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EX-31.2 - EXHIBIT 31.2 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex31-2.htm
EX-99.12 - EXHIBIT 99.12 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex99-12.htm
EX-99.11 - EXHIBIT 99.11 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex99-11.htm
EX-32.2 - EXHIBIT 32.2 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex31-1.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

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

 

For the fiscal year ended March, 31, 2004

For the fiscal year ended March, 31, 2005

For the fiscal year ended March, 31, 2006

For the fiscal year ended March, 31, 2007

 

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

(Exact name of registrant as specified in its charter)

 

California   33-0707612
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
     
17782 Sky Park Circle,    
Irvine, CA   92614-6404
(Address of principal executive offices)   (zip code)

 

(714) 662-5565

(Telephone Number)

 

Securities registered pursuant to Section 12(b) of the Act:

 

NONE

 

Securities registered pursuant to section 12(g) of the Act:

 

UNITS OF LIMITED PARTNERSHIP INTEREST

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [  ] No [X]

 

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 Website, 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [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 definition 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 [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]

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

 

INAPPLICABLE

 

DOCUMENTS INCORPORATED BY REFERENCE

 

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).

 

NONE

 

 

 

 
 

 

TABLE OF CONTENTS

 

  Page
PART I      
       
Item 1. Business   3
Item 1B. Unresolved Staff Comments   15
Item 2. Properties   15
Item 3. Legal Proceedings   30
Item 4. Mine Safety Disclosures   30
       
PART II      
       
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   30
Item 5B. Use of Proceeds   30
Item 5C. Purchases of Equity Securities by the Issuer and Affiliated Purchasers   30
Item 6. Selected Financial Data   31
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations   34
Item 7A. Quantitative and Qualitative Disclosures Above Market Risk   44
Item 8. Financial Statements and Supplementary Data   44
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   45
Item 9A. Controls and Procedures   45
Item 9B. Other Information   46
       
PART III      
       
Item 10. Directors, Executive Officers and Corporate Governance   46
Item 11.

Executive Compensation

   50
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   52
Item 13. Certain Relationships and Related Transactions, and Director Independence   52
Item 14. Principal Accountant Fees and Services   53
       
PART IV      
       
Item 15. Exhibits and Financial Statement   53
       
Signatures   67

 

2
 

 

PART I.

 

Item 1. Business

 

Organization

 

WNC Housing Tax Credit Fund V, L.P., Series 4 (the “Partnership”) is a California Limited Partnership formed under the laws of the State of California on July 26, 1995, and commenced operations on July 1, 1996. The Partnership was formed to acquire limited partnership interests in other limited partnerships (“Local Limited Partnerships”) which own 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 Complex. 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 the president of Associates own 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.

 

Pursuant to a registration statement filed with the Securities and Exchange Commission (the “SEC”) on July 26, 1995, the Partnership commenced a public offering of 25,000 units of limited partnership interest (“Partnership Units”) at a price of $1,000 per Partnership Unit. As of the close of the public offering on July 11, 1997 a total of 22,000 Partnership Units representing subscriptions in the amount of $21,914,830, net of dealer discounts of $5,620 and volume discounts of $79,550, had been sold. Holders of Partnership Units are referred to herein as “Limited Partners”.

 

The Partnership shall continue in full force and effect until December 31, 2050 unless terminated prior to that date pursuant to the Partnership Agreement (as defined below) or law.

 

Description of Business

 

The Partnership’s principal business objective is to provide its Limited Partners with Low Income Housing Tax Credits. The Partnership’s principal business therefore consists of investing as a limited partner or non-managing member in Local Limited Partnerships each of which will own and operate a Housing Complex which will qualify for the Low Income Housing Tax Credits. In general, under Section 42 of the Internal Revenue Code, an owner of low income housing can receive the Low Income Housing Tax Credits to be used to reduce Federal taxes otherwise due in each year of a ten-year credit period. Each Housing Complex is subject to a 15-year compliance period (the “Compliance Period”), and under state law may have to be maintained as low income housing for 30 or more years.

 

As a consequence of the provisions of tax law in effect for dispositions of buildings prior to August 2008, in order to avoid recapture of Low Income Housing Credits, the Partnership expected that it would not dispose of its interests in Local Limited Partnerships (“Local Limited Partnership Interests”) or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. That provision of law was amended in 2008 (i) to provide that there would be no recapture on sale of a Low Income Housing Tax Credit building during the Compliance Period if it were reasonable to expect at the time of sale that the building would continue to be operated as qualified low income housing (see “Exit Strategy” below) and (ii) to eliminate the possibility of posting a bond against potential recapture. The Partnership is not seeking to sell its Local Limited Partnership Interests. And, because of (i) the nature of the Housing Complexes and the Local Limited Partnership Interests, (ii) the difficulty of predicting the resale market for low-income housing, (iii) the current economy, and (iv) the ability of lenders to disapprove of transfer, it is not possible at this time to predict when the liquidation of the Partnership’s assets and the disposition of the proceeds, if any, in accordance with the Partnership’s Agreement of Limited Partnership dated May 5, 1996 (the “Partnership Agreement”), would occur. Furthermore, the recent codification of the economic substance doctrine as part of 2010 legislation has created some uncertainty about the deductibility of losses from low income housing that is not generating Low Income Housing Tax Credits, and this could have an adverse effect on the resale market for Housing Complexes and Local Limited Partnership Interests. Until a Local Limited Partnership Interest or the related Housing Complex is sold, it is anticipated that the Local General Partner would continue to operate such Housing Complex. Notwithstanding the preceding, circumstances beyond the control of the General Partner or the Local General Partners may occur during the ten-year credit period and/or the Compliance Period, which would require the Partnership to approve the disposition of a Housing Complex prior to the end thereof, possibly resulting in recapture of Low Income Housing Tax Credits.

 

3
 

 

The Partnership invested in fourteen Local Limited Partnerships, none of which had been sold or otherwise disposed as of March 31, 2007, 2006, 2005 and 2004. Each of these Local Limited Partnerships owns a single Housing Complex that was eligible for the Low Income Housing Tax Credits. Certain Local Limited Partnerships may also benefit from additional government programs promoting low- or moderate-income housing.

 

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 must satisfy the “reasonable belief” test outlined above to avoid recapture.

 

The following table reflects the end of the ten-year credit period and the Compliance Period of each Housing Complex:

 

Local Limited Partnership Name   Expected last
year of credit
delivery
  15-year
Compliance
Period
         
Ashford Place Limited Partnership   2008   2012
Belen Vista Associates Limited Partnership   2007   2012
Blessed Rock of El Monte, a CA Limited Partnership   2007   2012
Bolivar Plaza Apartments, LP   2010   2014
Cleveland Apartments, L.P.   2010   2014
Crescent City Apartments, a California Limited Partnership   2010   2011
D. Hilltop Apartments, Ltd.   2007   2012
Greyhound Associates I, L.P.   2008   2012
Lamar Plaza Apartments, LP   2008   2012
Mesa Verde Apartments, Limited Partnership   2008   2012
Mountain Vista Associates Limited Partnership   2007   2011
The North Central Limited Partnership   2009   2014
Woodland, Ltd.   2008   2012
Wynwood Place, Limited Partnership   2009   2013

 

With that in mind, the General Partner is continuing its review of the Housing Complexes, with special emphasis on the more mature Housing Complexes such as any that have satisfied the IRS compliance requirements. 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.

 

The objective is to maximize the Limited Partners’ return wherever possible and, ultimately, to wind down the Partnership. 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 March 31, 2007.

 

4
 

 

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 of 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.

 

Subsequent to March 31, 2007 and through the date of this filing, the Partnership identified and sold the Housing Complexes of Mesa Verde Apartments, L.P. (“Mesa Verde”), The North Central Limited Partnership (“The North Central”) and Blessed Rock of El Monte, A CA Limited Partnership (“Blessed Rock). The Partnership also identified and sold its Local Limited Partnership interests in Lamar Plaza Apartments, LP, D. Hilltop Apartments, Ltd., Woodland, Ltd., and Greyhound Associates I, L.P subsequent to March 31, 2007.

 

The following table reflects the dispositions that occurred subsequent to March 31, 2007:

 

Local Limited Partnership  Debt at
prior 12/31
before sale
date
   Appraisal
Value
   Date of
Sale
   Sales
Proceeds
   Actual
Sale
Related
Expenses
   Investment
balance at
date of sale
   Gain (loss)
on sale
 
                             
Mesa Verde Apartments, L.P.(*)  $1,919,353   $2,300,000    4/23/2010   $137,413   $-   $-   $137,413 
The North Central Limited Partnership(*)   313,264    640,000    3/23/2011    225,967    992    -    224,975 
Blessed Rock of El Monte, a CA Limited Partnership   2,054,000    6,910,000    4/12/2013    2,355,384    2,250    547,890    1,805,244 
Lamar Plaza Apartments, LP(*)   651,285    330,000    12/31/2010    20,000    -    -    20,000 
D. Hilltop Apartments, Ltd.   415,909    220,000    8/1/2012    20,000    3,047    -    16,953 
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 Compliance Periods for the Local Limited Partnerships expired after the respective date of sale. The respective purchasers have guaranteed 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.

 

5
 

 

The following table represents the use of the cash proceeds from the dispositions of the Local Limited Partnerships that were disposed of subsequent to March 31, 2007:

 

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
 
                 
Mesa Verde Apartments, L.P.  $137,413   $90,900   $-   $46,513 
The North Central Limited Partnership   225,967    36,000    88,719    101,248 
Blessed Rock of El Monte, a CA Limited Partnership   2,355,384    25,852    966,695    1,362,837 
Lamar Plaza Apartments, LP   20,000    14,000    -    6,000 
D. Hilltop Apartments, Ltd.   20,000    11,775    -    8,225 
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 

 

Subsequent to March 31, 2007, 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 the date of the sales 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 guaranteed 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.

 

Item 1A. Risk Factors

 

Set forth below are the risks the Partnership believes are the most significant material risks to the Limited Partners. The Partnership and the Local Limited Partnerships operate in a continually changing business environment and, therefore, new risks emerge from time to time. This section contains some forward-looking statements. For an explanation of the qualifications and limitations on forward-looking statements, see Item 7.

 

(a)     Risks arising from the Internal Revenue Code rules governing Low Income Housing Tax Credits

 

Low Income Housing Tax Credits might not be available. If a Housing Complex does not satisfy the requirements of Internal Revenue Code Section 42, then the Housing Complex will not be eligible for Low Income Housing Tax Credits.

 

6
 

 

Low Income Housing Tax Credits might be less than anticipated. The Local General Partners will calculate the amount of the Low Income Housing Tax Credits. No opinion of counsel will cover the calculation of the amount of Low Income Housing Tax Credits. The IRS could challenge the amount of the Low Income Housing Tax Credits claimed for any Housing Complex under any of a number of provisions set forth in Internal Revenue Code Section 42. A successful challenge by the IRS would decrease the amount of the Low Income Housing Tax Credits from the amount paid for by the Partnership.

 

Unless a bond is posted or a Treasury Direct Account is established, Low Income Housing Tax Credits may be recaptured if Housing Complexes are not owned and operated for 15 years. Housing Complexes must comply with Internal Revenue Code Section 42 for the 15-year Compliance Period. Low Income Housing Tax Credits will be recaptured with interest to the extent that a Housing Complex is not rented as low income housing or in some other way does not satisfy the requirements of Internal Revenue Code Section 42 during the Compliance Period. For example, unless a bond is posted or a Treasury Direct Account is established, recapture with interest would occur if:

 

a Local Limited Partnership disposed of its interest in a Housing Complex during the Compliance Period, or

 

the Partnership disposed of its interest in a Local Limited Partnership during the Compliance Period.

 

For these purposes, disposition includes transfer by way of foreclosure.

 

It will be up to the Partnership to determine whether to post a bond. There is no obligation under the agreements with the Local Limited Partnerships that the Local Limited Partnerships must do so.

 

There can be no assurance that recapture will not occur. If it does, recapture will be of a portion of all Low Income Housing Tax Credits taken in prior years for that Housing Complex, plus interest. During the first 11 years of the Compliance Period, non-compliance results in one-third of the credits up to that point for the particular Housing Complex being recaptured, plus interest. Between years 12 and 15, the recapture is phased out ratably.

