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EX-32.2 - SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER. - AMERICAN TAX CREDIT TRUST SERIES Iex32-2.htm
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EX-31.2 - RULE 13A-14(A)/15D-14(A) CERTIFICATION OF CHIEF FINANCIAL OFFICER. - AMERICAN TAX CREDIT TRUST SERIES Iex31-2.htm


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


FORM 10-Q

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

For the Quarterly Period Ended December 30, 2011

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: 0-24600

 
American Tax Credit Trust, a Delaware statutory business trust Series I
(Exact Name of Registrant as Specified in its Charter)

                             Delaware
  06-6385350
(State or Other Jurisdiction of Organization)
(I.R.S. Employer Incorporation or Identification No.)
   
Richman American Credit Corp.
 
340 Pemberwick Road
 
Greenwich, Connecticut
06831
(Address of Principal Executive Offices)
(Zip Code)

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

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.

Yes    X    No ___
  
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    X     No ___  

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

Large Accelerated Filer ___Accelerated Filer___Non-Accelerated Filer___ Smaller Reporting Company    X 

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

Yes ___  No    X                                

As of January 26, 2012, there are 18,654 units of limited partnership interest outstanding.

 
 

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I

PART I - FINANCIAL INFORMATION


Table of Contents
 
 
  
        Page
     
Item 1.
Financial Statements.
 
     
Balance Sheets
3
     
Statements of Operations
4
     
Statements of Cash Flows
5
     
Notes to Financial Statements
7
     
Item 2.
Management’s Discussion and Analysis of Financial
 
 
Condition and Results of Operations.
9
     
Item 3.
Quantitative and Qualitative Disclosure About Market Risk.
12
     
Item 4.
Controls and Procedures.
12
 
 
2

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I
BALANCE SHEETS
(UNAUDITED)

   
December 30,
   
March 30,
 
   
2011
   
2011
 
             
ASSETS
           
             
Cash and liquid investments
           
             
Cash and cash equivalents
  $ 215,604     $ 205,400  
Investment in Pemberwick Fund
    787,705       799,505  
Investment in bond
            99,873  
                 
Total cash and liquid investments
    1,003,309       1,104,778  
                 
Interest receivable
            123  
Investment in local partnerships
    2,426,782       2,297,912  
                 
    $ 3,430,091     $ 3,402,813  
                 
LIABILITIES AND OWNERS' EQUITY (DEFICIT)
               
                 
Liabilities
               
                 
Accounts payable and accrued expenses
  $ 19,290     $ 31,628  
Payable to manager and affiliates
    848,619       808,871  
                 
      867,909       840,499  
                 
Commitments and contingencies
               
                 
Owners' equity (deficit)
               
                 
Manager
    (138,164 )     (138,396 )
Beneficial owners (18,654 units of beneficial ownership nterest outstanding)
    2,709,985       2,687,011  
Accumulated other comprehensive income (loss)
    (9,639 )     13,699  
                 
      2,562,182       2,562,314  
                 
    $ 3,430,091     $ 3,402,813  

See Notes to Financial Statements.

 
3

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I
STATEMENTS OF OPERATIONS
THREE AND NINE MONTH PERIODS ENDED DECEMBER 30, 2011 AND 2010
(UNAUDITED)

   
Three Months
Ended
December 30,
2011
   
Nine Months
Ended
December 30,
2011
   
Three Months
Ended
 December 30,
2010
   
Nine Months
Ended
December 30,
2010
 
                         
REVENUE
                       
                         
Interest
  $ 3,414     $ 8,302     $ 5,532     $ 14,714  
Other income from local partnerships
    3,250       6,250               2,500  
                                 
TOTAL REVENUE
    6,664       14,552       5,532       17,214  
                                 
EXPENSES
                               
                                 
Management fee
    48,036       144,107       48,036       144,107  
Professional fees
    9,342       28,011       9,931       25,075  
Printing, postage and other
    532       3,630       4,076       9,759  
                                 
