporting fees as collections are made.

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

 

As of June 30, 2013 and March 31, 2013, the Partnership has acquired limited partnership interests in nine and ten, respectively, Local Limited Partnerships, each of which owns one Housing Complex consisting of an aggregate of 436 and 573, respectively, 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, as defined, require approval from the Partnership. The Partnership, as a Limited Partner, is generally entitled to 98.98% to 99.98%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses, and Low Income Housing Tax Credits of the Local Limited Partnerships.

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS – CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 2 INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

The Partnership reviews its investments in Local Limited Partnerships for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of such investments may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the investment to the sum of the total amount of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investment. No impairment loss was recorded against the investments for any of the periods presented.

 

The Partnership also evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. Impairment loss of $100,779 and $0 was recorded against the related intangibles for the three months ended June 30, 2013 and 2012, respectively.

 

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

 

		For the Three Months Ended June 30, 2013				For the Year Ended March 31, 2013
Investments per balance sheet, beginning of period		$	650,468			$	629,335
Equity in losses of Local Limited Partnerships			-				38,184
Disposition of Local Limited Partnership			(547,889	)			-
Impairment			(100,779	)			-
Distributions received from Local Limited Partnerships			-				(9,851	)
Amortization of capitalized acquisition fees and costs			(1,800	)			(7,200	)
Investments per balance sheet, end of period		$	-			$	650,468

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

		For the Three Months Ended June 30, 2013				For the Year Ended March 31, 2013
Investments in Local Limited Partnerships, net		$	-			$	547,889
Acquisition fees and costs, net of accumulated amortization of $0 and $34,200			-				102,579
Investments per balance sheet, end of period		$	-			$	650,468

 

Selected financial information for the three months ended June 30, 2013 and 2012 from the unaudited combined condensed financial statements of the Local Limited Partnerships in which the Partnership has invested is as follows:

 

COMBINED CONDENSED STATEMENTS OF OPERATIONS
		2013				2012
Revenues		$	611,000			$	861,000
Expenses:
Interest expense			103,000				144,000
Depreciation and amortization			169,000				232,000
Operating expenses			483,000				610,000
Total expenses			755,000				986,000
Net loss		$	(144,000	)		$	(125,000	)
Net loss allocable to the Partnership		$	(144,000	)		$	(135,000	)
Net income (loss) recorded by the Partnership		$	-			$	10,000

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

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 the operations of such Local Limited Partnerships. If additional capital contributions are not made when they are required, the Partnership’s investment in certain of such Local Limited Partnerships could be impaired, and the loss and recapture of the related Low Income Housing Tax Credits could occur.

 

Troubled Housing Complexes

 

The Local Limited Partnership, Wynwood Place, L.P. (“Wynwood Place”), in which the Partnership owns a 99.98% interest, struggled with occupancy and cash flow beginning in early 2002. The original Local General Partner funded operating deficits through May 2006 totaling $42,198, at which time they sought and brought forth an acceptable replacement Local General Partner, Greystone Affordable Housing, GP, LLC (“Greystone”). Associates approved this substitute Local General Partner as well as a related management agent of Greystone to manage the property. Through the year ended March 31, 2008, Greystone had advanced $155,266 to meet operating deficits and fund necessary renovation work at Wynwood Place. Occupancy and overall performance of the property has continued to improve with Greystone as both general partner and management agent. The property continued to not be able to generate enough cash flows to meet its financial obligations. A large storm in 2011 resulted in damage to the property that exceeded budgeted repairs and maintenance expenditures by $28,000. Wynwood Place will remain on the watch list until such time acceptable performance has been achieved and cash flows have improved.

 

Additionally, the management company also evicted several long term residents for non-payment and criminal activity during 2012. The combination of vacancy losses, associated turnover costs and capital expenditures incurred throughout the year caused the property to operate below its requirements. The General Partner funded the year-end cash flow deficit by temporarily suspending replacement reserve deposits, deferring management fees and reimbursable expenses due to the affiliated management company. The security deposit and escrow accounts remain fully funded. The management company is focused on reducing expenses to decrease operating deficits. However, the property is budgeted to operate at a deficit in 2013 and the General Partner is expected to continue to fund shortfalls. The investment balance for Wynwood Place as of all periods presented was $0. The Compliance Period for Wynwood Place ends on December 31, 2013.