 

Sales of Housing Complexes after 15 years are subject to limitations which may impact a Local Limited Partnership’s ability to sell its Housing Complex. Each Local Limited Partnership executes an extended low income housing commitment with the state in which the Housing Complex is located. The extended low income housing commitment states the number of years that the Local Limited Partnership and any subsequent owners must rent the Housing Complex as low income housing. Under Federal law, the commitment must be for at least 30 years. The commitment actually agreed to may be significantly longer than 30 years. In prioritizing applicants for Low Income Housing Tax Credits, most states give additional points for commitment periods in excess of 30 years. On any sale of the Housing Complex during the commitment period, the purchaser would have to agree to continue to rent the Housing Complex as low income housing for the duration of the commitment period. This requirement reduces the potential market, and possibly the sales price, for the Housing Complexes. The sale of a Housing Complex may be subject to other restrictions. For example, Federal lenders or subsidizers may have the right to approve or disapprove a purchase of a Housing Complex. 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 amount of cash will be distributed to the Limited Partners. As a result, a material portion of the Low Income Housing Tax Credits may represent a return of the money originally invested in the Partnership.

 

As part of the recently enacted health care legislation, Congress has codified the economic substance doctrine. Because of its recent enactment, the full reach of this provision is unclear. Inasmuch as Housing Complexes might offer no benefit to a purchaser other than tax benefits, it is possible that the economic substance doctrine could be interpreted to limit deduction of tax losses from Housing Complexes, which would be expected to have a significant adverse effect on the sale value of the Housing Complexes and the Local Limited Partnership Interests.

 

Limited Partners can only use Low Income Housing Tax Credits in limited amounts. The ability of an individual or other non-corporate Limited Partner to claim Low Income Housing Tax Credits on his individual tax return is limited. For example, an individual Limited Partner can use Low Income Housing Tax Credits to reduce his tax liability on:

 

an unlimited amount of passive income, which is income from entities such as the Partnership, and

 

$25,000 in income from other sources.

 

7
 

 

However, the use of Low Income Housing Tax Credits by an individual against these types of income is subject to ordering rules, which may further limit the use of Low Income Housing Tax Credits. Some corporate Limited Partners are subject to similar and other limitations. They include corporations which provide personal services, and corporations which are owned by five or fewer shareholders.

 

Any portion of a Low Income Housing Tax Credit which is allowed to a Limited Partner under such rules is then aggregated with all of the Limited Partner’s other business credits. The aggregate is then subject to the general limitation on all business credits. That limitation provides that a Limited Partner can use business credits to offset the Limited Partner’s annual tax liability equal to $25,000 plus 75% of the Limited Partner’s tax liability in excess of $25,000. However, business credits may not be used to offset any alternative minimum tax. All of these concepts are extremely complicated.

 

(b)     Risks related to investment in Local Limited Partnerships and Housing Complexes

 

Because the Partnership has few investments, each investment will have a great impact on the Partnership’s results of operations. Any single Housing Complex experiencing poor operating performance, impairment of value or recapture of Low Income Housing Tax Credits will have a significant impact upon the Partnership as a whole.

 

The failure to pay mortgage debt could result in a forced sale of a Housing Complex. Each Local Limited Partnership leverages the Partnership’s investment therein by incurring mortgage debt. A Local Limited Partnership’s revenues could be less than its debt payments and taxes and other operating costs. If so, the Local Limited Partnership would have to use working capital reserves, seek additional funds, or suffer a forced sale of its Housing Complex, which could include a foreclosure. The same results could occur if government subsidies ceased. Foreclosure would result in a loss of the Partnership’s capital invested in the Housing Complex. Foreclosure could also result in a recapture of Low Income Housing Tax Credits, and a loss of Low Income Housing Tax Credits for the year in which the foreclosure occurs. If the Housing Complex is highly-leveraged, a relatively slight decrease in the rental revenues could adversely affect the Local Limited Partnership’s ability to pay its debt service requirements. Mortgage debt may be repayable in a self-amortizing series of equal installments or with a large balloon final payment. Balloon payments maturing prior to the end of the anticipated holding period for the Housing Complex create the risk of a forced sale if the debt cannot be refinanced. There can be no assurance that additional funds will be available to any Local Limited Partnership if needed on acceptable terms or at all.

 

The Partnership does not control the Local Limited Partnerships and must rely on the Local General Partners. The Local General Partners will make all management decisions for the Local Limited Partnerships and the Housing Complexes. The Partnership has very limited rights with respect to management of the Local Limited Partnerships. The Partnership will not be able to exercise any control with respect to Local Limited Partnership business decisions and operations. Consequently, the success of the Partnership will depend on the abilities of the Local General Partners.

 

Housing Complexes subsidized by other government programs are subject to additional rules which may make it difficult to operate and sell Housing Complexes. Some or all of the Housing Complexes receive or may receive government financing or operating subsidies in addition to Low Income Housing Tax Credits. The following are risks associated with some such subsidy programs:

 

Obtaining tenants for the Housing Complexes. Government regulations limit the types of people who can rent subsidized housing. These regulations may make it more difficult to rent the residential units in the Housing Complexes.

 

Obtaining rent increases. In many cases rents can only be increased with the prior approval of the subsidizing agency.

 

8
 

 

Limitations on cash distributions. The amount of cash that may be distributed to owners of subsidized Housing Complexes is less than the amount that could be earned by the owners of non-subsidized Housing Complexes.

 

Limitations on sale or refinancing of the Housing Complexes. A Local Limited Partnership may be unable to sell its Housing Complex or to refinance its mortgage loan without the prior approval of the lender. The lender may withhold such approval in the discretion of the lender. Approval may be subject to conditions, including the condition that the purchaser continues to operate the property as affordable housing for terms which could be as long as 30 years or more. In addition, any prepayment of a mortgage may result in the assessment of a prepayment penalty.

 

Limitations on transfers of interests in Local Limited Partnerships. The Partnership may be unable to sell its interest in a Local Limited Partnership without the prior approval of the lender. The lender may withhold such approval in the discretion of the lender. Approval may be subject to conditions.

 

Limitations on removal and admission of Local General Partners. The Partnership may be unable to remove a Local General Partner from a Local Limited Partnership except for cause, such as the violation of the rules of the lender or state allocating authority. Regulations may prohibit the removal of a Local General Partner or permit removal only with the prior approval of the lender. Regulations may also require approval of the admission of a successor Local General Partner even upon the death or other disability of a Local General Partner.

 

Limitations on subsidy payments. Subsidy payments may be fixed in amount and subject to annual legislative appropriations. The rental revenues of a Housing Complex, when combined with the maximum committed subsidy, may be insufficient to meet obligations. Congress or the state legislature, as the case may be, may fail to appropriate or increase the necessary subsidy. In those events, the mortgage lender could foreclose on the Housing Complex unless a workout arrangement could be negotiated.

 

Possible changes in applicable regulations. Legislation may be enacted which adversely revises provisions of outstanding mortgage loans. Such legislation has been enacted in the past.

 

Limited Partners may not receive distributions if Housing Complexes are sold. There is no assurance that Limited Partners will receive any cash distributions from the sale or refinancing of a Housing Complex. The price at which a Housing Complex is sold may not be high enough to pay the mortgage and other expenses at the Local Limited Partnership and partnership levels which must be paid at such time. If that happens, a Limited Partner’s return would be derived only from the Low Income Housing Tax Credits and tax losses.

 

Uninsured casualties could result in losses and recapture. There are casualties which are either uninsurable or not economically insurable. These include earthquakes, floods, wars and losses relating to hazardous materials or environmental matters. If a Housing Complex experienced an uninsured casualty, the Partnership could lose both its invested capital and anticipated profits in such property. Even if the casualty were an insured loss, the Local Limited Partnership might be unable to rebuild the destroyed property. A portion of prior tax credits could be recaptured and future tax credits could be lost if the Housing Complex were not restored within a reasonable period of time. Any liability judgments against the Local Limited Partnership could exceed available insurance proceeds or otherwise materially and adversely affect the Local Limited Partnership. The cost of liability and casualty insurance has increased in recent years. Casualty insurance has become more difficult to obtain and may require large deductible amounts.

 

Housing Complexes without financing or operating subsidies may be unable to pay operating expenses. If a Local Limited Partnership were unable to pay operating expenses, one result could be a forced sale of its Housing Complex. In this regard, some of the Local Limited Partnerships may own Housing Complexes which have no subsidies other than Low Income Housing Tax Credits. Those Housing Complexes do not have the benefit of below-market-interest-rate financing or operating subsidies which often are important to the feasibility of low income housing. Those Housing Complexes rely solely on rents to pay expenses. However, in order for any Housing Complex to be eligible for Low Income Housing Tax Credits, it must restrict the rent which may be charged to tenants. Over time, the expenses of a Housing Complex will increase. If a Local Limited Partnership cannot increase its rents, it may be unable to pay increased operating expenses.

 

9
 

 

The Partnership’s investment protection policies will be worthless if the net worth of the Local General Partners is not sufficient to satisfy their obligations. There is a risk that the Local General Partners will be unable to perform their financial obligations to the Partnership. The General Partner has not established a minimum net worth requirement for the Local General Partners. Rather, each Local General Partner demonstrates a net worth which the General Partner believes is appropriate under the circumstances. The assets of the Local General Partners are likely to consist primarily of real estate holdings and similar assets. The fair market value of these types of assets is difficult to estimate. These types of assets cannot be readily liquidated to satisfy the financial guarantees and commitments which the Local General Partners make to the Partnership. Moreover, other creditors may have claims on these assets. No escrow accounts or other security arrangements will be established to ensure performance of a Local General Partner’s obligations. The cost to enforce a Local General Partner’s obligations may be high. If a Local General Partner does not satisfy its obligations the Partnership may have no remedy, or the remedy may be limited to removing the Local General Partner as general partner of the Local Limited Partnership.

 

Fluctuating economic conditions can reduce the value of real estate. The Partnership’s principal business objective is providing its Limited Partners with Low Income Housing Tax Credits, not the generation of gains from the appreciation of real estate held by the Local Limited Partnerships. In its financial statements, the Partnership has carried its investments in Local Limited Partnerships at values reflecting the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership of its interests in the Local Limited Partnerships. As of March 31, 2007, 2006, 2005, 2004, 2003, and 2002, the Partnership had reduced the carrying amount to $0 with respect to three, two, two, one, one, and one of its investments, respectively.

 

Any investment in real estate is subject to risks from fluctuating economic conditions. These conditions can adversely affect the ability to realize a profit or even to recover invested capital. Among these conditions are:

 

the general and local job market,

 

the availability and cost of mortgage financing,

 

monetary inflation,

 

tax, environmental, land use and zoning policies,

 

the supply of and demand for similar properties,

 

neighborhood conditions,

 

the availability and cost of utilities and water.

 

A loss in value of an investment in a Local Limited Partnership, other than a temporary decline, is recorded by the Partnership in its financial statements as an impairment loss. Impairment is measured by comparing the Partnership’s carrying amount in the investment to the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership. For the years ended March 31, 2007, 2006, 2005, 2004, 2003 and 2002, impairment loss related to investments in Local Limited Partnerships was $1,186,381, $1,459,091 $547,547, $237,163, $0 and $0, respectively.

 

10
 

 

(c)     Tax risks other than those relating to tax credits

 

In addition to the risks pertaining specifically to Low Income Housing Tax Credits, there are other Federal income tax risks. Additional Federal income tax risks associated with the ownership of Partnership Units and the operations of the Partnership and the Local Limited Partnerships include, but are not limited to, the following:

 

No opinion of counsel as to certain matters. No legal opinion is obtained regarding matters:

 

the determination of which depends on future factual circumstances,

 

which are peculiar to individual Limited Partners, or

 

which are not customarily the subject of an opinion.

 

The more significant of these matters include:

 

allocating purchase price among components of a property, particularly as between buildings and fixtures, the cost of which is depreciable, and the underlying land, the cost of which is not depreciable,

 

characterizing expenses and payments made to or by the Partnership or a Local Limited Partnership,

 

identifying the portion of the costs of any Housing Complex which qualify for historic and other tax credits,

 

applying to any specific Limited Partner the limitation on the use of tax credits and tax losses. Limited Partners must determine for themselves the extent to which they can use tax credits and tax losses, and

 

the application of the alternative minimum tax to any specific Limited Partner, or the calculation of the alternative minimum tax by any Limited Partner.  The alternative minimum tax could reduce the tax benefits from an investment in the Partnership.

 

There can be no assurance, therefore, that the IRS will not challenge some of the tax positions adopted by the Partnership. The courts could sustain an IRS challenge. An IRS challenge, if successful, could have a detrimental effect on the Partnership’s ability to realize its investment objectives.

