UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended June 30, 2010

For the quarterly period ended September 30, 2010

For the quarterly period ended December 31, 2010

 

OR

 

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

 

For the transition period from ________ to ___________

 

Commission file number: 0-21897

 

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

 

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

 

17782 Sky Park Circle, Irvine, CA 92614

( Address of principle executive offices )

 

(714) 622-5565

( Telephone Number )

 

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

 

Yes [  ]  No  [X]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Yes [  ]  No  [X]

 

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

 

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

 

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

 

Yes [  ]  No [X]

 

 

 

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

(A California Limited Partnership)

 

INDEX TO FORM 10-Q

 

For the Quarterly periods Ended June 30, 2010, September 30, 2010

and December 31, 2010

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements			F-1
	Condensed Balance Sheets
	As of June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2010		F-1
	Condensed Statements of Operations
	For the Three Months Ended June 30, 2010 and 2009		F-2
	For the Three and Six Months Ended September 30, 2010 and 2009		F-3
	For the Three and Nine Months Ended December 31, 2010 and 2009		F-4
	Condensed Statements of Partners’ Equity
	For the Three Months Ended June 30, 2010		F-5
	For the Six Months Ended September 30, 2010		F-5
	For the Nine Months Ended December 31, 2010		F-5
	Condensed Statements of Cash Flows
	For the Three Months Ended June 30, 2010 and 2009		F-6
	For the Six Months Ended September 30, 2010 and 2009		F-7
	For the Nine Months Ended December 31, 2010 and 2009		F-8
	Notes to Condensed Financial Statements		F9 - F27
Item 2. Management’s Discussion and Analysis of Financial
	Condition and Results of Operations		3
Item 3. Quantitative and Qualitative Disclosures About Market Risk			9
Item 4. Controls and Procedures			9
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings		10
	Item 1A. Risk Factors		10
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		10
	Item 3. Defaults Upon Senior Securities		10
	Item 4. Mine Safety Disclosures		10
	Item 5. Other Information		10
	Item 6. Exhibits.		10
	Signatures		11

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

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

(A California Limited Partnership)

 

CONDENSED BALANCE SHEETS

(unaudited)

 

		June 30, 2010				September 30, 2010				December 31, 2010				March 31, 2010
ASSETS
Cash		$	55,933			$	13,632			$	64,055			$	25,677
Investments in Local Limited Partnerships, net (Notes 2 and 3)			603,667				593,282				600,035				697,775
Sales proceeds receivable			67,975				37,973				7,973				-
Total Assets		$	727,575			$	644,887				672,063			$	723,452
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Payables to Local Limited Partnerships (Note 4)		$	39,310			$	39,310			$	39,310			$	39,310
Accrued fees and expenses due to General Partner and affiliates (Note 3)			302,770				221,715				238,339				311,427
Total Liabilities			342,080				261,025				277,649				350,737
Partners’ Equity:
General Partner			41,899				41,882				41,988				41,771
Limited Partners (25,000 Partnership Units authorized; 21,990 Partnership Units issued and outstanding)			343,596				341,980				352,426				330,944
Total Partners’ Equity			385,495				383,862				394,414				372,715
Total Liabilities and Partners’ Equity		$	727,575			$	644,887			$	672,063			$	723,452

 

See accompanying notes to condensed financial statements

 

 

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

(A California Limited Partnership)

CONDENSED STATEMENTS OF OPERATIONS

 

For the Three Months Ended June 30, 2010 and 2009

(unaudited)

 

		2010				2009
		Three Months				Three Months
Reporting fees		$	-			$	34,031
Distribution income			5,000				-
Total operating income			5,000				34,031
Operating expenses and loss:
Amortization (Note 3)			1,800				1,800
Asset management fees (Note 3)			14,081				15,125
Impairment loss (Note 2)			87,338				185,972
Legal and accounting fees			15,131				3,464
Write off of advances to Local Limited Partnerships (Note 5)			-				35,853
Other			7,153				1,844
Total operating expenses and loss			125,503				244,058
Loss from operations			(120,503	)			(210,027	)
Equity in losses of Local Limited Partnerships (Note 2)			(4,970	)			(22,340	)
Gain on sale of Local Limited Partnerships (Note 2)			137,413				-
Interest income			840				9
Net income (loss)		$	12,780			$	(232,358	)
Net income (loss) allocated to:
General Partner		$	128			$	(2,324	)
Limited Partners		$	12,652			$	(230,034	)
Net income (loss) per Partnership Unit		$	1			$	(10	)
Outstanding weighted Partnership Units			21,990				21,990

 

See accompanying notes to condensed financial statements

 

 

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

(A California Limited Partnership)

 

CONDENSED STATEMENTS OF OPERATIONS

 

For the Three and Six Months Ended

September 30, 2010 and 2009

(unaudited)

 

		2010								2009
		Three				Six				Three				Six
		Months				Months				Months				Months
Reporting fees		$	10,581			$	10,581			$	-			$	34,031
Distribution income			-				5,000				5,277				5,277
Total operating income			10,581				15,581				5,277				39,308
Operating expenses and loss:
Amortization (Note 3)			1,800				3,600				1,800				3,600
Asset management fees (Note 3)			14,081				28,162				15,125				30,250
Impairment loss (Note 2)			-				87,338				-				185,972
Legal and accounting fees			5,180				20,311				4,121				7,585
Write off of advances to Local Limited Partnerships (Note 5)			-				-				38,328				74,181
Other			584				7,737				210				2,054
Total operating expenses and loss			21,645				147,148				59,584				303,642
Loss from operations			(11,064	)			(131,567	)			(54,307	)			(264,334	)
Equity in income(losses) of Local  Limited Partnerships (Note 2)			8,552				3,582				(277	)			(22,617	)
Gain on sale of Local Limited Partnerships (Note 2)			-				137,413				-				-
Interest income			879				1,719				7				16
Net income (loss)		$	(1,633	)		$	11,147			$	(54,577	)		$	(286,935	)
Net income (loss) allocated to:
General Partner		$	(17	)		$	111			$	(545	)		$	(2,869	)
Limited Partners			(1,616	)			11,036				(54,032	)		$	(284,066	)
Net income (loss) per  Partnership Unit		$	0			$	1			$	(3	)		$	(13	)
Outstanding weighted Partnership Units			21,990				21,990				21,990				21,990