 

In the first quarter of 2013, Wynwood Place continues to recover from the excessive vacancy loss which began the previous quarter. The management company has cleared out the non-paying and problem residents and returned the occupancy to 96%. Ten new residents, which equates to 42%, moved in during the quarter. As the replacement reserve account is depleted, all expenditures must be funded from the operating account, which had a balance of $5,273 at the end of the reporting period. Although the operating deficit guarantee period has expired, the Local General Partner remains available to fund cash deficits as needed.

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

Ashford Place Limited Partnership (“Ashford”) a Local Limited Partnership has struggled for several years with high turnover and a market which has increasingly become more competitive. Several factors have led to poor, property specific results over the past several years. Occupancy historically has been soft, never higher than 90% for any successive quarters for the past three years. Additionally, rents at Ashford have not kept pace with the increase in expenses, and as a result of the soft market conditions, cash flow has been negative since 2002. As this has been a factor from the onset of operations, the original Local General Partner, Cowen Properties, Inc., was unable to meet its financial obligations to the Local Limited Partnership and, as a result, Associates removed the original Local General Partner in March 2002 and substituted WNC Oklahoma, LLC, an affiliated entity. Since inception of Ashford, the Partnership and the General Partner of the Partnership have advanced $462,514 and $258,567 respectively to meet operating deficits as well as capital needs requirements. Ashford had also been subjected to restrictive reserve requirements imposed by the mortgage lender. However, WNC Oklahoma, LLC has been successful in having these requirements reduced which has had a beneficial effect on Ashford’s operating expenses. As of 2011, Ashford has been under the watch of WNC’s Structured Assets Group (“SAG”). During that time, SAG removed the managing agent Western Property Management in November 2011 and they were replaced with Professional Property Management. With a new management team in place along with a new advertising plan to attract more tenants, as of May 2013, Ashford was able to bring its occupancy level to 100%. As of this filing date, Ashford is now current on all past due debt with funds that were provided by the Partnership and the General Partner of the Partnership. The investment balance for Ashford as of all periods presented was $0. The Compliance Period for Ashford ended on December 31, 2012.

 

NOTE 3 - RELATED PARTY TRANSACTIONS

 

Under the terms of the Partnership Agreement, the Partnership has paid or is obligated to the General Partner or its affiliates the following fees:

 

(a)

Acquisition fees of up to 7.5% of the gross proceeds from the sale of Partnership Units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships. At the end of all periods presented, the Partnership incurred acquisition fees of $1,630,375. Accumulated amortization of these capitalized costs was $0 and $34,200 as of June 30, 2013 and March 31, 2013, respectively. Impairment on the intangibles is measure by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. If an impairment loss related to the acquisition expenses is recorded, the accumulated amortization is reduced to zero at that time.

 

(b)

Reimbursement of costs incurred by the General Partner or an affiliate of Associates in connection with the acquisition of Local Limited Partnerships. These reimbursements have not exceeded 1% of the gross proceeds. As of the end of all periods presented, the Partnership incurred acquisition costs of $167,533, which have been included in investments in Local Limited Partnerships. As of all periods presented, the acquisition costs were fully amortized.

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 3 - RELATED PARTY TRANSACTIONS, continued

 

(c)

An annual asset management fee equal to the greater amount of (i) $2,000 for each Housing complex, or (ii) 0.275% of gross proceeds. In either case, the fee will be decreased or increased annually based on changes to the Consumer Price Index. However, in no event will the maximum amount exceed 0.2% of the Invested Assets of the Partnerships, as defined. “Invested assets” means the sum of the Partnership’s Investment 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. Asset management fees of $10,989 and $12,696 were incurred during each of the three months ended June 30, 2013 and 2012. Asset management reimbursements were $181,045 and $0 during the three months ended June 30, 2013 and 2012, respectively.

 

(d)

A subordinated disposition fee in an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the limited partners receiving a preferred return of 14% through June 30, 2013 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort. No such fee was incurred for all periods presented.