 

Passive activity rules will limit deduction of the Partnership’s losses and impose tax on interest income. The Internal Revenue Code imposes limits on the ability of most investors to claim losses from investments in real estate. An individual may claim these so-called passive losses only as an offset to income from investments in real estate or rental activities. An individual may not claim passive losses as an offset against other types of income, such as salaries, wages, dividends and interest. These passive activity rules will restrict the ability of most Limited Partners to use losses from the Partnership as an offset of non-passive income.

 

The Partnership may earn interest income on its reserves and loans. The passive activity rules generally will categorize interest as portfolio income, and not passive income. Passive losses cannot be used as an offset to portfolio income. Consequently, a Limited Partner could pay tax liability on portfolio income from the Partnership.

 

At risk rules might limit deduction of the Partnership’s losses. If a significant portion of the financing used to purchase Housing Complexes does not consist of qualified nonrecourse financing, the “at risk” rules will limit a Limited Partner’s ability to claim Partnership losses to the amount the Limited Partner invests in the Partnership. The “at risk” rules of the Internal Revenue Code generally limit a Limited Partner’s ability to deduct Partnership losses to the sum of:

 

the amount of cash the Limited Partner invests in the Partnership, and

 

the Limited Partner’s share of Partnership qualified nonrecourse financing.

 

Qualified nonrecourse financing is non-convertible, nonrecourse debt which is borrowed from a government, or with exceptions, any person actively and regularly engaged in the business of lending money.

 

11
 

 

Tax liability on sale of a Housing Complex or Local Limited Partnership Interest may exceed the cash available from the sale. When a Local Limited Partnership sells a Housing Complex it may recognize gain. Such gain is equal to the difference between:

 

the sales proceeds plus the amount of indebtedness secured by the Housing Complex, and

 

the adjusted basis for the Housing Complex. The adjusted basis for a Housing Complex is its original cost, plus capital expenditures, minus depreciation.

 

Similarly, when the Partnership sells an interest in a Local Limited Partnership the Partnership may recognize gain. Such gain is equal to the difference between:

 

the sales proceeds plus the Partnership’s share of the amount of indebtedness secured by the Housing Complex, and

 

the adjusted basis for the interest. The adjusted basis for an interest in a Local Limited Partnership is the amount paid for the interest, plus income allocations and cash distributions, less loss allocations.

 

Accordingly, gain will be increased by the depreciation deductions taken during the holding period for the Housing Complex. In some cases, a Limited Partner could have a tax liability from a sale greater than the cash distributed to the Limited Partner from the sale.

 

IRS could audit the returns of the Partnership, the Local Limited Partnerships or the Limited Partners. The IRS can audit the Partnership or a Local Limited Partnership at the entity level with regard to issues affecting the entity. The IRS does not have to audit each Limited Partner in order to challenge a position taken by the Partnership or a Local Limited Partnership. Similarly, only one judicial proceeding can be filed to contest an IRS determination. A contest by the Partnership of any IRS determination might result in high legal fees.

 

An audit of the Partnership or a Local Limited Partnership also could result in an audit of a Limited Partner. An audit of a Limited Partner’s tax returns could result in adjustments both to items that are related to the Partnership and to unrelated items. The Limited Partner could then be required to file amended tax returns and pay additional tax plus interest and penalties.

 

A successful IRS challenge to tax allocations of the Partnership or a Local Limited Partnership would reduce the tax benefits of an investment in the Partnership. Under the Internal Revenue Code, a partnership’s allocation of income, gains, deductions, losses and tax credits must have substantial economic effect. Substantial economic effect is a highly-technical concept. The fundamental principle is two-fold. If a partner will benefit economically from an item of partnership income or gain, that item must be allocated to him so that he bears the correlative tax burden. Conversely, if a partner will suffer economically from an item of partnership deduction or loss, that item must be allocated to him so that he bears the correlative tax benefit. If a partnership’s allocations do not have substantial economic effect, then the partnership’s tax items are allocated in accordance with each partner’s interest in the partnership. The IRS might challenge the allocations made by the Partnership:

 

between the Limited Partners and the General Partner,

 

among the Limited Partners, or

 

between the Partnership and a Local General Partner.

 

If any allocations were successfully challenged, a greater share of the income or gain or a lesser share of the losses or tax credits might be allocated to the Limited Partners. This would increase the tax liability or reduce the tax benefits to the Limited Partners.

 

12
 

 

Tax liabilities could arise in later years of the Partnership. After a period of years following commencement of operations by a Local Limited Partnership, the Local Limited Partnership may generate profits rather than losses. A Limited Partner would have tax liability on his share of such profits unless he could offset the income with:

 

unused passive losses from the Partnership or other investments, or

 

current passive losses from other investments.

 

In such circumstances, the Limited Partner would not receive a cash distribution from the Partnership with which to pay any tax liability.

 

IRS challenge to tax treatment of expenditures could reduce losses. The IRS may contend that fees and payments of the Partnership or a Local Limited Partnership:

 

should be deductible over a longer period of time or in a later year,

 

are excessive and may not be capitalized or deducted in full,

 

should be capitalized and not deducted, or

 

may not be included as part of the basis for computing tax credits.

 

Any such contention by the IRS could adversely impact, among other things:

 

the eligible basis of a Housing Complex used to compute Low Income Housing Tax Credits,

 

the adjusted basis of a Housing Complex used to compute depreciation,

 

the correct deduction of fees,

 

the amortization of organization and offering expenses and start-up expenditures.

 

If the IRS were successful in any such contention, the anticipated Low Income Housing Tax Credits and losses of the Partnership would be reduced, perhaps substantially.

 

Changes in tax law might reduce the value of Low Income Housing Tax Credits. Although all Low Income Housing Tax Credits are allocated to a Housing Complex at commencement of the 10-year credit period, there can be no assurance that future legislation may not adversely affect an investment in the Partnership. For example, legislation could reduce or eliminate the value of Low Income Housing Tax Credits. In this regard, before 1986, the principal tax benefit of an investment in low income housing was tax losses. These tax losses generally were used to reduce an investor’s income from all sources on a dollar-for-dollar basis. Investments in low income housing were made in reliance on the availability of such tax benefits. However, tax legislation enacted in 1986 severely curtailed deduction of such losses.

 

New administrative or judicial interpretations of the law might reduce the value of tax credits. Many of the provisions of the Internal Revenue Code related to low income housing and real estate investments have not been interpreted by the IRS in regulations, rulings or public announcements, or by the courts. In the future, these provisions may be interpreted or clarified by the IRS or the courts in a manner adverse to the Partnership or the Local Limited Partnerships. The IRS constantly reviews the Federal tax rules, and can revise its interpretations of established concepts. Any such revisions could reduce or eliminate tax benefits associated with an investment in the Partnership.

 

State income tax laws may adversely affect the Limited Partners. A Limited Partner may be required to file income tax returns and be subject to tax and withholding in each state or local taxing jurisdiction in which: a Housing Complex is located, the Partnership or a Local Limited Partnership engages in business activities, or the Limited Partner is a resident. Corporate Limited Partners may be required to pay state franchise taxes.

 

The tax treatment of particular items under state or local income tax laws may vary materially from the Federal income tax treatment of such items. Nonetheless, many of the Federal income tax risks associated with an investment in the Partnership may also apply under state or local income tax law. The Partnership may be required to withhold state taxes from distributions or income allocations to Limited Partners in some instances.

 

13
 

 

(d)     Risks related to the Partnership and the Partnership Agreement

 

The Partnership may be unable to timely provide financial reports to the Limited Partners which would adversely affect their ability to monitor Partnership operations. Historically, the Partnership has been unable to timely file and provide investors with all of its required periodic reports. In some instances, the delay has been significant. Each Local General Partner is required to retain independent public accountants and to report financial information to the Partnership in a timely manner. There cannot be any assurance that the Local General Partners will satisfy these obligations. If not, the Partnership would be unable to provide to the Limited Partners in a timely manner its financial statements and other reports. That would impact the Limited Partners’ ability to monitor Partnership operations. The Partnership’s failure to meet its filing requirements under the Securities Exchange Act of 1934 could reduce the liquidity for the Partnership Units due to the unavailability of public information concerning the Partnership. The failure to file could also result in sanctions imposed by the SEC. Any defense mounted by the Partnership in the face of such sanctions could entail legal and other fees, which would diminish cash reserves.

 

Lack of liquidity of investment. There is no public market for the purchase and sale of Partnership Units and it is unlikely that one will develop. Accordingly, Limited Partners may not be able to sell their Partnership Units promptly or at a reasonable price. Partnership Units should be considered as a long-term investment because the Partnership is unlikely to sell any Local Limited Partnership Interests for at least 15 years. Partnership Units cannot be transferred to tax-exempt or foreign entities, or through a secondary market. The General Partner can deny effectiveness of a transfer if necessary to avoid adverse tax consequences from the transfer. The General Partner does not anticipate that any Partnership Units will be redeemed by the Partnership.

 

The Limited Partners will not control the Partnership and must rely totally on the General Partner. The General Partner will make all management decisions for the Partnership. Management decisions include exercising powers granted to the Partnership by a Local Limited Partnership. Limited Partners have no right or power to take part in Partnership management.

 

Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority. The Partnership Agreement grants to Limited Partners owning more than 50% of the Partnership Units the right to:

 

remove the General Partner and elect a replacement general partner,

 

amend the Partnership Agreement,

 

terminate the Partnership.

 

Accordingly, a majority-in-interest of the Limited Partners could cause any such events to occur, even if Limited Partners owning 49% of the Partnership Units opposed such action.

 

Limitations on liability of the General Partner to the Partnership. The ability of Limited Partners to sue the General Partner and its affiliates is subject to limitations. The Partnership Agreement limits the liability of the General Partner and its affiliates to the Limited Partners. The General Partner and its affiliates will not be liable to the Limited Partners for acts and omissions: performed or omitted in good faith, and performed or omitted in a manner which the General Partner reasonably believed to be within the scope of its authority and in the best interest of the Limited Partners, provided such conduct did not constitute negligence or misconduct.

 

Therefore, Limited Partners may be less able to sue the General Partner and its affiliates than would be the case if such provisions were not included in the Partnership Agreement.

 

Associates and its affiliates are serving as the general partners of many other partnerships. Depending on their corporate are a of responsibility, the officers of Associates initially devote approximately 5% to 50% of their time to the Partnership. These individuals spend significantly less time devoted to the Partnership after the investment of the Partnership’s capital in Local Limited Partnerships.

 

14
 

 

The interests of Limited Partners may conflict with the interests of the General Partner and its affiliates. The General Partner and its affiliates are committed to the management of more than 100 other limited partnerships that have investments similar to those of the Partnership. The General Partner and its affiliates receive substantial compensation from the Partnership. The General Partner decides how the Partnership’s investments in Housing Complexes are managed, and when the investments will be sold. The General Partner may face a conflict in these circumstances because the General Partner’s share of fees and cash distributions from the transaction may be more or less than their expected share of fees if a Housing Complex was not sold. The result of these conflicts could be that the General Partner may make investments which are less desirable, or on terms which are less favorable, to the Partnership than might otherwise be the case. The Partnership has not developed any formal process for resolving conflicts of interest. However, the General Partner is subject to a fiduciary duty to exercise good faith and integrity in handling the affairs of the Partnership, and that duty will govern its actions in all such matters. Furthermore, the manner in which the Partnership can operate and sell investments is subject to substantial restrictions as outlined in the Partnership Agreement.

 

The Partnership’s accrued payables consist primarily of the asset management fees payable to the General Partner and the capital contributions payable to Local Limited Partnerships. The asset management fees payable for the years ended March 31, 2007, 2006, 2005, 2004 and 2003 had a net increase (decrease) of $100,000, $(17,000), $0, $0, and $0. The Partnership’s future contractual cash obligations consist of its obligations to pay future annual asset management fees and the payables due to the Local Limited Partnerships. For the years ended March 31, 2007 and 2006, the Partnership made payments toward asset management fees in excess of what was accrued in the amount of $7,281 and $17,469, which was included in prepaid expenses on the balance sheets. The future annual asset management fees will equal approximately $51,000 per year through the termination of the Partnership, which must occur no later than December 31, 2050. Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of the existing contractual obligations and anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.