 

See accompanying notes to condensed financial statements

 

 

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

(A California Limited Partnership)

 

CONDENSED STATEMENTS OF OPERATIONS

 

For the Three And Nine Months Ended

December 31, 2010 and 2009

(unaudited)

 

		2010								2009
		Three				Nine				Three				Nine
		Months				Months				Months				Months
Reporting fees		$	-			$	10,581			$	-			$	34,031
Distribution income			-				5,000				-				5,277
Total operating income			-				15,581				-				39,308
Operating expenses and loss:
Amortization (Note 3)			1,800				5,400				1,800				5,400
Asset management fees (Note 3)			14,131				42,293				15,125				45,375
Impairment loss (Note 2)			-				87,338				-				185,972
Legal and accounting fees			-				20,311				5,257				12,842
Write off of advances to Local Limited Partnerships (Note 5)			-				-				60,324				134,505
Other			2,492				10,229				1,629				3,683
Total operating expenses and loss			18,423				165,571				84,135				387,777
Loss from operations			(18,423	)			(149,990	)			(84,135	)			(348,469	)
Equity in income (losses) of Local  Limited Partnerships (Note 2)			8,553				12,135				(277	)			(22,894	)
Gain on sale of Local Limited Partnerships (Note 2)			20,000				157,413				-				-
Interest income			422				2,141				1				17
Net income (loss)		$	10,552			$	21,699			$	(84,411	)		$	(371,346	)
Net income (loss) allocated to:
General Partner		$	106			$	217			$	(844	)		$	(3,713	)
Limited Partners		$	10,446			$	21,482			$	(83,567	)		$	(367,633	)
Net income (loss) per Partnerships Unit		$	0			$	1			$	(4	)		$	(17	)
Outstanding weighted Partnership Units			21,990				21,990				21,990				21,990

 

See accompanying notes to condensed financial statements

 

 

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

(A California Limited Partnership)

 

CONDENSED STATEMENTS OF PARTNERS’ EQUITY

 

For the Three Months Ended June 30, 2010, Six Months Ended September 30, 2010 and
Nine Months Ended December 31, 2010

(unaudited)

 

For the Three Months Ended June 30, 2010
		General				Limited
		Partner				Partners				Total
Partners’ equity at March 31, 2010		$	41,771			$	330,944			$	372,715
Net income			128				12,652				12,780
Partners’ equity at June 30, 2010		$	41,899			$	343,596			$	385,495

 

For the Six Months Ended September 30, 2010
		General				Limited
		Partner				Partners				Total
Partners’ equity at March 31, 2010		$	41,771			$	330,944			$	372,715
Net income			111				11,036				11,147
Partners’ equity at September 30, 2010		$	41,882			$	341,980			$	383,862

 

For the Nine Months Ended December 31, 2010
		General				Limited
		Partner				Partners				Total
Partners’ equity at March 31, 2010		$	41,771			$	330,944			$	372,715
Net income			217				21,482				21,699
Partners’ equity at December 31, 2010		$	41,988			$	352,426			$	394,414

 

See accompanying notes to condensed financial statements

 

 

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

(A California Limited Partnership)

 

CONDENSED STATEMENTS OF CASH FLOWS

 

For the Three Months Ended June 30, 2010 and 2009

(unaudited)

 

		2010				2009
Cash flows from operating activities:
Net income (loss)		$	12,780			$	(232,358	)
Adjustments to reconcile net loss to net  cash provided by (used in) operating activities:
Amortization			1,800				1,800
Impairment loss			87,338				185,972
Equity in losses of Local Limited Partnerships			4,970				22,340
Increase (decrease) in accrued fees and expenses due to General Partner and affiliates			(8,657	)			56,287
Gain on sale of Local Limited Partnerships			(137,413	)			-
Net cash provided by (used in) operating activities			(39,182	)			34,041
Cash flows from investing activities:
Net proceeds from sale of Local Limited Partnerships			69,438				-
Advances made to Local Limited Partnerships			-				(35,853	)
Write off of advances made to Local Limited Partnerships			-				35,853
Net cash provided by investing activities			69,438				-
Net increase in cash			30,256				34,041
Cash, beginning of period			25,677				21,443
Cash, end of period		$	55,933			$	55,484
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid		$	-			$	-

 

See accompanying notes to condensed financial statements

 

 

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

(A California Limited Partnership)

 

CONDENSED STATEMENTS OF CASH FLOWS

 

For the Six Months Ended September 30, 2010 and 2009

(unaudited)

 

		2010				2009
Cash flows from operating activities:
Net income (loss)		$	11,147			$	(286,935	)
Adjustments to reconcile net loss to net  cash provided by (used in) operating activities:
Amortization			3,600				3,600
Impairment loss			87,338				185,972
Equity in (income) losses of Local Limited Partnerships			(3,582	)			22,617
Increase (decrease) in accrued fees and expenses due to
General Partner and affiliates			(89,712	)			75,742
Gain on sale of Local Limited Partnerships			(137,413	)			-
Net cash provided by (used in) operating activities			(128,622	)			996
Cash flows from in investing activities:
Net proceeds from sale of Local Limited Partnerships			99,440				-
Advances made to Local Limited Partnerships			-				(74,181	)
Write off of advances made to Local Limited Partnerships			-				74,181
Distributions received from Local Limited Partnerships			17,137				-
Net cash provided by investing activities			116,577				-
Net increase (decrease) in cash			(12,045	)			996
Cash, beginning of period			25,677				21,443
Cash, end of period		$	13,632			$	22,439
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid		$	-			$	-
NONCASH INVESTING AND FINANCING ACTIVITIES:
Advances made to the Partnership by the General partner in prior years were converted to General Partner equity		$	-			$	87,154

 

See accompanying notes to condensed financial statements

 

 

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

(A California Limited Partnership)

 

Condensed Statements of Cash Flows

 

For the Nine Months Ended December 31, 2010 and 2009

(unaudited)