 

(e)

The Partnership reimburses the General Partner or its affiliates for operating expenses incurred on behalf of the Partnership. Operating expense reimbursements were $26,660 and $0 during the three months ended June 30, 2013 and 2012, respectively.

 

The accrued fees and expenses due to General Partner and affiliates consisted of the following at:

 

		June 30, 2013				March 31, 2013
Asset management fee payable		$	21,868			$	191,924
Advances made to the Partnership from General Partner or affiliates			-				-
Expenses paid by the General Partners or affiliates on behalf of the Partnership			75,149				3,060
Total		$	97,017			$	194,984

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 4 – PAYABLES TO LOCAL LIMITED PARTNERSHIPS

 

Payables to Local Limited Partnerships represent amounts which are due at various times based on conditions specified in the Local Limited Partnership agreements. These contributions are payable in installments and are generally due upon the Local Limited Partnerships achieving certain operating and development benchmarks (generally within two years of the Partnership’s initial investment). As of June 30, 2013 and 2012 $22,810 and $33,810 was payable.

 

NOTE 5 –ADVANCES TO LOCAL LIMITED PARTNERSHIPS

 

The Partnership is not obligated to fund advances to the Local Limited Partnerships. Occasionally, when Local Limited Partnerships encounter operational issues the Partnership may decide to advance funds to assist the Local Limited Partnership with its operational issues.

 

As of June 30, 2013 and 2012, the Partnership in total had advanced $471,514 and $462,514, respectively to one Local Limited Partnership, Ashford Place Limited Partnership, in which the Partnership is a limited partner. These advances were used to pay for the property taxes, mortgage payments and operational expenses. All advances were reserved in full in the year they were advanced.

 

As of June 30, 2013 and 2012, the Partnership in total had advanced $4,939 and $4,939, respectively to one Local Limited Partnership, Wynwood Place Limited Partnership, in which the Partnership is a limited partner. These advances were used to pay for the property taxes, mortgage payments and operational expenses. All advances were reserved in full in the year they were advanced.

 

As of June 30, 2013 and 2012, the Partnership in total had advanced $24,493 and $0, respectively to one Local Limited Partnership, Cleveland Apartments, LP, in which the Partnership is a limited partner. These advances were used to pay for the property taxes, mortgage payments and operational expenses. All advances were reserved in full in the year they were advanced.

 

During the three months ended June 30, 2013, the Partnership advanced $3,500 to one Local Limited Partnership in which the Partnership was a limited partner. The Local Limited Partnership was sold in a prior period and the advance was to cover the final tax return cost in accordance with the partnership agreement. The advance was written off as the Local Limited Partnership was sold and would not be able to repay the Partnership.

 

NOTE 6- RETURN OF CAPITAL

 

During prior years, the Partnership was relieved of debt which was owed to the General Partner or an affiliate totaling $785,650. The debt was a result of advances that had previously been made to the Partnership by the General Partner or affiliate to aid the Partnership in providing funding to several Local Limited Partnerships which were experiencing operational issues. During the three months ended June 30, 2013, $785,650 was reimbursed to the General Partner for repayment of the previously written off amounts, the repayment was a result of the sales proceeds that resulted from the disposition of one of the Local Limited Partnerships.

 

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED

 

For the Quarterly Period Ended June 30, 2013

(Unaudited)

 

NOTE 7 – SUBSEQUENT EVENTS

 

Subsequent to June 30, 2013, the Partnership sold its Local Limited Partnership interests in Woodland, Ltd., Greyhound Associates I, L.P, and Crescent City Apartment, a California Limited Partnership. The investment balance was zero at the time of sale for each Local Limited Partnership listed below. The Compliance Period for the Local Limited Partnerships has been completed so there is no risk of tax credit recapture to the investors in the Partnership.