 

Item 1B. Unresolved Staff Comments

 

Not Applicable

 

Item 2. Properties

 

Through its investments in Local Limited Partnerships, the Partnership holds indirect ownership interests in the Housing Complexes. The following table reflects the status of the 14 Housing Complexes as of the dates or for the periods indicated:

 

15
 

 

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

 

         As of March 31, 2007   As of December 31, 2006 
Local Limited
Partnership Name
  Location  General Partner Name  Partnership’s
Total Investment
in Local Limited
Partnerships
   Amount of
Investment
Paid to Date
   Number
of Units
   Estimated
Aggregate Low
Income
Housing
Tax Credits (1)
   Mortgage
Balances
of Local Limited
Partnerships
 
                           
Ashford Place, a Limited Partnership (3)  Shawnee, Oklahoma  WNC Oklahoma, LLC  $2,317,000   $2,317,000    100   $3,931,000   $2,120,000 
                                
Belen Vista Associates, Limited Partnership  Belen, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   416,000    416,000    57    714,000    1,500,000 
                                
Blessed Rock of El Monte, a CA Limited Partnership (2)  El Monte, California  Everland, Inc.   2,511,000    2,511,000    137    8,899,000    3,494,000 
                                
Bolivar Plaza Apartments, LP  Bolivar, Missouri  MBL Development Co.   1,181,000    1,181,000    32    1,658,000    470,000 
                                
Cleveland Apartments L.P. (3)  Coffeyville, Kansas  Williams Management and Consulting, Inc. and Eastern Housing Corp.   515,000    476,000    48    737,000    1,551,000 
                                
Crescent City Apartments, a California Limited Partnership (2)  Crescent City, California  Crescent City Surf, Inc.   1,166,000    1,166,000    56    2,221,000    1,960,000 
                                
D. Hilltop Apartments Ltd.(2)  Prairie View, Texas  Donald W. Sowell   101,000    101,000    24    187,000    442,000 
                                
Greyhound Associates I, L.P. (2)  Windsor, Missouri  WCM Community Development Corp.   642,000    642,000    24    1,128,000    524,000 
                                
Lamar Plaza Apts., L.P.(2)  Lamar, Missouri  MBL Development Co.   738,000    738,000    28    1,230,000    712,000 
                                
Mesa Verde Apartments Limited Partnership (2)  Roswell, New Mexico  Shelter Resource Corporation   3,941,000    3,941,000    142    6,472,000    1,986,000 

 

16
 

 

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

 

         As of March 31, 2007   As of December 31, 2006 
Local Limited
Partnership Name
  Location  General Partner Name  Partnership’s
Total Investment
in Local Limited
Partnerships
   Amount of
Investment
Paid to Date
   Number
of Units
   Estimated
Aggregate Low
Income Housing
Tax Credits (1)
   Mortgage Balances
of Local Limited
Partnerships
 
                           
Mountain Vista Associates Limited Partnership  Los Alamos, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   315,000    315,000    53    543,000    1,408,000 
                                
North Central Limited Partnership (2)  New York, New York  City and Suburban Development Corp.   751,000    751,000    18    1,054,000    388,000 
                                
Woodland, Ltd.(2)  Marion, Alabama  ACHR Corp.   1,288,000    1,288,000    42    2,112,000    1,275,000 
                                
Wynwood Place, Limited Partnership  Raleigh, North Carolina  Greystone Affordable Housing   534,000    534,000    24    780,000    515,000 
                                
         $16,416,000   $16,377,000    785   $31,666,000   $18,345,000 

 

(1) Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10-year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 88% of the anticipated Low Income Housing Credits have been received from the Local Limited Partnerships and are no longer available to the Limited Partners.

 

(2) The Local Limited Partnership was identified for sale and disposed of subsequent to March 31, 2007.

 

(3) Subsequent to March 31, 2007 the Local Limited Partnership was identified for disposition but had not yet been sold as of the filing date.

 

17
 

 

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

 

   For the year ended December 31, 2006 
Local Limited
Partnership Name
  Rental Income   Net Income
(Loss)
   Low Income
Housing Tax
Credits Allocated
to Partnership
 
             
Ashford Place, a Limited Partnership (2)  $442,000   $(93,000)   98.99%
                
Belen Vista Associates, Limited Partnership   391,000    (30,000)   98.99%
                
Blessed Rock of El Monte, a CA Limited Partnership (1)   872,000    28,000    49.50%
                
Bolivar Plaza Apartments   114,000    (17,000)   98.98%
                
Cleveland Apartments L.P. (2)   296,000    1,000    99.98%
                
Crescent City Apartments, a California Limited Partnership (1)   212,000    (151,000)   99.00%
                
D. Hilltop Apartments Ltd.(1)   104,000    11,000    99.00%
                
Greyhound Associates I, L.P.(1)   85,000    (27,000)   99.00%
                
Lamar Plaza Apts., L.P. (1)   40,000    (42,000)   99.97%
                
Mesa Verde Apartments Limited Partnership (1)   516,000    (297,000)   99.00%
                
Mountain Vista Associates Limited Partnership   259,000    (33,000)   98.99%
                
North Central Limited Partnership (1)   124,000    (58,000)   99.89%
                
Woodland, Ltd.(1)   120,000    (58,000)   99.98%
                
Wynwood Place, Limited Partnership   135,000    (40,000)   99.98%
   $3,710,000   $(806,000)     

 

(1) The Local Limited Partnership was identified for sale and disposed of subsequent to March 31, 2007.

 

(2) Subsequent to March 31, 2007 the Local Limited Partnership was identified for disposition but had not yet been sold as of the filing date.

 

18
 

 

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

 

         As of March 31, 2006   As of December 31, 2005 
Local Limited
Partnership Name
  Location  General Partner Name  Partnership’s
Total Investment
in Local Limited
Partnerships
   Amount of
Investment
Paid to Date
   Number
of Units
   Estimated
Aggregate
Low
Income
Housing
Tax Credits (1)
   Mortgage
Balances of Local Limited
Partnerships
 
                           
Ashford Place, a Limited Partnership (3)  Shawnee, Oklahoma  WNC Oklahoma, LLC  $2,317,000   $2,317,000    100   $3,931,000   $2,157,000 
                                
Belen Vista Associates, Limited Partnership  Belen, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   416,000    416,000    57    714,000    1,506,000 
                                
Blessed Rock of El Monte, a CA Limited Partnership (2)  El Monte, California  Everland, Inc.   2,511,000    2,511,000    137    8,899,000    3,541,000 
                                
Bolivar Plaza Apartments  Bolivar, Missouri  MBL Development Co.   1,181,000    1,181,000    32    1,658,000    488,000 
                                
Cleveland Apartments L.P. (3)  Coffeyville, Kansas  Williams Management and Consulting, Inc. and Eastern Housing Corp.   515,000    476,000    48    737,000    1,561,000 
                                
Crescent City Apartments, a California Limited Partnership (2)  Crescent City, California  Crescent City Surf, Inc.   1,166,000    1,166,000    56    2,221,000    1,960,000 
                                
D. Hilltop Apartments Ltd. (2)  Prairie View, Texas  Donald W. Sowell   101,000    101,000    24    187,000    446,000 
                                
Greyhound Associates I, L.P. (2)  Windsor, Missouri  WCM Community Development Corp.   642,000    642,000    24    1,128,000    537,000 
                                
Lamar Plaza Apts., L.P.(2)  Lamar, Missouri  MBL Development Co.   738,000    738,000    28    1,230,000    731,000 
                                
Mesa Verde Apartments Limited Partnership  (2)  Roswell, New Mexico  Shelter Resource Corporation   3,941,000    3,941,000    142    6,472,000    2,006,000 

  

19
 

 

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

  

         As of March 31, 2006   As of December 31, 2005 
Local Limited
Partnership Name
  Location  General Partner Name  Partnership’s
Total Investment
in Local Limited
Partnerships
   Amount of
Investment
Paid to Date
   Number
of Units
   Estimated
Aggregate Low
Income Housing
Tax Credits (1)
   Mortgage Balances
of Local Limited
Partnerships
 
                           
Mountain Vista Associates Limited Partnership  Los Alamos, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   315,000    315,000    53    543,000    1,413,000 
                                
North Central Limited Partnership (2)  New York, New York  City and Suburban Development Corp.   751,000    751,000    18    1,054,000    404,000 
                                
Woodland, Ltd. (2)  Marion, Alabama  ACHR Corp.   1,288,000    1,288,000    42    2,112,000    1,278,000 
                                
Wynwood Place, Limited Partnership  Raleigh,
North Carolina
  Greystone Affordable Housing   534,000    534,000    24    780,000    527,000 
                                
         $16,416,000   $16,377,000    785   $31,666,000   $18,555,000 

 

(1) Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10-year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 80% of the anticipated Low Income Housing Credits have been received from the Local Limited Partnerships and are no longer available to the Limited Partners.

 

(2) The Local Limited Partnership was identified for sale and disposed of subsequent to March 31, 2006.

 

(3) Subsequent to March 31, 2006 the Local Limited Partnership was identified for disposition but had not yet been sold as of the filing date.

 

20
 

 

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

   For the year ended December 31, 2005 
Local Limited
Partnership Name
  Rental Income   Net Income
(Loss)
   Low Income Housing Tax Credits Allocated to Partnership 
             
Ashford Place, a Limited Partnership (2)  $439,000   $(146,000)   98.99%
                
Belen Vista Associates, Limited Partnership   379,000    (24,000)   98.99%
                
Blessed Rock of El Monte, a CA Limited Partnership (1)   861,000    10,000    49.50%
                
Bolivar Plaza Apartments   112,000    (27,000)   98.98%
                
Cleveland Apartments L.P. (2)   232,000    (49,000)   99.98%
                
Crescent City Apartments, a California Limited Partnership (1)   203,000    (170,000)   99.00%
                
D. Hilltop Apartments Ltd. (1)   126,000    6,000    99.00%
                
Greyhound Associates I, L.P. (1)   91,000    (13,000)   99.00%
                
Lamar Plaza Apts., L.P. (1)   87,000    (5,000)   99.97%
                
Mesa Verde Apartments Limited Partnership (1)   546,000    (437,000)   99.00%
                
Mountain Vista Associates Limited Partnership   267,000    (22,000)   98.99%
                
North Central Limited Partnership (1)   133,000    (45,000)   99.89%
                
Woodland, Ltd.(1)   112,000    (65,000)   99.98%
                
Wynwood Place, Limited Partnership   85,000    (119,000)   99.98%
   $3,673,000   $(1,106,000)     

 

(1) The Local Limited Partnership was identified for sale and disposed of subsequent to March 31, 2006.

 

(2) Subsequent to March 31, 2006 the Local Limited Partnership was identified for disposition but had not yet been sold as of the filing date.

 

21
 

 

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

 

         As of March 31, 2005   As of December 31, 2004 
Local Limited
Partnership Name
  Location  General Partner Name  Partnership’s Total Investment
in Local Limited
Partnerships
   Amount of
Investment
Paid to Date
   Number
of Units
   Estimated
Aggregate Low
Income
Housing
Tax Credits (1)
   Mortgage
Balances of
Local Limited
Partnerships
 
                           
Ashford Place, a Limited Partnership(3)  Shawnee, Oklahoma  WNC Oklahoma, LLC  $2,317,000   $2,317,000    100   $3,931,000   $2,191,000 
                                
Belen Vista Associates, Limited Partnership  Belen, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   416,000    416,000    57    714,000    1,513,000 
                                
Blessed Rock of El Monte, a CA Limited Partnership (2)  El Monte, California  Everland, Inc.   2,511,000    2,511,000    137    8,899,000    3,584,000 
                                
Bolivar Plaza Apartments  Bolivar, Missouri  MBL Development Co.   1,181,000    1,181,000    32    1,658,000    505,000 
                                
Cleveland Apartments L.P. (3)  Coffeyville, Kansas  Williams Management and Consulting, Inc. and Eastern Housing Corp.   515,000    440,000    48    737,000    1,570,000 
                                
Crescent City Apartments, a California Limited Partnership (2)  Crescent City, California  Crescent City Surf, Inc.   1,166,000    1,166,000    56    2,221,000    1,960,000 
                                
D. Hilltop Apartments Ltd.(2)  Prairie View, Texas  Donald W. Sowell   101,000    101,000    24    187,000    450,000 
                                
Greyhound Associates I, L.P. (2)  Windsor, Missouri  WCM Community Development Corp.   642,000    642,000    24    1,128,000    552,000 
                                
Lamar Plaza Apts., L.P.(2)  Lamar, Missouri  MBL Development Co.   738,000    738,000    28    1,230,000    751,000 
                                
Mesa Verde Apartments Limited Partnership(2)  Roswell, New Mexico  Shelter Resource Corporation   3,941,000    3,941,000    142    6,472,000    2,129,000 

 

22
 

  

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

 

         As of March 31, 2005   As of December 31, 2004 
Local Limited
Partnership Name
  Location  General Partner Name  Partnership’s
Total Investment
in Local Limited
Partnerships
   Amount of
Investment
Paid to Date
   Number
of Units
   Estimated
Aggregate Low
Income Housing
Tax Credits (1)
   Mortgage
Balances of
Local Limited
Partnerships
 
                           
Mountain Vista Associates Limited Partnership  Los Alamos, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   315,000    315,000    53    543,000    1,419,000 
                                
North Central Limited Partnership(2)  New York, New York  City and Suburban Development Corp.   751,000    751,000    18    1,054,000    418,000 
                                
Woodland, Ltd.(2)  Marion, Alabama  ACHR Corp.   1,288,000    1,288,000    42    2,112,000    1,281,000 
                                
Wynwood Place, Limited Partnership  Raleigh, North Carolina  Greystone Affordable Housing   534,000    534,000    24    780,000    539,000 
                                
         $16,416,000   $16,341,000    785   $31,666,000   $18,862,000 

 

(1) Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10-year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 72% of the anticipated Low Income Housing Credits have been received from the Local Limited Partnerships and are no longer available to the Limited Partners.

