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10-K - CAL 3 10K MARCH 31, 2008 - WNC CALIFORNIA HOUSING TAX CREDITS III LPcal308.txt
EX-31 - EXHIBIT 31-2 - WNC CALIFORNIA HOUSING TAX CREDITS III LPex312.txt
EX-32 - EXHIBIT 32-1 - WNC CALIFORNIA HOUSING TAX CREDITS III LPex321.txt
EX-32 - EXHIBIT 32-2 - WNC CALIFORNIA HOUSING TAX CREDITS III LPex322.txt
EX-31 - EXHIBIT 31-1 - WNC CALIFORNIA HOUSING TAX CREDITS III LPex311.txt
EX-99 - EXHIBIT 99 COLONIAL FIANANCAILS 07 AND 06 - WNC CALIFORNIA HOUSING TAX CREDITS III LPcolonial07.txt












                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)


                              FINANCIAL STATEMENTS


                     YEARS ENDED DECEMBER 31, 2005 and 2004




























INDEPENDENT AUDITOR'S REPORT To the Partners Colonial Village Roseville (A California Limited Partnership) Roseville, California I have audited the accompanying balance sheets of Colonial Village Roseville (A California Limited Partnership), as of December 31, 2005 and 2004, and the related statements of income, changes in partners capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Colonial Village Roseville (A California Limited Partnership) as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /S/ Bernard E. Rea, CPA Stockton, California February 23, 2006 1
C O N T E N T S Page INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS..................................................1 FINANCIAL STATEMENTS Balance sheets..........................................................2-3 Statements of income....................................................4-7 Statements of changes in partners capital.................................8 Statements of cash flows...............................................9-10 Notes to financial statements.........................................11-14
COLONIAL VILLAGE ROSEVILLE (A California Limited Partnership) BALANCE SHEETS December 31, 2005 and 2004 ASSETS 2005 2004 --------------- ---------------- CURRENT ASSETS Cash $ 113,220 $ 133,309 Rents receivable - - - - Other receivables - - - - Prepaid expense 4,553 4,429 ---------------- --------------- Total current assets $ 117,773 $ 137,738 ---------------- --------------- RESTRICTED DEPOSITS AND FUNDED RESERVES Tenants' security deposits $ 29,843 $ 29,053 Replacement reserve escrow 124,505 104,904 ---------------- --------------- $ 154,348 $ 133,957 ---------------- --------------- PROPERTY AND EQUIPMENT, AT COST Land $ 315,303 $ 315,303 Building 4,865,200 4,861,210 Equipment 177,478 177,478 ---------------- --------------- $ 5,357,981 $ 5,353,991 Less accumulated depreciation 2,084,508 1,905,710 ---------------- --------------- $ 3,273,473 $ 3,448,281 ---------------- --------------- OTHER ASSETS Deferred charges, less accumulated amortization of $54,940 and $49,727 $ 78,482 $ 83,695 ---------------- ---------------- $ 78,482 $ 83,695 ---------------- ---------------- $ 3,624,076 $ 3,803,671 ================ ================ See Notes to Financial Statements. 2
COLONIAL VILLAGE ROSEVILLE (A California Limited Partnership) BALANCE SHEETS December 31, 2005 and 2004 LIABILITIES AND PARTNERS CAPITAL 2005 2004 --------------- --------------- CURRENT LIABILITIES Current maturities of long-term debt $ 47,524 $ 40,297 Accounts payable 3,897 4,732 Accounts payable - general partner 10,388 10,722 Accrued expense 800 800 Accrued interest - - - - ---------------- --------------- Total current liabilities $ 62,609 $ 56,551 ---------------- --------------- DEPOSIT AND PREPAYMENT LIABILITIES Tenants' security deposits $ 23,550 $ 23,600 Prepaid rents - - - - ---------------- ---------------- $ 23,550 $ 23,600 ---------------- ---------------- LONG-TERM DEBT Mortgage payable, less current maturities $ 1,850,192 $ 1,899,408 ---------------- ---------------- $ 1,850,192 $ 1,899,408 ---------------- ---------------- COMMITMENT PARTNERS CAPITAL $ 1,687,725 $ 1,824,112 ---------------- ---------------- $ 3,624,076 $ 3,803,671 ================ ================ See Notes to Financial Statements. 3
COLONIAL VILLAGE ROSEVILLE (A California Limited Partnership) STATEMENTS OF INCOME Years Ended December 31, 2005 and 2004 2005 2004 -------------- --------------- RENTAL INCOME Apartments $ 541,423 $ 545,210 Tenant assistance payments - - - - Subsidy income - - - - Miscellaneous - - - - -------------- --------------- Net rental revenue $ 541,423 $ 545,210 -------------- --------------- FINANCIAL REVENUE Interest Income - project operations $ - - $ - - Income from investments - replacement reserve 3,798 2,464 Income from investments - operating reserve 315 183 Income from investments - miscellaneous - - - - -------------- --------------- Sub-total financial revenue $ 4,113 $ 2,647 -------------- --------------- OTHER REVENUE Laundry and vending $ 11,352 $ 5,276 NSF and late charges 225 775 Damage and cleaning fees 2,044 5,882 Forfeited tenant security deposits - - - - Other revenue - - 205 -------------- --------------- Sub-total other revenue $ 13,621 $ 12,138 -------------- --------------- Total revenues $ 559,157 $ 559,995 ============== ================ See Notes to Financial Statements. 4