TOTAL EXPENSES
    57,910       175,748       62,043       178,941  
                                 
      (51,246 )     (161,196 )     (56,511 )     (161,727 )
                                 
Equity in income of investment in local partnerships
    50,031       184,402       55,711       167,012  
                                 
NET INCOME (LOSS)
    (1,215 )     23,206       (800 )     5,285  
                                 
Reclassification of unrealized gain on investment in bond
            (2,730 )                
Other comprehensive income (loss), net
    (796 )     (20,608 )     630       10,190  
                                 
COMPREHENSIVE INCOME (LOSS)
  $ (2,011 )   $ (132 )   $ (170 )   $ 15,475  
                                 
NET INCOME (LOSS) ATTRIBUTABLE TO
                               
                                 
Manager
  $ (12 )   $ 232     $ (8 )   $ 53  
Beneficial owners
    (1,203 )     22,974       (792 )     5,232  
                                 
    $ (1,215 )   $ 23,206     $ (800 )   $ 5,285  
                                 
NET INCOME (LOSS) per unit of beneficial ownership interest (18,654 units of beneficial ownership interest)
  $ (.07 )   $  1.23     $ (.04 )   $  .28  

See Notes to Financial Statements.

 
4

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 30, 2011 AND 2010
(UNAUDITED)



   
2011
   
2010
 
             
CASH FLOWS FROM OPERATING ACTIVITIES
           
             
Interest received
  $ 14,568     $ 15,556  
Cash paid for
               
Management fees
    (104,359 )     (341,083 )
Professional fees
    (37,731 )     (36,157 )
Printing, postage and other expenses
    (6,248 )     (10,665 )
                 
Net cash used in operating activities
    (133,770 )     (372,349 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
                 
Investments in Pemberwick Fund
    (8,808 )     (10,484 )
Redemptions from Pemberwick Fund
            340,677  
Proceeds from redemption of investment in bond
    91,000          
Investment in bond
            (100,940 )
Distributions received from local partnerships
    61,782       62,732  
                 
Net cash provided by investing activities
    143,974       291,985  
                 
Net increase (decrease) in cash and cash equivalents
    10,204       (80,364 )
                 
Cash and cash equivalents at beginning of period
    205,400       286,543  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 215,604     $ 206,179  
                 
                 
SIGNIFICANT NONCASH INVESTING AND FINANCING ACTIVITIES
               
                 
Unrealized gain (loss) on investment in Pemberwick Fund
  $ (20,608 )   $ 6,709  
                 
Reclassification of unrealized gain on investment in bond
  $ (2,730 )        
                 
Unrealized gain on investment in bond
          $ 3,481  

See reconciliation of net income to net cash used in operating activities on page 6.
 
See Notes to Financial Statements.

 
5

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I
STATEMENTS OF CASH FLOWS - CONTINUED
NINE MONTHS ENDED DECEMBER 30, 2011 AND 2010
(UNAUDITED)

 
2011
   
2010
         
RECONCILIATION OF NET INCOME TO NET CASH USED IN OPERATING ACTIVITIES
           
             
Net income
  $ 23,206     $ 5,285  
                 
Adjustments to reconcile net income to net cash used in operating activities
               
                 
Equity in income of investment in local partnerships
    (184,402 )     (167,012 )
Other income from local partnerships
    (6,250 )     (2,500 )
Accrued interest purchased at date of investment in bond
            1,750  
Amortization of premium on investment in bond
    1,229       1,433  
Loss on redemption of investment in bond
    4,914          
Decrease (increase) in interest receivable
    123       (2,341 )
Decrease in accounts payable and accrued expenses
    (12,338 )     (11,988 )
Increase (decrease) in payable to manager and affiliates
    39,748       (196,976 )
                 
NET CASH USED IN OPERATING ACTIVITIES
  $ (133,770 )   $ (372,349 )
 
See Notes to Financial Statements.