 

(2) The Local Limited Partnership was identified for sale and disposed of subsequent to March 31, 2005.

 

(3) Subsequent to March 31, 2005 the Local Limited Partnership was identified for disposition but had not yet been sold as of the filing date.

 

23
 

 

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

 

   For the year ended December 31, 2004 
Local Limited
Partnership Name
  Rental Income   Net Income
(Loss)
   Low Income
Housing
Tax Credits
Allocated to
Partnership
 
             
Ashford Place, a Limited Partnership (2)  $428,000   $(254,000)   98.99%
                
Belen Vista Associates, Limited Partnership   380,000    (27,000)   98.99%
                
Blessed Rock of El Monte, a CA Limited Partnership (1)   847,000    78,000    49.50%
                
Bolivar Plaza Apartments   113,000    (22,000)   98.98%
                
Cleveland Apartments L.P. (2)   243,000    (19,000)   99.98%
                
Crescent City Apartments, a California Limited Partnership (1)   198,000    (148,000)   99.00%
                
D. Hilltop Apartments Ltd.(1)   116,000    (2,000)   99.00%
                
Greyhound Associates I, L.P. (1)   82,000    (10,000)   99.00%
                
Lamar Plaza Apts., L.P. (1)   92,000    (5,000)   99.97%
                
Mesa Verde Apartments Limited Partnership (1)   511,000    (193,000)   99.00%
                
Mountain Vista Associates Limited Partnership   263,000    (33,000)   98.99%
                
North Central Limited Partnership (1)   126,000    (37,000)   99.89%
                
Woodland, Ltd. (1)   120,000    (60,000)   99.98%
                
Wynwood Place, Limited Partnership   88,000    (74,000)   99.98%
                
   $3,607,000   $(806,000)     

 

(1) The Local Limited Partnership was identified for sale and disposed of subsequent to March 31, 2005.

 

(2) Subsequent to March 31, 2005 the Local Limited Partnership was identified for disposition but had not yet been sold as of the filing date.

 

24
 

 

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

 

         As of March 31, 2004   As of December 31, 2003 
Local Limited
Partnership Name
  Location  General Partner Name  Partnership’s
Total Investment
in Local Limited
Partnerships
   Amount of
Investment Paid to Date
   Number
of Units
   Estimated
Aggregate
Low Income
Housing
Tax Credits (1)
   Mortgage
Balances
of Local Limited
Partnerships
 
                           
Ashford Place, a Limited Partnership(3)  Shawnee, Oklahoma  WNC Oklahoma, LLC  $2,317,000   $2,317,000    100   $3,931,000   $2,223,000 
                                
Belen Vista Associates, Limited Partnership  Belen, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   416,000    416,000    57    714,000    1,518,000 
                                
Blessed Rock of El Monte, a CA Limited Partnership (2)  El Monte, California  Everland, Inc.   2,511,000    2,511,000    137    8,899,000    3,624,000 
                                
Bolivar Plaza Apartments  Bolivar, Missouri  MBL Development Co.   1,181,000    1,181,000    32    1,658,000    522,000 
                                
Cleveland Apartments L.P. (3)  Coffeyville, Kansas  Williams Management and Consulting, Inc. and Eastern Housing Corp.   515,000    440,000    48    737,000    1,579,000 
                                
Crescent City Apartments, a California Limited Partnership (2)  Crescent City, California  Crescent City Surf, Inc.   1,166,000    1,166,000    56    2,221,000    1,960,000 
                                
D. Hilltop Apartments Ltd. (2)  Prairie View, Texas  Donald W. Sowell   101,000    101,000    24    187,000    456,000 
                                
Greyhound Associates I, L.P. (2)  Windsor, Missouri  WCM Community Development Corp.   642,000    642,000    24    1,128,000    565,000 
                                
Lamar Plaza Apts., L.P.(2)  Lamar, Missouri  MBL Development Co.   738,000    738,000    28    1,230,000    761,000 
                                
Mesa Verde Apartments Limited Partnership(2)  Roswell, New Mexico  Shelter Resource Corporation   3,941,000    3,941,000    142    6,472,000    2,132,000 

 

25
 

 

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

 

         As of March 31, 2004   As of December 31, 2003 
Local Limited
Partnership Name
  Location  General Partner Name  Partnership’s
Total
Investment in
Local Limited
Partnerships
   Amount of
Investment
Paid to Date
   Number
of Units
   Estimated Aggregate
Low Income Housing
Tax Credits (1)
   Mortgage Balances
of Local Limited
Partnerships
 
                           
Mountain Vista Associates Limited Partnership  Los Alamos, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   315,000    315,000    53    543,000    1,424,000 
                                
North Central Limited Partnership(2)  New York, New York  City and Suburban Development Corp.   751,000    751,000    18    1,054,000    431,000 
                                
Woodland, Ltd.(2)  Marion, Alabama  ACHR Corp.   1,288,000    1,288,000    42    2,112,000    1,323,000 
                                
Wynwood Place, Limited Partnership  Raleigh, North Carolina  Greystone Affordable Housing.   534,000    469,000    24    780,000    549,000 
                                
         $16,416,000   $16,276,000    785   $31,666,000   $19,067,000 

 

(1)Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10-year credit period if Housing Complexes are retained and rented in compliance with credit rules for the 15-year Compliance Period. Approximately 63% of the anticipated Low Income Housing Credits have been received from the Local Limited Partnerships and are no longer available to the Limited Partners.

 

(2)The Local Limited Partnership was identified for sale and disposed of subsequent to March 31, 2004.

 

(3)Subsequent to March 31, 2004 the Local Limited Partnership was identified for disposition but had not yet been sold as of the filing date.

 

26
 

 

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

   For the year ended December 31, 2003 
Local Limited
Partnership Name
  Rental Income   Net Income
(Loss)
   Low Income
Housing
Tax Credits
Allocated to
Partnership
 
             
Ashford Place, a Limited Partnership (2)  $413,000   $(266,000)   98.99%
                
Belen Vista Associates, Limited Partnership   364,000    (8,000)   98.99%
                
Blessed Rock of El Monte, a CA Limited Partnership (1)   843,000    56,000    49.50%
                
Bolivar Plaza Apartments   111,000    (20,000)   98.98%
                
Cleveland Apartments L.P. (2)   201,000    (41,000)   99.98%
                
Crescent City Apartments, a California Limited Partnership (1)   194,000    (140,000)   99.00%
                
D. Hilltop Apartments Ltd.(1)   123,000    (11,000)   99.00%
                
Greyhound Associates I, L.P. (1)   71,000    (18,000)   99.00%
                
Lamar Plaza Apts., L.P. (1)   92,000    (8,000)   99.97%
                
Mesa Verde Apartments Limited Partnership (1)   463,000    (247,000)   99.00%
                
Mountain Vista Associates Limited Partnership   248,000    (32,000)   98.99%
                
North Central Limited Partnership (1)   77,000    (98,000)   99.89%
                
Woodland, Ltd.(1)   102,000    (94,000)   99.98%
                
Wynwood Place, Limited Partnership   86,000    (63,000)   99.98%
                
   $3,388,000   $(990,000)     

 

(1) The Local Limited Partnership was identified for sale and disposed of subsequent to March 31, 2004.

 

(2) Subsequent to March 31, 2004 the Local Limited Partnership was identified for disposition but had not yet been sold as of the filing date.

 

27
 

 

WNC Housing Tax Credit Fund V, L.P., Series 4
March 31, 2007, 2006, 2005 and 2004

 

         Occupancy Rates 
         As of December 31, 
Local Limited
Partnership Name
  Location  General Partner Name  2006   2005   2004   2003   2002   2001   2000   1999 
                                       
Ashford Place, a Limited Partnership  Shawnee, Oklahoma  WNC Oklahoma, LLC   93%   83%   92%   83%   76%   95%   92%   88%
                                               
Belen Vista Associates, Limited Partnership  Belen, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   100%   96%   100%   96%   98%   100%   100%   100%
                                               
Blessed Rock of El Monte, a CA Limited Partnership  El Monte, California  Everland, Inc.   100%   100%   100%   100%   100%   100%   99%   99%
                                               
Bolivar Plaza Apartments  Bolivar, Missouri  MBL Development Co.   97%   100%   100%   100%   97%   94%   88%   (1)
                                               
Cleveland Apartments L.P.  Coffeyville, Kansas  Williams Management and Consulting, Inc. and Eastern Housing Corp.   96%   79%   96%   85%   75%   73%   81%   56%
                                               
Crescent City Apartments, a California Limited Partnership  Crescent City, California  Crescent City Surf, Inc.   100%   100%   98%   98%   96%   100%   91%   91%
                                               
D. Hilltop Apartments Ltd.  Prairie View, Texas  Donald W. Sowell   92%   100%   100%   88%   100%   100%   96%   88%
                                               
Greyhound Associates I, L.P.  Windsor, Missouri  WCM Community Development Corp.   88%   88%   92%   88%   83%   88%   88%   96%
                                               
Lamar Plaza Apts., L.P.  Lamar, Missouri  MBL Development Co.   36%   61%   89%   89%   93%   82%   79%   

 

86

%

 

28
 

 

WNC Housing Tax Credit Fund V, L.P., Series 4

March 31, 2007, 2006, 2005 and 2004

 

         Occupancy Rates 
         As of December 31, 
Local Limited
Partnership Name
  Location  General Partner Name  2006   2005   2004   2003   2002   2001   2000   1999 
                                       
Mesa Verde Apartments Limited Partnership  Roswell, New Mexico  Shelter Resource Corporation   69%   84%   82%   68%   86%   91%   90%   92%
                                               
Mountain Vista Associates Limited Partnership  Los Alamos, New Mexico  Monarch Properties, Inc. and Low Income Housing Foundation of NM   92%   96%   94%   98%   96%   96%   96%   96%
                                               
North Central Limited Partnership  New York, New York  City and Suburban Development Corp.   94%   100%   94%   94%   94%   94%   94%   89%
                                               
Woodland, Ltd.  Marion, Alabama  ACHR Corp.   98%   93%   100%   88%   95%   100%   98%   93%
                                               
Wynwood Place, Limited Partnership  Raleigh, North Carolina  Greystone Affordable Housing   88%   83%   58%   67%   75%   71%   71%   100%
          89%   90%   93%   88%   90%   92%   90%   90%

 

(1) Housing Complex was under construction and the cost certification was not yet completed as of the respective year end.

 

29
 

 

Item 3. Legal Proceedings

 

NONE

 

Item 4. Mine Safety Disclosures

 

NOT APPLICABLE

 

PART II.

 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Item 5a.

 

a)The Partnership Units are not traded on a public exchange but were sold through a public offering. It is not anticipated that any public market will develop for the purchase and sale of any Partnership Units and none exists. Partnership Units can be assigned or otherwise transferred only if certain requirements in the Partnership Agreement are satisfied.

 

b)At March 31, 2007, 2006, 2005 and 2004, there were 1,313, 1,305, 1,303 and 1,292 Limited Partners, respectively, and 58, 57, 54 and 41 assignees of Partnership Units who were not admitted as Limited Partners, respectively.