 

		2010				2009
Cash flows from operating activities:
Net income (loss)		$	21,699			$	(371,346	)
Adjustments to reconcile net loss to net  cash provided by (used in) operating activities:
Amortization			5,400				5,400
Impairment loss			87,338				185,972
Equity in (income) losses of Local Limited Partnerships			(12,135	)			22,894
Increase (decrease) in accrued fees and expenses due to
General Partner and affiliates			(73,088	)			158,077
Gain on sale of Local Limited Partnerships			(157,413	)			-
Net cash provided by (used in) operating activities			(128,229	)			997
Cash flows from investing activities:
Net proceeds from sale of Local Limited Partnerships			149,440				-
Advances made to Local Limited Partnerships			-				(134,505	)
Write off of advances made to Local Limited Partnerships			-				134,505
Distributions received from Local Limited Partnerships			17,137				-
Net cash provided by investing activities			166,577				-
Net increase in cash			38,378				997
Cash, beginning of period			25,677				21,443
Cash, end of period		$	64,055			$	22,440
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid		$	-			$	-
NONCASH INVESTING AND FINANCING ACTIVITIES:
Advances made to the Partnership by the General partner in prior years were converted to General Partner equity		$	-			$	87,154

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

General

 

The accompanying condensed unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 2010, six months ended September 30, 2010 and nine months ended December 31, 2010 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2011. For further information, refer to the financial statements and footnotes thereto included in the Partnership’s annual report on Form 10-K for the fiscal year ended March 31, 2010.

 

Organization

 

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

 

The general partner of the Partnership is WNC & Associates, Inc. (the “General Partner” or “Associates”). The chairman and president of Associates own substantially all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through the General Partner, as the Partnership has no employees of its own.

 

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

 

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

 

The partnership agreement authorized the sale of up to 25,000 units of limited partnership interest (“Partnership Units”) at $1,000 per Partnership Unit. The offering of Partnership Units concluded on July 11, 1997 at which time 22,000 Partnership Units representing subscriptions in the amount of $21,914,830, net of discounts of $79,550 for volume purchases and $5,620 for dealer discounts, had been accepted. As of all periods presented, 21,990 Partnership Units remain outstanding. The General Partner has a 1% interest in operating profits and losses, taxable income and losses and in cash available for distribution from the Partnership and Low Income Housing Tax Credits. The investors (“Limited Partners”) in the Partnership will be allocated the remaining 99% of these items in proportion to their respective investments.

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

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

 

Risks and Uncertainties

 

An investment in the Partnership and the Partnership’s investments in Local Limited Partnerships and their Housing Complexes are subject to risks. These risks may impact the tax benefits of an investment in the Partnership, and the amount of proceeds available for distribution to the Limited Partners, if any, on liquidation of the Partnership’s investments. Some of those risks include the following:

 

The Low Income Housing Tax Credits rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Tax Credits and the fractional recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax Credits that an individual can use is limited to the tax liability due on the person’s last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a price which would result in the Partnership realizing cash distributions or proceeds from the transaction. Accordingly, the Partnership may be unable to distribute any cash to its Limited Partners. Low Income Housing Tax Credits may be the only benefit from an investment in the Partnership.

 

The Partnership has invested in a limited number of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership’s ability to satisfy its investment objectives. Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15 years(the “Compliance Period”), the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of prior Low Income Housing Tax Credits, and a loss of the Partnership’s investment in the Housing Complex would occur. The Partnership is a limited partner of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership’s investments in Local Limited Partnerships, nor the Local Limited Partnerships’ investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and Low Income Housing Tax Credits and recapture of Low Income Housing Tax Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others.

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

The ability of Limited Partners to claim tax losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Tax Credits and tax losses allocable to the limited partners could be reduced if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes.

 

No trading market for the Partnership Units exists or is expected to develop. Limited Partners may be unable to sell their Partnership Units except at a discount and should consider their Partnership Units to be a long-term investment. Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners.

 

As of June 30, September 30, and December 31, 2010, the Partnership has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through November 30, 2014

 

Exit Strategy

 

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

 

Upon the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits. A sale prior to the end of the Compliance Period could result in recapture if certain conditions are not met. None of the Housing Complexes have completed their 15-year Compliance Period.

 

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

 

Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership expects to proceed with efforts to liquidate them. The objective is to maximize the Limited Partners’ return wherever possible and, ultimately, to wind down the Partnership as Low Income Housing Tax Credits are no longer available. Local Limited Partnership interests may be disposed of any time by the General Partner in its discretion. While liquidation of the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of December 31, 2010.

 

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

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

During the three, six and nine months ended June 30, September 30, and December 31, 2010, the Partnership sold the Housing Complexes of Mesa Verde Apartments, L.P. (“Mesa Verde”). The Partnership also identified and sold its Local Limited Partnership interests in Lamar Plaza Apartments, L.P. 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.

 

The investment balance was zero at the time of sale for each Local Limited Partnership listed below.

 

Local Limited Partnership		Debt at prior 12/31 from sale date				Appraisal Value				Date of Sale				Sales Proceeds				Actual Sale Related Expenses				Gain (loss) on sale
Mesa Verde Apartments, L.P. (*)		$	1,919,353			$	2,300,000				4/23/2010			$	137,413			$	-			$	137,413
Lamar Plaza Apartments, LP			651,285				330,000				12/31/2010				20,000				-				20,000

 

(*) $88,084 of the total sale proceeds from the sale of Mesa Verde were recorded as a note at date of sale, of which $67,975, $37,973, and $7,973 were included in sale proceeds receivable on the balance sheet as of June 30, 2010, September 30, 2010, and December 31, 2010, respectively.

 

The following table represents the anticipated use of the cash proceeds from the disposition of the Local Limited Partnerships during the three, six and nine months ended June 30, September 30, and December 31, 2010.

 

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
Lamar Plaza Apartments, LP			20,000				14,000				-				6,000

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Subsequent to December 31, 2010, the Partnership identified and sold the Housing Complexes of 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 D. Hilltop Apartments, Ltd., Woodland, Ltd., and Greyhound Associates I, L.P subsequent to December 31, 2010.