 
6

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 30, 2011
(UNAUDITED)

1.
Basis of Presentation

The accompanying unaudited financial statements of American Tax Credit Trust, a Delaware statutory business trust Series I (the “Trust”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information.  They do not include all information and footnotes required by GAAP for complete financial statements.  The results of operations are impacted, in part, by the combined results of operations of the Local Partnerships, which are provided by the Local Partnerships on an unaudited basis during interim periods.  Accordingly, the accompanying unaudited financial statements are dependent on such unaudited information.  In the opinion of the Manager, the accompanying unaudited financial statements include all adjustments necessary to present fairly the financial position as of December 30, 2011 and the results of operations and cash flows for the interim periods presented.  All adjustments are of a normal recurring nature.  The results of operations for the nine months ended December 30, 2011 are not necessarily indicative of the results that may be expected for the entire year.

2.
Investment in Local Partnerships

The Trust owns a 98.9% to 99% limited partner interest (the “Local Partnership Interests”) in ten Local Partnerships representing capital contributions in the aggregate amount of $14,837,956, which includes voluntary advances made to certain Local Partnerships and all of which has been paid.  See discussion below regarding the potential disposal of a Local Partnership Interest.  The Trust has no legal obligation to fund any operating deficits of the Local Partnerships.

For the nine months ended December 30, 2011, the investment in local partnerships activity consists of the following:

Investment in local partnerships as of March 30, 2011
  $ 2,297,912  
         
Equity in income of investment in local partnerships
    184,402 *
         
Distributions received from Local Partnerships
    (61,782 )
         
Distributions classified as other income
    6,250  
         
Investment in local partnerships as of December 30, 2011
  $ 2,426,782  
         
 
 
*In the event the operations of a Local Partnership result in a loss, equity in loss of each investment in Local Partnership allocated to the Trust is recognized to the extent of the Trust’s investment balance in each Local Partnership.  Equity in loss in excess of the Trust’s investment balance in a Local Partnership is allocated to other partners’ capital in any such Local Partnership.

In January 2011, Starved Rock - LaSalle Manor Limited Partnership (“Starved Rock”) entered into a purchase agreement (the “Purchase Agreement”) to sell its underlying Property to an affiliate of the Local General Partner of Starved Rock.  Under the terms of the Purchase Agreement, the Trust would receive $108,000 (subject to adjustment as described in the Purchase Agreement) plus $30,000 in distributions that are due to the Trust under the terms of Starved Rock’s partnership agreement.  The Purchase Agreement is subject to the approval of the United States Department of Housing and Urban Development (“HUD”) and there can be no assurance that the Property will be sold under the terms of the Purchase Agreement.  The Trust’s investment balance in Starved Rock, after cumulative equity losses, became zero during the year ended March 30, 2008.
 
 
7

 

  AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 30, 2011
(UNAUDITED)

2.
Investment in Local Partnerships (Continued)

Edgewood Manor Associates, L.P. (“Edgewood”) is currently in default under the terms of its first mortgage and a default has been declared by the lender; delinquent payments of principal, interest and certain fees represent a cumulative arrearage of approximately $47,000 as of January 2012.  The Trust has made cumulative voluntary advances of $90,000 to Edgewood to fund operating deficits as of December 30, 2011, none of which were made during the nine months then ended.  The Trust’s investment balance in Edgewood, after cumulative equity losses, became zero during the year ended March 30, 2005 and voluntary advances made by the Trust were recorded as investment in local partnerships and written off as additional equity in loss of investment in local partnerships.

The Trust’s investment balance in St. John Housing Associates, L.P. (“St. John Housing”) of $2,426,782 as of December 30, 2011 represents more than 20% of the Trust’s total assets and its equity in income of its investment in St. John Housing of $184,402 represents more than 20% of the Trust’s net income for the nine months ended December 30, 2011.  The following financial information represents certain unaudited balance sheet and operating statement data of St. John Housing as of and for the nine months ended September 30, 2011:

Total assets
  $ 5,696,211  
         
Total liabilities
  $ 3,279,761  
         
Revenue
  $ 1,084,297  
         
Net income
  $ 186,265  

3.
Investment in Pemberwick Fund

The Trust carries its investment in Pemberwick Fund (“Pemberwick”) at estimated fair value.  The fair value of the Trust’s investment in Pemberwick is classified within Level 1 of the fair value hierarchy of the guidance on Fair Value Measurements as defined in Accounting Standards Codification (“ASC”) Topic 820.  Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Trust has the ability to access.  Pemberwick’s net asset value (“NAV”) is $9.88 per share as of December 30, 2011.  An unrealized loss of $9,639 is reflected as accumulated other comprehensive loss in the accompanying unaudited balance sheet as of December 30, 2011.  As of December 30, 2011, the Trust has earned $23,759 of interest revenue from its investment in Pemberwick.