COLONIAL VILLAGE ROSEVILLE (A California Limited Partnership) STATEMENTS OF INCOME (CONTINUED) Years Ended December 31, 2005 and 2004 2005 2004 -------------- ---------------- OPERATING EXPENSES Renting expenses Advertising $ 1,599 $ 617 Miscellaneous renting expenses - - 22 -------------- ---------------- Sub-total renting expenses $ 1,599 $ 639 -------------- ---------------- Administrative expenses Office salaries $ - - $ - - Office supplies 869 408 Office rent - - - - Management fee 34,944 33,600 Manager's salary 22,657 20,673 Manager rent free unit 11,316 11,250 Legal expense 1,168 1,082 Audit expense 6,125 5,850 Bookkeeping / accounting services - - - - Telephone and answering service 1,442 1,271 Bad debts 5,531 4,121 Miscellaneous administrative expenses 9,487 11,232 -------------- ---------------- Sub-total administrative expenses $ 93,539 $ 89,487 -------------- ---------------- Utilities expense Fuel oil / coal $ - - $ - - Electricity 4,927 4,853 Water 3,833 4,550 Gas 3,922 4,208 Sewer 8,090 7,665 -------------- ---------------- Sub-total utilities expense $ 20,772 $ 21,276 -------------- ---------------- See Notes to Financial Statements. 5
COLONIAL VILLAGE ROSEVILLE (A California Limited Partnership) STATEMENTS OF INCOME (CONTINUED) Years Ended December 31, 2005 and 2004 2005 2004 --------------- --------------- Operating and maintenance expense Janitor and cleaning payroll $ 5,306 $ 5,973 Janitor and cleaning supplies 772 543 Janitor and cleaning contract 1,805 1,105 Exterminating payroll / contract 924 682 Exterminating supplies - - - - Garbage and trash removal 7,608 7,304 Security payroll / contract - - - - Grounds payroll - - - - Grounds supplies 257 121 Grounds contract 12,945 9,579 Repairs payroll 24,182 22,196 Repairs material 2,211 1,435 Repairs contract 29,131 19,582 Elevator maintenance / contract - - - - Heating / cooling repairs and maintenance - - - - Swim pool maintenance / contract - - - - Snow removal - - - - Decorating payroll / contract 350 752 Decorating supplies 581 3,190 Vehicle and maintenance equipment o & r - - - - Miscellaneous operating and maint. expenses 5,698 4,474 -------------- --------------- Sub-total operating & maint. expense $ 91,770 $ 76,936 -------------- --------------- Taxes and insurance Real estate taxes $ 850 $ 566 Payroll taxes 4,896 4,728 Miscellaneous taxes, licenses, and permits 800 800 Property and liability insurance 7,664 6,860 Fidelity bond insurance - - - - Workman's compensation 13,766 14,959 Health insurance and other employee benefits 9,968 9,581 Other insurance - - - - --------------- --------------- Sub-total taxes & insurance $ 37,944 $ 37,494 --------------- --------------- Total operating expenses $ 245,624 $ 225,832 --------------- --------------- See Notes to Financial Statements. 6
COLONIAL VILLAGE ROSEVILLE (A California Limited Partnership) STATEMENTS OF INCOME (CONTINUED) Years Ended December 31, 2005 and 2004 2005 2004 ---------------- ------------------- OTHER EXPENSES Interest expense - mortgage $ 141,152 $ 150,344 Interest expense - notes - - - - Miscellaneous financial expense - - - - Depreciation and amortization 184,011 183,114 Non project expenses - - - - ----------------- ------------------- Sub-total other expenses $ 325,163 $ 333,458 ----------------- ------------------- Total expenses $ 570,787 $ 559,290 ----------------- ------------------- Net income (loss) $ (11,630) $ 705 ================= =================== See Notes to Financial Statements. 7
COLONIAL VILLAGE ROSEVILLE (A California Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS CAPITAL Years Ended December 31, 2005 and 2004 General Limited Total Partner Partner -------------- --------------- ---------------- Partners capital December 31, 2003 $ 1,858,497 $ 44,281 $ 1,814,216 Partners capital contributions - - - - - - Partners capital distributions (35,090) (18,563) (16,527) Net income (loss) 705 7 698 ---------------- ----------------- ---------------- Partners capital December 31, 2004 $ 1,824,112 $ 25,725 $ 1,798,387 Partners capital contributions - - - - - - Partners capital distributions (124,757) (86,999) (37,758) Net income (loss) (11,630) (116) (11,514) ----------------- ----------------- ----------------- Partners capital December 31, 2005 $ 1,687,725 $ (61,390) $ 1,749,115 ================= ================= ================= Percentage at December 31, 2005 100% 1% 99% ================= ================= ================= See Notes to Financial Statements. 8