 

The following table reflects dispositions that occurred subsequent to December 31, 2010:

 

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
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
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.

 

The following table represents the use of the cash proceeds from the disposition of the Local Limited Partnerships that were disposed of subsequent to December 31, 2010:

 

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
The North Central Limited Partnership		$	225,967			$	36,000			$	88,719			$	101,248
Blessed Rock of El Monte, a CA Partnership			2,355,384				25,852				966,695				1,362,837
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

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Subsequent to December 31, 2010, 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		01/31/2014		$	2,560,000			$	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.

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Method of Accounting for Investments in Local Limited Partnerships

 

The Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable. Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the sum of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments were capitalized as part of the investment account and were being amortized over 30 years (see Notes 2 and 3).

 

“Equity in losses of Local Limited Partnerships” for each year of the periods ended June 30, September 30 and December 31, 2010 and 2009 has been recorded by the Partnership. Management’s estimate for the three, six and nine month periods is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships. Equity in losses from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of the net losses not recognized during the period(s) the equity method was suspended. For the three, six and nine months ended June 30, September 30 and December 31, 2010, respectively, as soon as the investment balance reached zero, the related costs for acquiring the investment were written off.

 

In accordance with the accounting guidance for the consolidation of variable interest entities, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.

 

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

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Distributions received from the Local Limited Partnerships are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as distribution income. As of June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2010,thirteen,thirteen, thirteen, and twelve investment accounts in Local Limited Partnerships had reached a zero balance.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

 

Cash and Cash Equivalents

 

The Partnership considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. For all periods presented, the Partnership had no cash equivalents.

 

Reporting Comprehensive Income

 

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

 

Income Taxes

 

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

 

Net Loss Per Partnership Unit

 

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

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Impairment

 

The Partnership reviews its investments in Local Limited Partnerships for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of such investments may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the investment to the sum of the total amount of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investment. Impairment loss for the three months ended June 30, 2010 and 2009 was $87,338 and $185,972, respectively. For the six months ended September 30, 2010 and 2009, impairment loss of $87,338 and $185,972, respectively, was recorded. Impairment loss for the nine months ended December 31, 2010 and 2009 was $87,338 and $185,972, respectively.

 

The Partnership also evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. No impairment losses were recorded against the related intangibles for any of the periods presented.

 

Amortization

 

Acquisition fees and costs were being amortized over 30 years using the straight-line method. Amortization expense for the three months ended June 30, 2010 and 2009 was $1,800. For the six months ended September 30, 2010 and 2009 amortization expense was $3,600. For the nine months ended December 31, 2010 and 2009 amortization expense was $5,400.

 

Revenue Recognition

 

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

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

 

As of June 30, September 30, December 31, 2010, and March 31, 2010 the Partnership has acquired limited partnership interests in thirteen, thirteen, twelve, and fourteen Local Limited Partnerships, each of which owns one Housing Complex consisting of an aggregate of 643, 643, 615, and 785 apartment units, respectively. The respective Local General Partners of the Local Limited Partnerships manage the day to day operations of the entities. Significant Local Limited Partnership business decisions, as defined, require approval from the Partnership. The Partnership, as a Limited Partner, is generally entitled to 98.98% to 99.98%, except for one Local Limited Partnership which the Partnership is entitled to 49.50%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses, and Low Income Housing Tax Credits of the Local Limited Partnerships.

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

The Partnership reviews its investments in Local Limited Partnerships for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of such investments may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the investment to the sum of the total amount of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investment. Impairment loss for the three months ended June 30, 2010 and 2009 was $87,338 and $185,972, respectively. For the six months ended September 30, 2010 and 2009, impairment loss of $87,338 and $185,972, respectively, was recorded. Impairment loss for the nine months ended December 31, 2010 and 2009 was $87,338 and $185,972, respectively.

 

The Partnership also evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. No impairment losses were recorded against the related intangibles for any of the periods presented.

 

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

 

		For the Three Months Ended June 30, 2010				For the Year Ended March 31, 2010
Investments per balance sheet, beginning of period		$	697,775			$	914,118
Impairment loss			(87,338	)			(185,972	)
Equity in losses of Local Limited Partnerships			(4,970	)			(23,171	)
Distributions received from Local Limited Partnerships			-				-
Amortization of capitalized acquisition fees and costs			(1,800	)			(7,200	)
Investments per balance sheet, end of period		$	603,667			$	697,775

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

		For the Six Months Ended September 30, 2010				For the Year Ended March 31, 2010
Investments per balance sheet, beginning of period		$	697,775			$	914,118
Impairment loss			(87,338	)			(185,972	)
Equity in losses of Local Limited Partnerships			3,582				(23,171	)
Distributions received from Local Limited Partnerships			(17,137	)			-
Amortization of capitalized acquisition fees and costs			(3,600	)			(7,200	)
Investments per balance sheet, end of period		$	593,282			$	697,775

 

		For the Nine Months Ended December 31, 2010				For the Year Ended March 31, 2010
Investments per balance sheet, beginning of period		$	697,775			$	914,118
Impairment loss			(87,338	)			(185,972	)
Equity in losses of Local Limited Partnerships			12,135				(23,171	)
Distributions received from Local Limited Partnerships			(17,137	)			-
Amortization of capitalized acquisition fees and costs			(5,400	)			(7,200	)
Investments per balance sheet, end of period		$	600,035			$	697,775

 

		For the Three Months Ended June 30, 2010				For the Year Ended March 31, 2010
Investments in Local Limited Partnerships, net		$	481,289			$	573,596
Acquisition fees and costs, net of accumulated amortization of $14,400 and $12,600			122,378				124,179
Investments per balance sheet, end of period		$	603,667			$	697,775

 

		For the Six Months Ended September 30, 2010				For the Year Ended March 31, 2010
Investments in Local Limited Partnerships, net		$	472,703			$	573,596
Acquisition fees and costs, net of accumulated amortization of $16,200 and $12,600			120,579				124,179
Investments per balance sheet, end of period		$	593,282			$	697,775