4.
Investment in Bond

The Trust carried its investment in bond as available-for-sale because such investment was used to facilitate and provide flexibility for its obligations.  Investment in bond was reflected in the accompanying unaudited balance sheet as of March 30, 2011 at estimated fair value and was classified within Level 1 of the fair value hierarchy of the guidance on Fair Value Measurements (see Note 3).  The bond was called during the nine months ended December 30, 2011; accordingly, there is no accumulated other comprehensive income or loss associated with the Trust’s investment in bond in the accompanying unaudited balance sheet as of December 30, 2011.  The Trust’s cumulative annualized return on the bond for the sixteen month holding period totaled approximately 2.94%.

5.
Additional Information

Additional information, including the audited March 30, 2011 Financial Statements and the Organization, Purpose and Summary of Significant Accounting Policies, is included in the Trust's Annual Report on Form 10-K for the fiscal year ended March 30, 2011 on file with the Securities and Exchange Commission.

 
8

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I

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

Material Changes in Financial Condition

As of December 30, 2011, American Tax Credit Trust, a Delaware statutory business trust Series I (the “Registrant”) has not experienced a significant change in financial condition as compared to March 30, 2011.  Principal changes in assets are comprised of periodic transactions and adjustments and equity in income (loss) from operations of the local partnerships (the “Local Partnerships”), which own low-income multifamily residential complexes (the “Properties”) that qualified for the low-income tax credit in accordance with Section 42 of the Internal Revenue Code (the “Low-income Tax Credit”).  During the nine months ended December 30, 2011, Registrant received cash from interest revenue, the redemption of its investment in bond and distributions from Local Partnerships, and utilized cash for operating expenses and investments in Pemberwick Fund (“Pemberwick”). Cash and cash equivalents, investment in Pemberwick and investment in bond decreased, in the aggregate, by approximately $101,000 during the nine months ended December 30, 2011 (which includes an unrealized loss on investment in Pemberwick and the reclassification of unrealized gain on investment in bond in the aggregate of approximately $23,000 and amortization of premium on investment in bond and the write-off of the remaining unamortized premium on the date the bond was redeemed totaling approximately $6,000).  The bond owned by Registrant was called on October 3, 2011 at par; Registrant’s cumulative annualized return on the bond for the sixteen month holding period totaled approximately 2.94%.  Accordingly, Registrant did not experience any adverse impact in connection with such investment.  During the nine months ended December 30, 2011, the investment in local partnerships increased as a result of Registrant's equity in the Local Partnerships' net income for the nine months ended September 30, 2011 of $184,402, partially offset by cash distributions received from Local Partnerships of $55,532 (excluding $6,250 of distributions classified as other income from local partnerships).  Payable to manager and affiliates represents deferred management fees in the accompanying unaudited balance sheet as of December 30, 2011.

Results of Operations

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

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

Registrant’s operations for the three months ended December 30, 2011 and 2010 have not varied significantly, as reflected by the net losses of $1,215 and $800, respectively.  Other comprehensive loss for the three months ended December 30, 2011 resulted from an unrealized loss on investment in Pemberwick of $796.

Registrant’s operations for the nine months ended December 30, 2011 and 2010 resulted in net income of $23,206 and $5,285, respectively.  The increase in net income from fiscal 2010 to fiscal 2011 is primarily attributable to an increase in equity in income of investment in local partnerships of approximately $17,000, which increase is attributable to an increase in the net income of the Local Partnership in which Registrant continues to have an investment balance.  Other comprehensive loss for the nine months ended December 30, 2011 resulted from an unrealized loss on investment in Pemberwick and the reclassification of unrealized gain on investment in bond of $20,608 and $2,730, respectively.