 

The following table reflects dispositions that occurred subsequent to June 30, 2013:

 

Local Limited Partnership		Debt at prior 12/31 from sale date				Appraisal Value				Date of Sale				Sales Proceeds				Actual Sale Related Expenses				Gain on sale
Woodland, Ltd		$	1,341,720			$	226,000				7/31/2013			$	28,001			$	2,500			$	25,501
Greyhound Associates I, L.P			435,203				115,000				8/31/2013				5,000				2,600				2,400
Crescent City Apartment, a California Limited Partnership			2,681,206				320,000				10/1/2013				50,000				7,334				42,666

 

The following table represents the use of the cash proceeds from the disposition of the Local Limited Partnerships that were disposed of subsequent to June 30, 2013:

 

Local Limited Partnership		Cash Proceeds				Reimburse GP or affiliates for expenses				Payment of accrued asset management fees				Remaining cash to remain in reserves for future expenses
Woodland, Ltd		$	28,001			$	23,000				-			$	5,001
Greyhound Associates I, L.P			5,000				-				-				5,000
Crescent City Apartment, a California Limited Partnership			50,000				-				21,868				28,132

 

 

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, this “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, the Partnership’s 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 the Partnership or persons acting on its behalf are expressly qualified in their entirety by cautionary statements in this Form 10-Q and in other reports filed with the Securities and Exchange Commission.

 

The following discussion and analysis compares the results of operations for the three months ended June 30, 2013 and 2012 and should be read in conjunction with the combined condensed financial statements and accompanying notes included within this report.

 

Financial Condition

 

The Partnership’s assets at June 30, 2013 consisted primarily of $1,368,000 in cash and $28,000 in prepaid expenses. Liabilities at June 30, 2013 primarily consisted of $23,000 of payables to Local Limited Partnerships, $97,000 of accrued fees and expenses due to the General Partner and/or its affiliates, and $10,000 in prepaid disposition proceeds.

 

Results of Operations

 

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012 The Partnership’s net income increased by $1,576,000 for the three months ended June 30, 2013 compared to $0 net income incurred during the three months ended June 30, 2012. The change was primarily due to the increase of $1,805,000 in gain on sale of Local Limited Partnerships for the three months ended June 30, 2013. The gain on sale of Local Limited Partnerships will vary from period to period, depending on the number of Housing Complexes that have been identified for disposition, the value of such Housing Complexes, and the closing dates of the transactions. There was an increase in impairment loss of $(101,000) during the three months ended June 30, 2013. The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the partnership and the current estimated residual value of the investments compared to the current carrying value of each of the investments. During the three months ended June 30, 2013 there were advances of $(37,000) made to several Local Limited Partnerships which were reserved for in full compared to $(2,000) advanced and reserved for during the three months ended June 30, 2012. The advances made to the troubled Local Limited Partnership can vary each year depending on the operations of each Local Limited Partnership. There was a decrease in equity in income of Local Limited Partnerships of $(10,000) for the three months ended June 30, 2013. The equity in income can vary each year depending on the operations of each of the Local Limited Partnerships. Reporting fees and distribution income decreased by $(4,000) for the three months ended June 30, 2013 compared to the three months ended June 30, 2012 due to the fact that Local Limited Partnerships pay the reporting fee to the Partnership when the Local Limited Partnership cash flows will allow for the payment. Accounting and legal fees increased by $(80,000) due to the timing of work performed. The Partnership was past due in multiple annual and quarterly reports. Work on bringing the past due reports current are still in progress. There was a $(2,000) decrease in asset management fees for the three months ended June 30, 2013. The fees are calculated based on the value of invested assets. As Local Limited Partnerships are sold, the invested assets decrease, thereby decreasing the asset management fees.

 

 

Capital Resources and Liquidity

 

Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012 Net cash provided during the three months ended June 30, 2013 was $1,071,000, compared to net cash provided during the three months ended June 30, 2012 of $19,000. The change was due primarily to the fact that during the three months ended June 30, 2013, the Partnership received $2,353,000 in cash proceeds from the sale of its Local Limited Partnership compared to no sale proceeds received during the three months ended June 30, 2012. Proceeds received from the disposition of Local Limited Partnerships will vary from period to period as discussed above. During the three months ended June 30, 2013 the Partnership advanced $(37,000) to a Local Limited Partnership that was experiencing operational issues compared to $(2,000) advanced for the three months ended June 30, 2012. During the three months ended June 30, 2013 the partnership paid the General Partner or an affiliate $(27,000) for operating expenses paid on its behalf compared to no such reimbursement during the three months ended June 30, 2012. The Partnership also paid $(181,000) to the General Partner or an affiliate in accrued asset management fees for the three months ended June 30, 2013 compared to $0 reimbursement for the three months ended June 30, 2012. The amount paid varies depending on the cash that the Partnership collected throughout the period. In addition, the Partnership paid $(786,000) of disposition proceeds to the General Partner for advances previously forgiven. During the three months ended June 30, 2013, the Partnership made $(11,000) in capital contributions to a Local Limited Partnerships compared to no contribution made during the three months ended June 30, 2012. Capital contributions are paid when the Local Limited Partnership reaches certain benchmarks. Distributions decreased by $(10,000) during the three months ended June 30, 2013 compared to June 30, 2012 due to the fact that Local Limited Partnerships pay distributions to the Partnership when the Local Limited Partnerships’ cash flows will allow for the payment.

 

Recent Accounting Changes

 

In May 2011, the FASB issued an update to existing guidance related to fair value measurements on how to measure fair value and what disclosures to provide about fair value measurements. For fair value measurements categorized as level 3, a reporting entity should disclose quantitative information of the unobservable inputs and assumptions, a description of the valuation processes and narrative description of the sensitivity of the fair value to changes in unobservable inputs. This update is effective for interim and annual periods beginning after December 15, 2011. The adoption of this update did not materially affect the Partnership’s financial statements.

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risks

 

NOT APPLICABLE

 

Item 4. Controls and Procedures

 

(a)

Disclosure controls and procedures

 

As of the end of the periods 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 Partnership’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 Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Partnership’s disclosure controls and procedures were not effective to ensure that material information required to be disclosed in the Partnership’s periodic report filings with SEC is recorded, processed, summarized and reported within the time period specified by the SEC’s rules and forms, consistent with the definition of “disclosure controls and procedures” under the Securities Exchange Act of 1934.

 

The Partnership must rely on the Local Limited Partnerships to provide the Partnership with certain information necessary to the timely filing of the Partnership’s periodic reports. Factors in the accounting at the Local Limited Partnerships have caused delays in the provision of such information during past reporting periods, and resulted in the Partnership’s inability to file its periodic reports in a timely manner.

 

Once the Partnership has received the necessary information from the Local Limited Partnerships, the Chief Executive Officer and the Chief Financial Officer of Associates believe that the material information required to be disclosed in the Partnership’s periodic report filings with SEC is effectively recorded, processed, summarized and reported, albeit not in a timely manner. Going forward, the Partnership will use the means reasonably within its power to impose procedures designed to obtain from the Local Limited Partnerships the information necessary to the timely filing of the Partnership’s periodic reports.

 

(b)

Changes in internal controls

 

There were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended June 30, 2013 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

 

 

Part II. Other Information

 

Item 1. Legal Proceedings

 

NONE

 

Item 1A. Risk Factors

 

No material changes in risk factors as previously disclosed in the Partnership’s Form 10-K.

 

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

 

NONE

 

Item 3. Defaults Upon Senior Securities

 

NONE

 

Item 4. Mine Safety Disclosures

 

NONE

 

Item 5. Other Information

 

NONE

 

Item 6. Exhibits

 

31.1

Certification of the Principal Executive Officer pursuant to Rule 13a-14 and 15d-14, 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-14 and 15d-14, 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)

 

101

Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Balance Sheets at June 30, 2013 and March 31, 2013, (ii) the Condensed Statements of Operations for the three month periods ended June 30, 2013 and 2012 (iii) the Condensed Statements of Partners’ Equity (Deficit) for the three months ended June 30, 2013 (iv) the Condensed Statements of Cash Flows for the three months ended June 30, 2013 and 2012, and (v) the Notes to Condensed Financial Statements. (filed herewith)

 

Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.

 

 

Signatures

 

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 HOUSING TAX CREDIT FUND V, L.P., SERIES 4

 

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: November 4, 2013

 

By:	/s/ Melanie R. Wenk
Melanie R. Wenk
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: November 4, 2013