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

		For the Nine Months Ended December 31, 2010				For the Year Ended March 31, 2010
Investments in Local Limited Partnerships, net		$	481,256			$	573,596
Acquisition fees and costs, net of accumulated amortization of $18,000 and $12,600			118,779				124,179
Investments per balance sheet, end of period		$	600,035			$	697,775

 

Selected financial information for the three months ended June 30, 2010 and 2009 from the unaudited combined condensed financial statements of the Local Limited Partnerships in which the Partnership has invested is as follows:

 

COMBINED CONDENSED STATEMENTS OF OPERATIONS
		2010				2009
Revenues		$	870,000			$	1,032,000
Expenses:
Interest expense			154,000				209,000
Depreciation and amortization			247,000				300,000
Operating expenses			613,000				697,000
Total expenses			1,014,000				1,206,000
Net loss		$	(144,000	)		$	(174,000	)
Net loss allocable to the Partnership		$	(151,000	)		$	(181,000	)
Net loss recorded by the Partnership		$	(5,000	)		$	(22,000	)

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

Selected financial information for the six months ended September 30, 2010 and 2009 from the unaudited combined condensed financial statements of the Local Limited Partnerships in which the Partnership has invested is as follows:

 

COMBINED CONDENSED STATEMENTS OF OPERATIONS
		2010				2009
Revenues		$	1,741,000			$	2,064,000
Expenses:
Interest expense			308,000				417,000
Depreciation and amortization			494,000				601,000
Operating expenses			1,226,000				1,394,000
Total expenses			2,028,000				2,412,000
Net loss		$	(287,000	)		$	(348,000	)
Net loss allocable to the Partnership		$	(302,000	)		$	(361,000	)
Net loss recorded by the Partnership		$	4,000			$	(23,000	)

 

Selected financial information for the nine months ended December 31, 2010 and 2009 from the unaudited combined condensed financial statements of the Local Limited Partnerships in which the Partnership has invested is as follows:

 

COMBINED CONDENSED STATEMENTS OF OPERATIONS
		2010				2009
Revenues		$	2,611,000			$	3,096,000
Expenses:
Interest expense			462,000				626,000
Depreciation and amortization			740,000				901,000
Operating expenses			1,840,000				2,092,000
Total expenses			3,042,000				3,619,000
Net loss		$	(431,000	)		$	(523,000	)
Net loss allocable to the Partnership		$	(453,000	)		$	(542,000	)
Net loss recorded by the Partnership		$	12,000			$	(23,000	)

 

Certain Local Limited Partnerships have incurred significant operating losses and/or have working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partners may be required to sustain the operations of such Local Limited Partnerships. If additional capital contributions are not made when they are required, the Partnership’s investment in certain of such Local Limited Partnerships could be impaired, and the loss and recapture of the related Low Income Housing Tax Credits could occur.

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

Troubled Housing Complexes

 

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 was 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%. The investment balance for Lamar Plaza was $0 as of all periods presented. No recapture of Low Income Housing Tax Credits was experience subsequent to the sale of this Local Limited Partnership.

 

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.

 

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 was $0 as of all periods presented. The Compliance Period for Wynwood Place ends on December 31, 2013.

 

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

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

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

 

The Partnership was advised during the year ended 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.

 

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 was $0 as of all periods presented. The Compliance Period for Mesa Verde ended on December 31, 2012.

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

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 was 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. No recapture of Low Income Housing Tax Credits was experience subsequent to the sale of this Local Limited Partnership.

 

NOTE 3 - RELATED PARTY TRANSACTIONS

 

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

 

	(a)	Acquisition fees of up to 7.5% of the gross proceeds from the sale of Partnership Units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships. At the end of all periods presented, the Partnership incurred acquisition fees of $1,630,375. Accumulated amortization of these capitalized costs was$14,400, $16,200, $18,000 and $12,600 as of June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2010, respectively. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. If an impairment loss related to the acquisition expenses is recorded, the accumulated amortization is reduced to zero at that time.
	(b)	Reimbursement of costs incurred by the General Partner or an affiliate of Associates in connection with the acquisition of Local Limited Partnerships. These reimbursements have not exceeded 1% of the gross proceeds. As of the end of all periods presented, the Partnership incurred acquisition costs of $167,533, which have been included in investments in Local Limited Partnerships. As of all periods presented, the acquisition costs were fully amortized.
	(c)	An annual asset management fee equal to the greater amount of (i) $2,000 for each Housing complex, or (ii) 0.275% of gross proceeds. In either case, the fee will be decreased or increased annually based on changes to the Consumer Price Index. However, in no event will the maximum amount exceed 0.2% of the Invested Assets of the Partnerships, as defined. “Invested assets” means the sum of the Partnership’s Investment in Local Limited Partnerships and the Partnership’s allocable share of the amount of the mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Asset management fees of $14,081 and $15,125 were incurred during each of the three months ended June 30, 2010 and 2009. For each of the six months ended September 30, 2010 and 2009, the Partnership incurred asset management fees of $28,162 and $30,250. Management fees of $42,293 and $45,375 were incurred during each of the nine months ended December 31, 2010 and 2009. No payments were made by the Partnership to the General Partner or affiliates for accrued asset management fees during any of the periods presented.

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 3 - RELATED PARTY TRANSACTIONS, continued

 

	(d)	A subordinated disposition fee in an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the limited partners receiving a preferred return of 14% through December 31, 2010 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort. No such fee was incurred for all periods presented.
	(e)	The Partnership reimburses the General Partner or its affiliates for operating expenses incurred on behalf of the Partnership. Operating expense reimbursements were $25,000 and$0 during the three months ended June 30, 2010 and 2009, respectively. For the six months ended September 30, 2010 and 2009, the Partnership reimbursed operating expenses of $115,900 and$0, respectively. For the nine months ended December 31, 2010 and 2009, operating expense reimbursements were $115,900 and $0, respectively.