 
9

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I

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

Local Partnership Matters

Registrant's primary objective, to provide Low-income Tax Credits to its beneficial owners (the “Beneficial Owners”), has been completed.  The relevant state tax credit agency allocated each of the Local Partnerships an amount of Low-income Tax Credits, which are generally available for a ten year period from the year the Property is placed in service (the “Ten Year Credit Period”).  The Ten Year Credit Period was fully exhausted with respect to all of the Properties as of December 31, 2006.  The required holding period of each Property, in order to avoid Low-income Tax Credit recapture, is fifteen years from the year in which the Low-income Tax Credits commence on the last building of the Property (the "Compliance Period").  The Compliance Period of all of the Local Partnerships had expired as of December 31, 2010.  In addition, certain of the Local Partnerships entered into agreements with the relevant state tax credit agencies whereby the Local Partnerships must maintain the low-income nature of the Properties for a period which exceeds the Compliance Period (in certain circumstances, up to 50 years from when the Property is placed in service, but commonly 30 years from the date any such Property is placed in service), regardless of a sale of the Properties by the Local Partnerships after the Compliance Period (the “Extended Use Provisions”).  Although the Extended Use Provisions do not extend the Compliance Period of the respective Local Partnerships, such provisions may limit the number and availability of potential purchasers of the Properties.  Accordingly, a sale of a Property may happen well after the expiration of the Compliance Period and/or may be significantly discounted.  Registrant is in the process of disposing of its limited partner interests in the Local Partnerships (the “Local Partnership Interests”).  As of January 2012, Registrant owns all ten of the Local Partnership Interests originally acquired (see discussion below regarding the potential sale of a Local Partnership Interest).  Registrant has served a demand on the local general partners (the “Local General Partners”) to commence a sale process to dispose of the Properties.  In the event a sale cannot be consummated, it is the Manager’s intention to sell or assign Registrant’s Local Partnership Interests.  It is not possible to ascertain the amount, if any, that Registrant will receive with respect to each specific Property from such sales or assignments.  Registrant intends to dissolve after the final disposition of its Local Partnership Interests.  There can be no assurance as to when Registrant will dispose of its Local Partnership Interests.

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

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

 
10

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I

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

In January 2011, Starved Rock - LaSalle Manor Limited Partnership (“Starved Rock”) entered into a purchase agreement (the “Purchase Agreement”) to sell its underlying Property to an affiliate of the Local General Partner of Starved Rock.  Under the terms of the Purchase Agreement, Registrant would receive $108,000 (subject to adjustment as described in the Purchase Agreement) plus $30,000 in distributions that are due to Registrant under the terms of Starved Rock’s partnership agreement.  The Purchase Agreement is subject to the approval of HUD and there can be no assurance that the Property will be sold under the terms of the Purchase Agreement.  Registrant’s investment balance in Starved Rock, after cumulative equity losses, became zero during the year ended March 30, 2008.

Edgewood Manor Associates, L.P. (“Edgewood”) is currently in default under the terms of its first mortgage and a default has been declared by the lender; delinquent payments of principal, interest and certain fees represent a cumulative arrearage of approximately $47,000 as of January 2012.  Registrant has made cumulative voluntary advances of $90,000 to Edgewood to fund operating deficits as of December 30, 2011, none of which were made during the nine months then ended.  Registrant’s investment balance in Edgewood, after cumulative equity losses, became zero during the year ended March 30, 2005 and voluntary advances made by Registrant were recorded as investment in local partnerships and written off as additional equity in loss of investment in local partnerships.