 

c)The Partnership was not designed to provide operating cash distributions to Limited Partners. It is possible that the Partnership could make distributions from sale proceeds, if the Partnership is able to sell its Local Limited Partnership Interests or Housing Complexes for more than the related closing costs and any then accrued obligations of the Partnership. There can be no assurance in this regard. Any distributions would be made in accordance with the terms of the Partnership Agreement. For all periods presented there were no cash distributions to the Limited Partners.

 

d)No securities are authorized for issuance by the Partnership under equity compensation plans.

 

e)The Partnership does not issue common stock.

 

f)No unregistered securities were sold by the Partnership during the years ended March 31, 2007, 2006, 2005 and 2004.

 

Item 5b. Use of Proceeds

 

NOT APPLICABLE

 

Item 5c. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

NONE

 

30
 

 

Item 6. Selected Financial Data

 

Selected balance sheet information for the Partnership is as follows:

 

   March 31, 
                                 
   2007   2006   2005   2004   2003   2002   2001   2000 
                                 
ASSETS                                        
Cash  $235,855   $361,469   $517,435   $837,387   $1,006,242   $1,221,951   $1,316,217   $1,725,133 
Investments in Local Limited Partnerships, net   4,942,198    7,011,330    9,372,757    10,923,902    12,237,450    13,261,486    14,075,565    15,243,007 
Loans receivable   -    -    -    -    -    -    -    12,080 
Due from affiliates   574    8,586    574    574    574    10,306    10,306    574 
Prepaid expenses   7,281    17,469    -    -    -    -    -    - 
                                         
Total Assets  $5,185,908   $7,398,854   $9,890,766   $11,761,863   $13,244,266   $14,493,743   $15,402,088   $16,980,794 

 

LIABILITIES                                        
Payables to Local Limited Partnerships  $39,310   $39,310   $74,625   $139,906   $154,741   $164,475   $257,889   $672,640 
Accrued fees and expenses due to General Partner and affiliates   31,614    25,929    43,619    40,454    18,451    18,143    1,664    1,936 
                                         
Total Liabilities   70,924    65,239    118,244    180,360    173,192    182,618    259,553    674,576 
                                         
PARTNERS’ EQUITY   5,114,984    7,333,615    9,772,522    11,581,503    13,071,074    14,311,125    15,142,535    16,306,218 
                                         
Total Liabilities and
Partners’ Equity
  $5,185,908   $7,398,854   $9,890,766   $11,761,863   $13,244,266   $14,493,743   $15,402,088   $16,980,794 

 

 

31
 

 

Selected results of operations for the Partnership are as follows:

 

   For the Years Ended
March 31,
 
   2007   2006   2005   2004   2003   2002   2001   2000 
                                 
Loss  from  operations  (Note 1)  $(1,411,533)  $(1,610,187)  $(873,052)  $(485,727)  $(300,226)  $(133,335)  $(139,190)  $(163,273)
Equity in losses from Local Limited Partnerships   (808,469)   (830,792)   (939,791)   (1,011,324)   (957,485)   (745,147)   (1,103,435)   (1,146,270)
Interest income   1,371    2,072    3,862    7,480    17,660    47,072    78,942    108,385 
Net loss  $(2,218,631)  $(2,438,907)  $(1,808,981)  $(1,489,571)  $(1,240,051)  $(831,410)  $(1,163,683)  $(1,201,158)
                                         
Net loss allocated to:                                        
General Partner  $(22,186)  $(24,389)  $(18,090)  $(14,896)  $(12,401)  $(8,314)  $(11,637)  $(12,012)
                                         
Limited Partners  $(2,196,445)  $(2,414,518)  $(1,790,891)  $(1,474,675)  $(1,227,650)  $(823,096)  $(1,152,046)  $(1,189,146)
                                         
Net loss per Partnership Unit  $(99.88)  $(109.80)  $(81.44)  $(67.06)  $(55.80)  $(37.41)  $(52.37)  $(54.05)
                                         
Outstanding weighted Partnership Units   21,990    21,990    21,990    21,990    22,000    22,000    22,000    22,000 

 

Note 1 - Loss from operations for the years ended March 31, 2007, 2006, 2005, 2004, 2003, 2002, 2001 and 2000 include a charge for impairment losses on investments in Local Limited Partnerships of $1,186,381, $1,459,091, $547,547, $237,163, $0, $0, $0 and $0, respectively. (See Note 2 to the financial statements.)

 

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Selected results of cash flows for the Partnership are as follows:

 

   For the Years Ended March 31,
                                 
   2007   2006   2005   2004   2003   2002   2001   2000 
                                 
Net cash provided by (used in):                                        
                                         
Operating activities  $(154,509)  $(129,825)  $(260,958)  $(159,806)  $(212,962)  $(10,220)  $1,392   $(121,756)
Investing activities   28,895    (26,141)   (58,994)   (9,049)   (2,747)   (84,046)   (410,308)   (1,614,046)
                                         
Net change in cash   (125,614)   (155,966)   (319,952)   (168,855)   (215,709)   (94,266)   (408,916)   (1,735,802)
                                         
Cash, beginning of year   361,469    517,435    837,387    1,006,242    1,221,951    1,316,217    1,725,133    3,460,935 
                                         
Cash, end of year  $235,855   $361,469   $517,435   $837,387   $1,006,242   $1,221,951   $1,316,217   $1,725,133 

 

Low Income Housing Tax Credits per Partnership Unit were as follows for the years ended December 31:

 

     2006    2005    2004    2003    2002    2001    2000    1999 
                                          
Federal   $118   $121   $120   $121   $120   $121   $114   $104 
State    -    -    -    -    -    -    -    - 
                                          
Total   $118   $121   $120   $121   $120   $121   $114   $104 

 

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Item 7. 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-K 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 Credits property market and the economy in general, changes in law rules and regulations, and 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-K and in other reports filed with the SEC. The following discussion should be read in conjunction with the Financial Statements and the Notes thereto included elsewhere in this filing.

 

Critical Accounting Policies and Certain Risks and Uncertainties

 

The Partnership believes that the following discussion addresses the Partnership’s most significant accounting policies, which are the most critical to aid in fully understanding and evaluating the Partnership’s reported financial results, and certain of the Partnership’s risks and uncertainties.

 

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.

 

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 product 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 are capitalized as part of the investment account and were being amortized over 30 years. (See Notes 2 and 3 to the financial statements.)

 

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“Equity in losses of Local Limited Partnerships” for each year ended March 31 has been recorded by the Partnership based on the twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. 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 net losses not recognized during the period(s) the equity method was suspended.

 

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.

 

The Partnership does not consolidate the accounts and activities of the Local Limited Partnerships which a Variable Interest Entities under Financial Accounting Standards Board Interpretation No. 46-Revised, “Consolidation of Variable Interest Entities”, because the Partnership is not considered the primary beneficiary. The Partnership’s balance in Investments in Local Limited Partnerships represents the maximum exposure to loss in connection with such investments. The Partnership’s exposure to loss on the Local Limited Partnerships I mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners.

 

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.

 

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Impact of Recent Accounting Pronouncements

 

In September 2006, the Financial Accounting Standards Board (“FASB”) issued accounting guidance for Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements. This guidance is effective for financial statements issued for fiscal years beginning after November 15, 2007 and shall be applied prospectively except for very limited transactions. In February 2008, the FASB delayed for one year implementation of the guidance as it pertains to certain non-financial assets and liabilities. The Partnership adopted GAAP for Fair Value Measurements effective April 1, 2008, except as it applies to those non-financial assets and liabilities, for which the effective date was April 1, 2009. The Partnership has determined that adoption of this guidance is not expected to have a material impact on the Partnership’s financial statements.

 

In February 2007, the FASB issued accounting guidance for The Fair Value Option for Financial Assets and Financial Liabilities. This guidance permits entities to choose to measure many financial instruments and certain other items at fair value. The fair value election is designed to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. It is effective for fiscal years beginning after November 15, 2007. On April 1, 2008, the Partnership adopted GAAP for The Fair Value Option for Financial Assets and Financial Liabilities and elected not to apply the provisions to its eligible financial assets and financial liabilities on the date of adoption. Accordingly, the initial application of the guidance is not expected to have an effect on the Partnership.

 

In November 2008, the FASB issued accounting guidance on Equity Method Investment Accounting Considerations that addresses how the initial carrying value of an equity method investment should be determined, how an impairment assessment of an underlying indefinite-lived intangible asset of an equity method investment should be performed, how an equity method investee’s issuance of shares should be accounted for, and how to account for a change in an investment from the equity method to the cost method. This guidance is effective in fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years. The Partnership adopted the guidance for the interim quarterly period beginning April 1, 2009. The impact of adopting it is not expected to have a material impact on the Partnership’s financial condition or results of operations.

 

In April 2009, the FASB issued accounting guidance for Interim Disclosures about Fair Value of Financial Instruments.  This requires disclosure about the method and significant assumptions used to establish the fair value of financial instruments for interim reporting periods as well as annual statements.  It became effective for as of and for the interim period ended June 30, 2009 and is not expected to have an impact on the Partnership’s financial condition or results of operations.

 

In May 2009, the FASB issued guidance regarding subsequent events, which was subsequently updated in February 2010. This guidance established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this guidance sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This guidance was effective for financial statements issued for fiscal years and interim periods ending after June 15, 2009, and was therefore adopted by the Partnership for the quarter ended June 30, 2009. The adoption did not have a significant impact on the subsequent events that the Partnership reports, either through recognition or disclosure, in the financial statements. In February 2010, the FASB amended its guidance on subsequent events to remove the requirement to disclose the date through which an entity has evaluated subsequent events, alleviating conflicts with current SEC guidance. This amendment was effective immediately and therefore the Partnership did not include the disclosure in this Form 10-K.

 

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In June 2009, the FASB issued the Accounting Standards Codification (Codification). Effective July 1, 2009, the Codification is the single source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP. The Codification is intended to reorganize, rather than change, existing GAAP. Accordingly, all references to currently existing GAAP have been removed and have been replaced with plain English explanations of the Partnership’s accounting policies. The adoption of the Codification is not expected have a material impact on the Partnership’s financial position or results of operations.

 

In June 2009, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (VIEs). The amended guidance modified the consolidation model to one based on control and economics, and replaced quantitative primary beneficiary analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that 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 amended guidance requires continual reconsideration of the primary beneficiary of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE. Additionally, the amendment requires enhanced and expanded disclosures around VIEs. This amendment was effective for fiscal years beginning after November 15, 2009. The adoption of this guidance on April 1, 2010 is not expected to have a material effect on the Partnership’s financial statements.

 

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 is not expected to materially affect the Partnership’s financial statements.

 

Certain Risks and Uncertainties

 

See Item 1A for a discussion of risks regarding the Partnership.

 

To date, certain Local Limited Partnerships have incurred significant operating losses and 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 lost, and the loss and recapture of the related Low Income Housing Tax Credits could occur.

 

Financial Condition

 

As of March 31, 2007

 

The Partnership’s assets at March 31, 2007 consisted of $236,000 in cash, prepaid expenses of $7,000, due from affiliates of $1,000 and aggregate investments in 14 Local Limited Partnerships of $4,942,000 (See “Method of Accounting for Investments in Local Limited Partnerships”). Liabilities at March 31, 2007 consisted of $32,000 of accrued fees and advances due to General Partner and/or its affiliates, (See “Future Contractual Cash Obligations” below) and $39,000 in payables to Local Limited Partnerships.

 

As of March 31, 2006

 

The Partnership’s assets at March 31, 2006 consisted of $361,000 in cash, prepaid expenses of $17,000, due from affiliates of $9,000 and aggregate investments in 14 Local Limited Partnerships of $7,011,000 (See “Method of Accounting for Investments in Local Limited Partnerships”). Liabilities at March 31, 2006 consisted of $26,000 of accrued fees and advances due to General Partner and/or its affiliates, (See “Future Contractual Cash Obligations” below) and $39,000 in payables to Local Limited Partnerships.

 

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As of March 31, 2005

 

The Partnership’s assets at March 31, 2005 consisted of $517,000 in cash, due from affiliates of $1,000 and aggregate investments in 14 Local Limited Partnerships of $9,373,000 (See “Method of Accounting for Investments in Local Limited Partnerships”). Liabilities at March 31, 2005 consisted of $44,000 of accrued fees and advances due to General Partner and/or its affiliates, (See “Future Contractual Cash Obligations” below) and $75,000 in payables to Local Limited Partnerships.