 

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

 

		June 30, 2010				September 30, 2010				December 31, 2010				March 31, 2010
Asset management fee payable		$	163,300			$	177,381			$	191,462			$	149,219
Advances made to the Partnership from General Partner or affiliates			39,427				29,427				29,427				59,449
Expenses paid by the General Partners or an affiliate on behalf of the Partnership			100,043				14,907				17,450				102,759
Total		$	302,770			$	221,715			$	238,339			$	311,427

 

NOTE 4 – PAYABLES TO LOCAL LIMITED PARTNERSHIPS

 

Payables to Local Limited Partnerships represent amounts which are due at various times based on conditions specified in the Local Limited Partnership agreements. These contributions are payable in installments and are generally due upon the Local Limited Partnerships achieving certain operating and development benchmarks (generally within two years of the Partnership’s initial investment). As of June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2010$39,310 was payable.

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 5 –ADVANCES TO LOCAL LIMITED PARTNERSHIPS

 

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

 

As of June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2010 the Partnership in total had advanced $280,031, $280,031, $280,031, and $280,031, respectively to one Local Limited Partnership, Ashford Place Limited Partnership, in which the Partnership is a limited partner. These advances were used to pay for the property taxes, mortgage payments and operational expenses. All advances were reserved in full in the year they were advanced.

 

As of June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2010 the Partnership in total had advanced $4,939, $4,939, $4,939, and $4,939, respectively to one Local Limited Partnership, Wynwood Place Limited Partnership, in which the Partnership is a limited partner. These advances were used to pay for the property taxes, mortgage payments and operational expenses. All advances were reserved in full in the year they were advanced.

 

NOTE 6 –SUBSEQUENT EVENTS

 

Subsequent to December 31, 2010, the Partnership identified and sold the Housing Complexes of 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 D. Hilltop Apartments, Ltd., Woodland, Ltd., Greyhound Associates I, L.P, and Crescent City Apartment, a CA Limited Partnership (“Crescent”) subsequent to December 31, 2010.

 

The following table reflects dispositions that occurred subsequent to December 31, 2010:

 

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
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
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.

 

 

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

(A California Limited Partnership)

 

NOTES TO CONDENSED FINANCIAL STATEMENTS-CONTINUED

 

For the Quarterly periods ended June 30, 2010, September 30, 2010 and

December 31, 2010

(unaudited)

 

NOTE 6 –SUBSEQUENT EVENTS, continued

 

The following table represents the use of the cash proceeds from the disposition of the Local Limited Partnerships that were disposed of subsequent to December 31, 2010:

 

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
The North Central Limited Partnership		$	225,967			$	36,000			$	88,719			$	101,248
Blessed Rock of El Monte, a CA Partnership			2,355,384				25,852				966,695				1,362,837
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 December 31, 2010, 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		01/31/2014		$	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 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward Looking Statements

 

With the exception of the discussion regarding historical information, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other discussions elsewhere in this Form 10-Q contain forward looking statements. Such statements are based on current expectations subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied. Further, certain forward-looking statements are based upon assumptions about future events which may not prove to be accurate.

 

Risks and uncertainties inherent in forward looking statements include, but are not limited to, the Partnership’s future cash flows and ability to obtain sufficient financing, level of operating expenses, conditions in the Low Income Housing Tax Credit property market and the economy in general, as well as legal proceedings. Historical results are not necessarily indicative of the operating results for any future period.

 

Subsequent written and oral forward looking statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by cautionary statements in this Form 10-Q and in other reports filed with the Securities and Exchange Commission.

 

The following discussion and analysis compares the results of operations for the three months ended June 30, 2010 and 2009, the three and six months ended September 30, 2010 and 2009, and the three and nine months ended December 31, 2010 and 2009, and should be read in conjunction with the combined condensed financial statements and accompanying notes included within this report.

 

Financial Condition

 

The Partnership’s assets at June 30, 2010 consisted primarily of $56,000 in cash, aggregate investments in the thirteen Local Limited Partnerships of $604,000 and sales proceeds receivable of $68,000. Liabilities at June 30, 2010 primarily consisted of$39,000 of payables to Local Limited Partnerships and $303,000 of accrued fees and expenses due to the General Partner and/or its affiliates.

 

The Partnership’s assets at September 30, 2010 consisted primarily of $14,000 in cash, aggregate investments in the thirteen Local Limited Partnerships of $593,000 and sales proceeds receivable of $38,000. Liabilities at September 30, 2010 primarily consisted of $39,000 of payables to Local Limited Partnerships and $222,000 of accrued fees and expenses due to the General Partner and/or its affiliates.

 

The Partnership’s assets at December 31, 2010 consisted primarily of $64,000 in cash, aggregate investments in the twelve Local Limited Partnerships of $600,000 and sales proceeds receivable of $8,000. Liabilities at December 31, 2010 primarily consisted of $39,000 of payables to Local Limited Partnerships and $238,000 of accrued fees and expenses due to the General Partner and/or its affiliates.

 

 

Results of Operations

 

Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009 The Partnership’s net income for the three months ended June 30, 2010 was $13,000 reflecting an increase of approximately $245,000 from the net loss of $(232,000) for the three months ended June 30, 2009. The increase was primarily due to the increase of $137,000 gain on sale of Local Limited partnerships for the three months ended June 30, 2010. The gain on sale of Local Limited partnerships will vary from period to period, depending on the number of Housing Complexes that have been identified for disposition, the values of such Housing Complexes and the closing dates of transactions. There was a decrease in impairment loss of $99,000 for the three months ended June 30, 2010. The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership and the current estimated residual value of the investments compared to the current carrying value of each of the investments. No advances were made to the Local Limited Partnerships during the three months ended June 30, 2010 compared to $(36,000) advanced and reserved for during the three months ended June 30, 2009. The advances made to the troubled Local Limited Partnership can vary each year depending on the operations of each Local Limited Partnership. There was a decrease in equity in losses of Local Limited Partnerships of $17,000 for the three months ended June 30, 2010. The equity in losses can vary each year depending on the operations of each of the Local Limited Partnerships. Total operating income decreased by $(29,000) for the three months ended June 30, 2010 compared to the three months ended June 30, 2009 due to the fact that Local Limited Partnerships pay the reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flows will allow for the payment. Accounting and legal fees increased by $(12,000) for the three months ended June 30, 2010 compared to the three months ended June 30, 2009 due to the timing of accounting work performed.