COLONIAL VILLAGE ROSEVILLE (A California Limited Partnership) STATEMENTS OF CASH FLOWS Years Ended December 31, 2005 and 2004 2005 2004 ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (11,630) $ 705 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 184,011 183,114 Change in assets and liabilities: Decrease (increase) in: Prepaid expenses (124) 127 Tenants' security deposits (790) (444) Rents receivable - - - - Other receivables - - - - Increase (decrease) in: Accounts payable (835) 161 Accounts payable - general partner (334) 1,484 Accrued expenses - - - - Accrued interest - - - - Prepaid rents - - - - Tenants' security deposits (50) (1,000) ----------------- ---------------- Net cash provided by (used in) operating activities $ 170,248 $ 184,147 ----------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES Funding of replacement reserve escrow $ (19,601) $ (18,754) Withdrawals from replacement reserve escrow - - 49,095 Acquisition of property and equipment (3,990) (52,545) ----------------- ---------------- Net cash provided by (used in) investing activities $ (23,591) $ (22,204) ----------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES Partner contributions $ - - $ - - Partner distributions (124,757) (35,090) Payment of development fees payable - - (11,303) Principal payments on long-term debt (41,989) (37,331) ----------------- ---------------- Net cash provided by (used in) financing activities $ (166,746) $ (83,724) ----------------- ---------------- See Notes to Financial Statements. 9
COLONIAL VILLAGE ROSEVILLE (A California Limited Partnership) STATEMENTS OF CASH FLOWS (CONTINUED) Years Ended December 31, 2005 and 2004 2005 2004 ---------------- ---------------- Increase (decrease) in cash and cash equivalents $ (20,089) $ 78,219 Cash and cash equivalents Beginning 133,309 55,090 ---------------- ---------------- Ending $ 113,220 $ 133,309 ================ ================ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for interest $ 141,152 $ 150,344 ================ ================ See Notes to Financial Statements. 10
COLONIAL VILLAGE ROSEVILLE (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. 11
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 Colonial Village Roseville is a California Limited Partnership which was formed in April 1993, to develop, construct, own, maintain and operate a 56-unit multi-family apartment complex and is located in the city of Roseville, California. The Partnership Agreement and the loan agreement with the Midland Mortgage Company govern the major activities of the Partnership. Under the agreements, the Partnership is required to provide low cost housing to very low-income or lower-income households. The Partnership has one general partner, Project Go Inc., a 501(c) (3) tax exempt, non-profit community service organization and one investing limited partner, WNC Housing Tax Credits III, L.P., a California limited partnership. Partnership transactions with the partners are described in other notes to these financial statements. NOTE 3 - RESTRICTED DEPOSITS AND FUNDED RESERVES In accordance with the Partnership Agreement and the Rider to Multifamily Instrument with Midland Mortgage Company, the Partnership is required to maintain a replacement reserve account. The replacement reserve account is to be funded annually in the amount of $16,800. 12
NOTES TO FINANCIAL STATEMENTS NOTE 4 - DEFERRED CHARGES Deferred charges as of December 31, 2005 and 2004, consists of the following: 2005 2004 --------------- --------------- Deferred debt expense $ 110,462 $ 110,462 Tax credit monitoring fee 22,960 22,960 --------------- --------------- $ 133,422 $ 133,422 Less accumulated amortization 54,940 49,727 --------------- --------------- $ 78,482 $ 83,695 =============== =============== NOTE 5 - LONG-TERM DEBT Long-Term debt consisted of a permanent loan with Midland Mortgage Company in face amount of $2,200,000. Under the terms of the 30-year Promissory Note with Midland, the loan provides for an initial interest rate of 7.67% and monthly payments of $15,639.62 commencing on September 1, 1995, and continuing through August 2025. The interest rate and monthly payment will be adjusted at year eleven (11) and year twenty-one (21), at which time the interest rate will be adjusted based on the Current Index plus 2.75% and the payment will be adjusted and determined by the amount of the monthly payment that would be sufficient to repay the note within 360 months of the initial payment date. As Of December 31, 2005, the current interest rate, and minimum monthly payment due is 6.89% and $14,732.89, respectively. The apartment complex is pledged as collateral for the mortgage and is secured by deeds of trust, assignment of rents, security agreements and fixture filings against the property. Aggregate maturities of Long-term debt for the next five years are as follows: December 31, 2006 $ 47,524 2007 50,904 2008 54,524 2009 58,402 2010 62,555 Thereafter 1,623,807 ------------- TOTAL $ 1,897,716 ------------- NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES MANAGEMENT FEE -------------- In accordance with the Management Agreement, the Partnership paid Project Go, Inc., the general partner, management fees during 2005 and 2004 in the amounts of $34,944 and 33,600, respectively, for services rendered in connection with the leasing and operation of the project. The fee for its services is approximately 6% of the project's rental income. 13
NOTES TO FINANCIAL STATEMENTS NOTE 7 - 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 8 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS The Partnership's sole asset is Colonial Village Roseville Apartments. The Partnership's operations are concentrated in the multifamily real estate market. 14