 

As of March 31, 2004

 

The Partnership’s assets at March 31, 2004 consisted of $837,000 in cash, due from affiliates of $1,000 and aggregate investments in 14 Local Limited Partnerships of $10,924,000 (See “Method of Accounting for Investments in Local Limited Partnerships”). Liabilities at March 31, 2004 consisted of $40,000 of accrued fees and advances payable to the General Partner and/or its affiliates (See “Future Contractual Cash Obligations” below) and $140,000 in payables to Local Limited Partnerships.

 

Results of Operations

 

Year Ended March 31, 2007 Compared to Year Ended March 31, 2006 The Partnership’s net loss for the year ended March 31, 2007 was $(2,219,000), reflecting a decrease of $220,000 from the net loss experienced for the year ended March 31, 2006 of $(2,439,000). That decrease in net loss was largely due to a decrease of $273,000 in impairment loss for the year ended March 31, 2007 compared to March 31, 2006. 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 to the Partnership compared to the current carrying value of each of the investments to the Partnership. That decrease was offset partially by an $(80,000) increase in write off of advances to Local Limited Partnerships. During the year ended March 31, 2007 there were advances of $(110,000) made to several Local Limited Partnerships which were reserved for in full as of March 31, 2007 compared to $(30,000) advanced and reserved for during the year ended March 31, 2006. The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships. The accounting and legal fees increased by $(2,000) for the year ended March 31, 2007 compared to the year ended March 31, 2006 due to the timing of the accounting work performed. The amortization expense decreased by $1,000 during the year ended March 31, 2007 due to the fact that when a Local Limited Partnership’s investment balance reaches zero the acquisition costs and fees associated with that investment are expensed, resulting in a decreased future amortization expense. Reporting fees increased by $13,000 for the year ended March 31, 2007 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. There was also a $22,000 decrease of equity in losses of Local Limited Partnerships for the year ended March 31, 2007. The equity in losses can vary each year depending on the operations of each of the Local Limited Partnerships.

 

Year Ended March 31, 2006 Compared to Year Ended March 31, 2005 The Partnership’s net loss for the year ended March 31, 2006 was $(2,439,000), reflecting an increase of $(630,000) from the net loss experienced for the year ended March 31, 2005 of $(1,809,000). There was a $(912,000) increase in impairment loss for the year ended March 31, 2006. 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 to the Partnership compared to the current carrying value of each of the investments to the Partnership. There was also a decrease of $163,000 in write off of advances to Local Limited Partnerships for the year ended March 31, 2006 compared to the year ended March 31, 2005. Advances of $(30,000) were made and reserved for during the year ended March 31, 2006 compared to $(193,000) advanced and reserved for during the year ended March 31, 2005. The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships. Amortization decreased by $3,000 for the year ended March 31, 2006 due to the fact that when a Local Limited Partnership’s investment balance reaches zero the acquisition costs and fees associated with that investment are expensed, resulting in a decreased future amortization expense. The accounting and legal fees decreased by $2,000 for the year ended March 31, 2006 compared to the year ended March 31, 2005 due to the timing of the accounting work performed. Reporting fees increased by $1,000 for the year ended March 31, 2006 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. The equity in losses also decreased by $109,000 for the year ended March 31, 2006 compared to March 31, 2005 due to the fact that the operations of the underlying Housing Complexes of the Local Limited Partnerships will vary from year to year depending on the operations of each of the Local Limited Partnerships.

 

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Year Ended March 31, 2005 Compared to Year Ended March 31, 2004 The Partnership’s net loss for the year ended March 31, 2005 was $(1,809,000), reflecting an increase of $(319,000) from the net loss experienced for the year ended March 31, 2004 of $(1,490,000). There was a $(310,000) increase in impairment loss for the year ended March 31, 2005. 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 to the Partnership compared to the current carrying value of each of the investments to the Partnership. Additionally, during the year ended March 31, 2005 there were advances of $(193,000) that were made and fully reserved for in the same year compared to advances of $(141,000) made and reserved for during the year ended March 31, 2004. The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships. Additionally, reporting fees decreased by $(39,000) for the year ended March 31, 2005 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnership’s cash flow will allow for the payment. The amortization decreased by $2,000 for the year ended March 31, 2005 due to the fact that when a Local Limited Partnership’s investment balance reaches zero the acquisition costs and fees associated with that investment are expensed, resulting in a decreased future amortization expense. The accounting and legal fees decreased by $13,000 for the year ended March 31, 2005 compared to the year ended March 31, 2004 due to the timing of the accounting work performed. The equity in losses also decreased by $72,000 for the year ended March 31, 2005 compared to March 31, 2004 due to the fact that the operations of the underlying Housing Complexes of the Local Limited Partnerships will vary from year to year depending on the operations of each of the Local Limited Partnerships. Lastly interest income decreased by $(4,000) for the year ended March 31, 2005 due to a decrease in the cash balance maintained by the Partnership along with decreasing interest rates.

 

Year Ended March 31, 2004 Compared to Year Ended March 31, 2003 The Partnership’s net loss for the year ended March 31, 2004 was $(1,490,000), reflecting an increase of $(250,000) from the net loss of $(1,240,000) experienced for the year ended March 31, 2003. The change in net loss is partially due to equity in losses of Local Limited Partnerships increasing by $(54,000) for the year ended March 31, 2004 due to the fact that the operations of the underlying Housing Complexes of the Local Limited Partnerships will vary from year to year depending on the operations of each of the Local Limited Partnerships. There was an increase of $(237,000) in impairment loss for the year ended March 31, 2004. 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 to the Partnership compared to the current carrying value of each of the investments to the Partnership. There was a decrease in write off of advances to Local Limited Partnerships for the year ended March 31, 2004. During the year ended March 31, 2004 advances of $(141,000) were made to Local Limited Partnerships and reserved for in full compared to advances of $(168,000) made and reserved for during the year ended March 31, 2003. The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships. There was a $(2,000) increase in accounting and legal fees for the year ended March 31, 2004 due to the timing of accounting work performed. Reporting fees also increased by $28,000 for the year ended March 31, 2004 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. Lastly, interest income decreased by $(10,000) due to a decrease in the cash balance maintained by the Partnership along with decreasing interest rates.

 

Year Ended March 31, 2003 Compared to Year Ended March 31, 2002 The Partnership’s net loss for the year ended March 31, 2003 was $(1,240,000), reflecting an increase of $(409,000) from the net loss of $(831,000) experienced for the year ended March 31, 2002. The change in net loss is partially due to equity in losses of Local Limited Partnerships increasing by $(212,000) for the year ended March 31, 2003 due to the fact that the operations of the underlying Housing Complexes of the Local Limited Partnerships will vary from year to year depending on the operations of each of the Local Limited Partnerships. During the year ended March 31, 2003 advances of $(168,000) were made to Local Limited Partnerships and reserved for in full compared to advances no such advances being made and reserved for during the year ended March 31, 2002. The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships. There was a $2,000 decrease in accounting and legal fees for the year ended March 31, 2003 due to the timing of accounting work performed. Reporting fees decreased by $(2,000) for the year ended March 31, 2003 due to the fact that Local Limited Partnerships pay the reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. Lastly, interest income decreased by $(29,000) due to a decrease in the cash balance maintained by the Partnership along with decreasing interest rates.

 

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Liquidity and Capital Resources

 

Year Ended March 31, 2007 Compared to Year Ended March 31, 2006 The net decrease in cash during the year ended March 31, 2007 was $(126,000) compared to a net decrease in cash for the year ended March 31, 2006 of $(156,000). During the year ended March 31, 2007, the Partnership paid accrued asset management fees of $50,000 compared to $95,000 paid during the year ended March 31, 2006. During the year ended March 31, 2007 the Partnership reimbursed the General Partner or an affiliate $12,000 for operating expenses paid on its behalf compared to $14,000 reimbursed during the year ended March 31, 2006. The accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership. The Partnership also collected $13,000 more in reporting fees and $4,000 more in distributions for the year ended March 31, 2007 compared to the year ended March 31, 2006 due to the fact that Local Limited Partnerships pay the reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. During the year ended March 31, 2007 the Partnership made no payments of capital contributions to a Local Limited Partnership compared to $35,000 paid during the year ended March 31, 2006. Capital contributions are paid when the Local Limited Partnership reaches certain benchmarks. The Partnership advanced $110,000 to troubled Local Limited Partnerships during the year ended March 31, 2007 compared to $38,000 advanced during the year ended March 31, 2006 as discussed above. During the year ended March 31, 2007, repayments of advances to Local Limited Partnerships totaling $8,000 were received compared to no such receipts during the year ended March 31, 2006.

 

Year Ended March 31, 2006 Compared to Year Ended March 31, 2005 The net decrease in cash during the year ended March 31, 2006 was $(156,000) compared to a net decrease in cash for the year ended March 31, 2005 of $(320,000). During the year ended March 31, 2006 the Partnership advanced $(38,000) to the Local Limited Partnerships compared to $(193,000) advanced during the year ended March 31, 2005 as discussed above. The Partnership paid accrued asset management fees of $94,000 during the year ended March 31, 2006 compared to $61,000 paid during the year ended March 31, 2006. During the year ended March 31, 2006 the Partnership reimbursed the General Partner or an affiliate $14,000 for operating expenses paid on its behalf compared to $19,000 reimbursed during the year ended March 31, 2005. The accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership. During the year ended March 31, 2006 the Partnership made $35,000 in capital contributions to a Local Limited Partnership compared to $65,000 paid to Local Limited Partnerships during the year ended March 31, 2005. Capital contributions are paid when the Local Limited Partnership reaches certain benchmarks. The Partnership received $11,000 more in distributions from Local Limited Partnerships for the year ended March 31, 2006 due to the fact that Local Limited Partnerships pay the distributions to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment.

 

Year Ended March 31, 2005 Compared to Year Ended March 31, 2004 The net decrease in cash during the year ended March 31, 2005 was $(320,000) compared to a net decrease in cash for the year ended March 31, 2004 of $(169,000). During the year ended March 31, 2005 the Partnership advanced $(193,000) to the Local Limited Partnerships while the Partnership advanced $(141,000) during the year ended March 31, 2004 as discussed above. During the year ended March 31, 2005 the Partnership paid $(65,000) of capital contributions to a Local Limited Partnership compared to $(15,000) in capital contributions paid to Local Limited Partnerships during the year ended March 31, 2004. Capital contributions are paid when the Local Limited Partnership reaches certain benchmarks. The Partnership received $(39,000) less in reporting fees from Local Limited Partnerships for the year ended March 31, 2005 as discussed above. During the year ended March 31, 2005 the Partnership reimbursed the General Partner or an affiliate $19,000 for operating expenses paid on its behalf compared to $29,000 reimbursed during the year ended March 31, 2004. The accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership.

 

40
 

 

Year Ended March 31, 2004 Compared to Year Ended March 31, 2003 The net decrease in cash during the year ended March 31, 2004 was $(169,000) compared to a net decrease in cash for the year ended March 31, 2003 of $(216,000). During the year ended March 31, 2004 the Partnership advanced $(141,000) to troubled Local Limited Partnerships while $(168,000) was advanced during the year ended March 31, 2003 as discussed above. During the year ended March 31, 2004 the Partnership collected reporting fees of $45,000 from Local Limited Partnerships compared to $18,000 collected during the year ended March 31, 2003 as discussed above. For the year ended March 31, 2004 the Partnership paid the General Partner and affiliates approximately $(29,000) for reimbursement for expenses paid on behalf of the Partnership compared to $(28,000) paid during the year ended March 31, 2003. The reimbursements of operating expenses are paid after management reviews the cash position of the Partnership.

 

Year Ended March 31, 2003 Compared to Year Ended March 31, 2002 The net decrease in cash during the year ended March 31, 2003 was $(216,000) compared to a net decrease in cash for the year ended March 31, 2002 of $(94,000). During the year ended March 31, 2003 the Partnership advanced $(168,000) to troubled Local Limited Partnerships while no cash was advanced during the year ended March 31, 2002. During the year ended March 31, 2003 the Partnership paid $(10,000) of capital contributions to a Local Limited Partnership compared to $(93,000) in capital contributions paid to Local Limited Partnerships during the year ended March 31, 2003. Capital contributions are paid when the Local Limited Partnership reaches certain benchmarks. During the year ended March 31, 2003 the Partnership collected reporting fees of $18,000 from Local Limited Partnerships compared to $20,000 collected during the year ended March 31, 2002 as discussed above. For the year ended March 31, 2003 the Partnership paid the General Partner and affiliates approximately $(28,000) for reimbursement for expenses paid on behalf of the Partnership compared to $(33,000) paid during the year ended March 31, 2002. The reimbursements of operating expenses are paid after management reviews the cash position of the Partnership.