 

Three Months Ended September 30, 2010 Compared to the Three Months Ended September 30, 2009 The Partnership’s net loss for the three months ended September 30, 2010 was $(2,000), reflecting a decrease of approximately $53,000 from the net loss of $(55,000) for the three months ended September 30, 2009. There was an increase of equity in income of Local Limited Partnerships of $9,000 for the three months ended September 30, 2010. The equity in income (losses) can vary each year depending on the operations of each of the Local Limited Partnerships. Additionally, total operating income increased by $5,000 for the three months ended September 30, 2010 compared to the three months ended September 30, 2009 due to the fact that Local Limited Partnerships pay the reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flows will allow for the payment. There were no advances made to the Local Limited Partnerships during the three months ended September 30, 2010 compared to $(38,000) advanced and reserved for during the three months ended September 30, 2009. The advances made to the troubled Local Limited Partnership can vary each year depending on the operations of each Local Limited Partnership. Accounting and legal fees increased by $(1,000) for the three months ended September 30, 2010 compared to the three months ended September 30, 2009 due to the timing of accounting work performed.

 

Six Months Ended September 30, 2010 Compared to the Six Months Ended September 30, 2009 The Partnership’s net income for the six months ended September 30, 2010 was $11,000, reflecting a change of approximately $298,000 from the net loss of $(287,000) for the six months ended September 30, 2009. The increase was primarily due to the increase of $137,000 in gain on sale of Local Limited partnerships for the six months ended September 30, 2010. The gain on sale of Local Limited partnerships will vary from period to period, depending on the number of Housing Complexes that have been identified for disposition, the values of such Housing Complexes and the closing dates of transactions. There was a decrease in impairment loss of $99,000 for the six months ended September 31, 2010. The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership and the current estimated residual value of the investments compared to the current carrying value of each of the investments. There was also an increase in equity in income of Local Limited Partnerships of $26,000 for the six months ended September 30, 2010. The equity in income(losses) can vary each year depending on the operations of each of the Local Limited Partnerships. Total operating income decreased by $(24,000) for the six months ended September 30, 2010 compared to the six months ended September 30, 2008 due to the fact that Local Limited Partnerships pay the reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flows will allow for the payment. There were no advances made during the six months ended September 30, 2010 compared to $(74,000) advanced and reserved for during the three months ended September 30, 2009. The advances made to the troubled Local Limited Partnership can vary each year depending on the operations of each Local Limited Partnership. Accounting and legal fees increased by $(13,000) for the six months ended September 30, 2010 compared to the six months ended September 30, 2009 due to the timing of accounting work performed. There was also a $2,000 decrease of asset management fees for the six months ended September 30, 2010. These fees are calculated based on the value of invested assets. As Local Limited Partnerships are sold, the invested assets decrease, thereby decreasing the asset management fees.

 

 

Three Months Ended December 31, 2010 Compared to the Three Months Ended December 31, 2009 The Partnership’s net income for the three months ended December 31, 2010 was $11,000, reflecting an increase of approximately $95,000 from the net loss of $(84,000) for the three months ended December 31, 2009. Advances of $(60,000) were made to several Local Limited partnerships which were reserved in full during the three months ended December 31, 2009 compared to no such advances made during the three months ended December 31, 2010. The advances made to the troubled Local Limited Partnership can vary each year depending on the operations of each Local Limited Partnership. There was an increase in equity in net losses of Local Limited Partnerships of $9,000 for the three months ended December 31, 2010. The equity in income (losses) can vary each year depending on the operations of each of the Local Limited Partnerships. Accounting and legal fees decreased by $5,000 for the three months ended December 31, 2010 compared to the three months ended December 31, 2009 due to the timing of accounting work performed. There was an increase of $20,000 in gain on sale of Local Limited Partnerships for the three months ended December 31, 2010. The gain on sale of Local Limited partnerships will vary from period to period, depending on the number of Housing Complexes that have been identified for disposition, the values of such Housing Complexes and the closing dates of transactions.

 

Nine Months Ended December 31, 2010 Compared to Nine Months Ended December 31, 2009 The Partnership’s net income for the nine months ended December 31, 2010 was $22,000, reflecting a change of approximately $393,000 from the net loss of $(371,000) for the nine months ended December 31, 2009. The change is largely due to an increase of $157,000 in gain on sale of Local Limited Partnerships for the nine months ended December 31, 2010 compared to the nine months ended December, 2009. The gains recorded vary based on sales prices and values of the Local Limited Partnerships sold. There was a decrease in impairment loss of $99,000 for the nine months ended December 31, 2010. The impairment loss can vary each year depending on the annual decrease in Low Income Housing Tax Credits allocated to the Partnership and the current estimated residual value of the investments compared to the current carrying value of each of the investments. Additionally, there was an increase of equity in income of Local Limited Partnerships of $35,000 for the nine months ended December 31, 2010. The equity in income(losses) can vary each year depending on the operations of each of the Local Limited Partnerships. Total operating income decreased by $(24,000) for the nine months ended December 31, 2010 compared to the nine months ended December 31, 2009 due to the fact that Local Limited Partnerships pay the reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flows will allow for the payment. There were no advances made during the nine months ended December 31, 2010 compared to $(135,000) advanced and reserved for during the nine months ended December 31, 2009. The advances made to the troubled Local Limited Partnership can vary each year depending on the operations of each Local Limited Partnership. Accounting and legal fees increased by $(7,000) for the nine months ended December 31, 2010 compared to the nine months ended December 31, 2009 due to the timing of accounting work performed. There was also a $3,000 decrease of asset management fees for the nine months ended December 31, 2010. These fees are calculated based on the value of invested assets. As Local Limited Partnerships are sold, the invested assets decrease, thereby decreasing the asset management fees.