Critical Accounting Policies and Estimates

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

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

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

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

Forward-Looking Information

As a cautionary note, with the exception of historical facts, the matters discussed in this quarterly report on Form 10-Q are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”).  Forward-looking statements may relate to, among other things, current expectations, forecasts of future events, future actions, future performance generally, business development activities, capital expenditures, strategies, the outcome of contingencies, future financial results, financing sources and availability and the effects of regulation and competition.  Words such as “anticipate,” “expect,” “intend,” “plan,” “seek,” “estimate” and other words and terms of similar meaning in connection with discussions of future operating or financial performance signify forward-looking statements.  Registrant may also provide written forward-looking statements in other materials released to the public.

 
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AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I

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

Such statements are made in good faith by Registrant pursuant to the “Safe Harbor” provisions of the Reform Act.  Registrant undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise.  Such forward-looking statements involve known risks, uncertainties and other factors that may cause Registrant’s actual results of operations or actions to be materially different from future results of operations or actions expressed or implied by the forward-looking statements.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

Registrant’s investment in Pemberwick is subject to certain risk.  The fixed income securities in which Pemberwick invests are subject to interest rate risk, credit risk, prepayment risk, counterparty risk, municipal securities risk, liquidity risk, management risk, government security risk and valuation risk.  Typically, when interest rates rise, the market prices of fixed income securities go down.  Pemberwick is classified as “non-diversified,” and thus may invest most of its assets in securities issued by or representing a small number of issuers.  As a result, Pemberwick may be more susceptible to the risks associated with these particular issuers, or to a single economic, political or regulatory occurrence affecting these issuers.  These risks could adversely affect Pemberwick’s net asset value (“NAV”), yield and total return. An unrealized loss of $9,639 is reflected as accumulated other comprehensive loss in the accompanying unaudited balance sheet as of December 30, 2011.  As of December 30, 2011, Registrant has earned $23,759 of interest revenue from its investment in Pemberwick.

Item 4.  Controls and Procedures.

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

Registrant has carried out an evaluation, under the supervision and the participation of its management, including the Chief Executive Officer and Chief Financial Officer of the Manager, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act), as of the three months ended December 30, 2011.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer of the Manager concluded that Registrant’s disclosure controls and procedures were effective as of December 30, 2011.

There were no changes in Registrant’s internal control over financial reporting during the three months ended December 30, 2011 that have materially affected, or are reasonably likely to materially affect, Registrant’s internal control over financial reporting.

 
12

 

AMERICAN TAX CREDIT TRUST,
a Delaware statutory business trust Series I

Part II - OTHER INFORMATION
 
Item 1.
Legal Proceedings.
   
 
None.
   
Item 1A.
Risk Factors.
   
 
There have been no material changes from the risk factors previously disclosed in Item 1A of Registrant’s Annual Report on Form 10-K for the year ended March 30, 2011.
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
   
 
None.
   
Item 3.
Defaults Upon Senior Securities.
   
 
None; see Item 2 of Part I regarding the mortgage default of a certain Local Partnership.
   
Item 4.
Removed and Reserved.
   
Item 5.
Other Information.
   
 
None.
   
Item 6.
Exhibits.
   
 
Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
 
Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
 
Exhibit 32.1 - Section 1350 Certification of Chief Executive Officer.
 
Exhibit 32.2 - Section 1350 Certification of Chief Financial Officer.
 
Exhibit 101.ins - XBRL Instance.
 
Exhibit 101.xsd - XBRL Schema.
 
Exhibit 101.cal - XBRL Calculation.
 
Exhibit 101.def - XBRL Definition.
 
Exhibit 101.lab - XBRL Label.
 
Exhibit 101.pre - XBRL Presentation.

 
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SIGNATURES


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

   
 
AMERICAN TAX CREDIT TRUST, a
 
Delaware statutory business trust Series I
   
 
By:Richman American Credit Corp.
 
  The Manager
   
   
Dated: January 26, 2012
/s/David Salzman
 
By:David Salzman
 
  Chief Executive Officer
   
   
   
Dated: January 26, 2012
/s/James Hussey
 
By:James Hussey
 
  Chief Financial Officer
   
   
   
Dated: January 26, 2012
/s/Richard Paul Richman
 
By:Richard Paul Richman
 
  Sole Director
   
   
   
 
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