 

Other Matters

 

During the year ended March 31, 2006, Associates was advised that Lamar Plaza Apartments, (“Lamar Plaza”) a Local Limited Partnership, was experiencing a significant drop in occupancy and thereby cash flow due to three major employers discontinuing operations in the area. As a result of the foregoing, the Local Limited Partnership was added to the watch list and classified as a secondary concern level property. In December of 2006, Lamar Plaza’s occupancy dropped to its lowest level to date, 36% occupancy. The Local General Partner continued to meet Lamar Plaza’s cash flow deficit requirements and changed management agents in April 2007. Subsequent to this management change, occupancy had steadily rebounded through aggressive marketing techniques to reach 97% as of March 31, 2008 with corresponding cash deficits on the decline. Occupancy had continued to hold steady at 96% with slight cash flow deficits that were funded from reserves up until its sale on December 31, 2010.

 

Although Lamar Plaza was sold on December 31, 2010 the Local Limited Partnership continued to be monitored since the Compliance Period was not completed until December 31, 2012. It was revealed in 2011 that the economic occupancy to be 94%, indicating a consistent occupancy of above 90%. However, the asset experienced a temporary reduction in occupancy during the third quarter of 2012, but ended the year with 100%. No recapture of Low Income Housing Tax Credits was experience subsequent to the sale of this Local Limited Partnership. The investment balance for Lamar Plaza as of March 31, 2007, 2006, 2005, 2004, and 2003 was $179,043, $301,977, $424,911, $547,845, and $631,872. The Compliance Period for Lamar Plaza ends on December 31, 2012.

 

Another 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.

 

41
 

 

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 March 31, 2007, 2006, 2005, 2004, and 2003 was $76,925, $121,639, $220,703, $305,575, and $374,534, respectively. 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.

 

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 March 31, 2007, 2006, 2005, 2004, and 2003 was $456,516, $561,042, $692,556, $916,961, and $1,186,919. The Compliance Period for Ashford ends on December 31, 2012.

 

The Partnership was advised during the year ending March 31, 2003 that the Local Limited Partnership, Mesa Verde Apartments Limited Partnership (“Mesa Verde”) and its original Local General Partner, were not meeting their various guarantee requirements and partnership operational deficit needs. As a result, the Local General Partner was removed, and Associates brought in a substitute Local General Partner, Medlock Charitable Foundation, Inc. (“Medlock”) as managing general partner as well as Shelter Resource Corporation (“Shelter”) as general partner in November 2003. Medlock was unable to perform the general partner duties; therefore, Shelter became the new managing general partner in September 2004, and remains the Local General Partner as of the date of this report.

 

Since the Local Limited Partnership’s inception, there have been four managing agents providing property management services for Mesa Verde. Mesa Verde is currently being managed by Vantage Property Management and has been since November 2006.

 

42
 

 

During 2003, occupancy dropped into the 60% range and rebounded in late 2004 into the low 80s. During 2005, occupancy did reach into the high 80%s but collections were approximately 10% lower; this trend continued into 2006. From 2007 until the date of sale of the Local Limited Partnership, April 23, 2010, Mesa Verde Apartments had been continuously experiencing occupancy issues falling as low as the 50’s and no higher than the low 70’s in occupancy. During 2007, there were several incidents involving local authorities that were prevalent throughout the market area and Mesa Verde. These incidents further impacted Mesa Verde’s occupancy, which dropped even further into the low 70%s to high 60%s. Since early 2002, this property has operated with insufficient cash flow due to lower than anticipated occupancy, poor rental collections, and high tenant turnover. Due to the extended period of time Mesa Verde has experienced negative cash flow, the Partnership has funded over $1,000,000 for operations, capital needs, capital improvements, and to refinance the original mortgage as described below. Mesa Verde Apartments has been on the watch list since March 2002 and remained there until the date of sale, which occurred on April 23, 2010. The investment balance for Mesa Verde as of March 31, 2007, 2006, 2005, 2004, and 2003 was $912,470, $1,553,214, $2,136,950, $2,388,203, and $2,670,155. The Compliance Period for Mesa Verde ends on December 31, 2012.

 

In July 2005, the primary mortgage was refinanced with US Bank at a lowered interest rate of 6.17% and a reduced principal balance of $1,750,000. With the new principal balance, the annual debt service was lowered by approximately $60,000. US Bank had declared that the first mortgage was in technical default due to the DCR not staying within mandatory levels. Through negotiations, Associates was able to reach an agreement with US Bank. Associates offered a plan that cured the DCR default which was accepted by US Bank and they in turn waived their prepayment/yield maintenance provision of the mortgage where $150,000 will be written off for this provision in accordance with the sale of the property.

 

The tax credit benefit stream ended in June 2008 for Mesa Verde. The General Partner elected to have Mesa Verde listed for sale at $2,300,000 with a national brokerage firm as of September 12, 2008. Mesa Verde appraised at $2,300,000 on June 26, 2008. The sale of the property closed on April 23, 2010 under the provision that the buyer would assume the HOME loan from NFMA and would hold the loan on their books until 2017. When the HOME loan compliance period ends in 2017, the loan will then be able to be written off and deemed paid in full. The HOME loan will carry an interest rate of 0% and require no monthly payments.

 

Partnership’s Future Contractual Cash Obligations

 

The following table summarizes the Partnership’s future contractual cash obligations as of March 31, 2007:

 

   2008   2009   2010   2011   2012   Thereafter   Total 
                             
Asset management fees(1)  $99,395   $60,500   $60,500   $55,492   $50,785   $1,929,830   $2,256,502 
Payable to Local Limited Partnerships   39,310    -    -    -    -    -    39,310 
Total contractual cash obligations  $138,705   $60,500   $60,500   $55,492   $50,785   $1,929,830   $2,295,812 

 

(1)Asset management fees are payable annually until termination of the Partnership, which is to occur no later than December 31, 2050. The estimate of the fees payable included herein assumes the retention of the Partnership’s interest in all Housing Complexes until December 31, 2050. Amounts due to the General Partner as of March 31, 2007 have been included in the 2008 column. The projected asset management fees do not include Blessed Rock of El Monte, a CA Limited Partnership, D. Hilltop Apartments, Ltd., Lamar Plaza Apartments, LP, Mesa Verde Apartments, Limited Partnership, The North Central Limited Partnership, and Woodland Ltd. in each year due to the subsequent dispositions discussed in the earlier exit strategy section. The General Partner does not anticipate that these fees will be paid until such time as capital reserves are in excess of the aggregate of the existing contractual obligations and the anticipated future foreseeable obligations of the Partnership.

 

For additional information regarding our asset management fees and payables to Local Limited Partnerships, see Notes 2, 3 and 5 to the financial statements included elsewhere herein.

 

43
 

 

Off-Balance Sheet Arrangements

 

The Partnership has no off-balance sheet arrangements.

 

Exit Strategy

 

See Item 1 for information in this regard.

 

Impact of New Accounting Pronouncements

 

See footnote 1 to the audited financial statements.

 

Item 7A. Quantitative and Qualitative Disclosures Above Market Risk

 

NOT APPLICABLE

 

Item 8. Financial Statements and Supplementary Data

 

44
 

 

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

 


 

 

To the Partners
WNC Housing Tax Credit Fund V, L.P., Series 4

 

We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund V, L.P., Series 4 (a California Limited Partnership) (the “Partnership”) as of March 31, 2003 and 2002, and the related statements of operations, partners’ equity (deficit) and cash flows for the years ended March 31, 2003, 2002 and 2001. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits. A significant portion of the financial statements of the limited partnerships in which the Partnership is a limited partner were audited by other auditors whose reports have been furnished to us. As discussed in Note 2 to the financial statements, the Partnership accounts for its investments in limited partnerships using the equity method. The portion of the Partnership’s investment in limited partnerships audited by other auditors represented 79% and 80% of the total assets of the Partnership at March 31, 2003 and 2002, respectively, and 97%, 98% and 100% of the Partnership’s equity in losses of limited partnerships for the years ended March 31, 2003, 2002 and 2001, respectively. Our opinion, insofar as it relates to the amounts included in the financial statements for the limited partnerships which were audited by others, is based solely on the reports of the other auditors.

 

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit 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. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.

 

In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of WNC Housing Tax Credit Fund V, L.P., Series 4 (a California Limited Partnership) as of March 31, 2003 and 2002, and the results of its operations and its cash flows for the years ended March 31, 2003, 2002 and 2001, in conformity with accounting principles generally accepted in the United States of America.

 

/s/ BDO Seidman, LLP  
   
Costa Mesa, California  
July 10, 2003  

 

F-1
 

  

Report of Independent Registered Public Accounting Firm

 

To the Partners
WNC Housing Tax Credit Fund V, L.P., Series 4

 

We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund V, L.P., Series 4 (the Partnership) as of March 31, 2007, 2006, 2005 and 2004, and the related statements of operations, partners’ equity (deficit), and cash flows for the years then ended. The Partnership’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain Local Limited Partnerships which investments represent $912,470, $1,553,214, $2,136,950 and $0, respectively, of the total Partnership assets as of March 31, 2007, 2006, 2005 and 2004, and $322,216, $398,116, $251,254 and $0, respectively, of the total Partnership loss for the years then ended. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to those Local Limited Partnerships, is based solely on the reports of the other auditors.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of WNC Housing Tax Credit Fund V, L.P., Series 4 as of March 31, 2007, 2006, 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.

 

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed under Item 15(a)(2) in the index related to the years ended March 31, 2007, 2006, 2005 and 2004 is presented for the purpose of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied to the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial statement data required to be set forth therein in relation to the basic financial statements taken as a whole.

 

/s/ CohnReznick LLP  
   
Bethesda, Maryland  
November 4, 2013  

 

F-2
 

 

PAILET, MEUNIER and LeBLANC, L.L.P.

Certified Public Accountants

Management Consultants

 

INDEPENDENT AUDITOR’S REPORT

 

To the Partners

MESA VERDE APARTMENTS, L.P.

Roswell, New Mexico

 

We have audited the accompanying balance sheet of MESA VERDE APARTMENTS, L.P., as of December 31, 2003 and the related statements of operations, changes in partners’ equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audit in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit 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. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MESA VERDE APARTMENTS, L.P. as of December 31, 2003 and the results of its operations, changes in partners’ equity and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

 

Metairie, Louisiana

June 13, 2007

 

3421 N. Causeway Blvd., Suite 701. Metairie, LA 70002.     Telephone (504) 837-0770. Fax (504) 837-7102

Member of

IGAF Worldwide - Member Firms in Principal Cities. PCAOB - Public Company Accounting Oversight Board
AICPA Centers. Center for Public Company Audit Firms (SEC)
Governmental Audit Quality Center. Private Companies Practice Section (PCPS)

 

F-3
 

 

PAILET, MEUNIER and LeBLANC, L.L.P.

Certified Public Accountants

Management Consultants

 

INDEPENDENT AUDITOR’S REPORT

 

To the Partners

MESA VERDE APARTMENTS, L.P.

Roswell, New Mexico

 

We have audited the accompanying balance sheet of MESA VERDE APARTMENTS, L.P., as of December 31, 2004 and the related statements of operations, changes in partners’ equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audit in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit 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. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MESA VERDE APARTMENTS, L.P. as of December 31, 2004 and the results of its operations, changes in partners’ equity and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

 

Metairie, Louisiana

August 29, 2006

 

3421 N. Causeway Blvd., Suite 701. Metairie, LA 70002.        Telephone (504) 837-0770 . Fax (504) 837-7102

Member of

IGAF Worldwide - Member Firms in Principal Cities. PCAOB - Public Company Accounting Oversight Board

AICPA Centers . Center for Public Company Audit Firms (SEC)

Governmental Audit Quality Center. Private Companies Practice Section (PCPS)

  

F-4
 

 

PAILET, MEUNIER and LeBLANC, L.L.P.

Certified Public Accountants

Management Consultants

 

INDEPENDENT AUDITOR’S REPORT

 

To the Partners

MESA VERDE APARTMENTS, L.P.

Roswell, New Mexico

 

We have audited the accompanying balance sheets of MESA VERDE APARTMENTS, L.P., as of December 31, 2005 and 2004 and the related statements of operations, changes in partners’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit 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. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MESA VERDE APARTMENTS, L.P. as of December 31, 2005 and 2004 and the results of its operations, changes in partners’ equity and cash flows for the years then ended in conformity with accounting principles generally accepted in the