 

 

Capital Resources and Liquidity

 

Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009 Net cash provided during the three months ended June 30, 2010 was $30,000, compared to the three months ended June 30, 2009 of $34,000. During the three months ended June 30, 2009 the Partnership advanced $(36,000) to a Local Limited Partnership that was experiencing operational issues compared to no such advances made for the three months ended June 30, 2010 as discussed above. The Partnership reimbursed the General Partner or affiliates $(25,000) during the three months ended June 30, 2010 compared to no payment made during the three months ended June 30, 2009 for reimbursements of operating expenses paid on its behalf. The reimbursements of operating expenses are paid after management reviews the cash position of the Partnership. During the three months ended June 30, 2010, the Partnership received $69,000 in net cash proceeds from the disposition of one of its Local Limited Partnerships interest. The proceeds received will vary from period to period, depending on the number of Housing Complexes that have been identified for disposition, the values of such Housing Complexes, and the closing dates of such transactions. Reporting fees decreased by $(34,000) and distributions increased by $5,000 for the three months ended June 30, 2010, due to the fact that Local Limited Partnerships pay reporting fees and distributions to the Partnership when the Local Limited Partnership’s cash flows allow for the payment.

 

Six Months Ended September 30, 2010 Compared to Six Months Ended September 30, 2009 Net cash used during the six months ended September 30, 2010 was $(12,000), compared to the six months ended September 30, 2009 of $1,000. The Partnership reimbursed the General Partner or affiliates $(116,000) during the six months ended September 30, 2010 for operating expenses compared to no such payment made during the three months ended September 30, 2009. The reimbursements of operating expenses are paid after management reviews the cash position of the Partnership. The Partnership made no advances to a Local Limited Partnership during the six months ended September 30, 2010 compared to $(74,000) advanced during the six months ended September 30, 2009 as discussed above. Reporting fees decreased by $(23,000) and distributions increased by $17,000 for the six months ended September 30, 2010, due to the fact that Local Limited Partnerships pay reporting fees and distributions to the Partnership when the Local Limited Partnership’s cash flows allow for the payment. During the six months ended September 30, 2010, the Partnership received $99,000 in proceeds from the sale of a Local Limited Partnership. The proceeds received will vary from period to period, depending on the number of Housing Complexes that have been identified for disposition, the values of such Housing Complexes, and the closing dates of such transactions.

 

Nine Months Ended December 31, 2010 Compared to Nine Months Ended December 31, 2009 Net cash provided during the nine months ended December 31, 2010 was $38,000, compared to the nine months ended December 31, 2009 of $1,000. The change is due primarily to the fact that during the nine months ended December 31, 2010, the Partnership received $149,000 in proceeds from the sale of Local Limited Partnerships. The proceeds received will vary from period to period, depending on the number of Housing Complexes that have been identified for disposition, the values of such Housing Complexes, and the closing dates of such transactions. During the nine months ended December 31, 2009, the partnership advanced $(135,000) to a Local Limited partnership which was experiencing operational issues compared to no such advances made during the nine months ended December 31, 2010 as discussed above. The Partnership reimbursed the General Partner or affiliates $(116,000) during the nine months ended December 31, 2010 for operating expenses compared to no such payment made during the nine months ended December 31, 2009. The reimbursements of operating expenses are paid after management reviews the cash position of the Partnership. Reporting fees decreased by $(23,000) and distributions increased by $17,000 for the nine months ended September 30, 2010, due to the fact that Local Limited Partnerships pay reporting fees and distributions to the Partnership when the Local Limited Partnership’s cash flows allow for the payment.

 

 

Recent Accounting Changes

 

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 had no 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 had no 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 did not 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 had no 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 the Form 10-K.

 

 

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 did not 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 did not 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.

 

 

Item 3.		Quantitative and Qualitative Disclosures About Market Risks
		NOT APPLICABLE
Item 4.		Controls and Procedures

 

(a)		Disclosure controls and procedures
		As of the end of the periods covered by this report, the Partnership’s General Partner, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of Associates, carried out an evaluation of the effectiveness of the Partnership’s “disclosure controls and procedures” as defined in Securities Exchange Act of 1934 Rule 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Partnership’s disclosure controls and procedures were not effective to ensure that material information required to be disclosed in the Partnership’s periodic report filings with SEC is recorded, processed, summarized and reported within the time period specified by the SEC’s rules and forms, consistent with the definition of “disclosure controls and procedures” under the Securities Exchange Act of 1934.
		The Partnership must rely on the Local Limited Partnerships to provide the Partnership with certain information necessary to the timely filing of the Partnership’s periodic reports. Factors in the accounting at the Local Limited Partnerships have caused delays in the provision of such information during past reporting periods, and resulted in the Partnership’s inability to file its periodic reports in a timely manner.
		Once the Partnership has received the necessary information from the Local Limited Partnerships, the Chief Executive Officer and the Chief Financial Officer of Associates believe that the material information required to be disclosed in the Partnership’s periodic report filings with SEC is effectively recorded, processed, summarized and reported, albeit not in a timely manner. Going forward, the Partnership will use the means reasonably within its power to impose procedures designed to obtain from the Local Limited Partnerships the information necessary to the timely filing of the Partnership’s periodic reports.
(b)		Changes in internal controls
		There were no changes in the Partnership’s internal control over financial reporting that occurred during the quarters ended June 30, 2010, September 30, 2010 and December 31, 2010 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

 

 

Part II.		Other Information
Item 1.		Legal Proceedings
		NONE
Item 1A.		Risk Factors
		No material changes in risk factors as previously disclosed in the Partnership’s Form 10-K.
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds
		NONE
Item 3.		Defaults Upon Senior Securities
		NONE
Item 4.		Mine Safety Disclosures
		NONE
Item 5.		Other Information
		NONE
Item 6.		Exhibits
31.1		Certification of the Principal Executive Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
31.2		Certification of the Principal Financial Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)
32.1		Section 1350 Certification of the Chief Executive Officer. (filed herewith)
32.2		Section 1350 Certification of the Chief Financial Officer. (filed herewith)
101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Balance Sheets at June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2009, (ii) the Condensed Statements of Operations for the three months ended June 30, 2010 and 2009, the three and six months ended September 30, 2010 and 2009 and the three and nine months ended December 31, 2010 and 2009 (iii) the Condensed Statements of Partners’ Equity (Deficit) for the three, six, and nine-month periods ended June 30, 2010, September 30, 2010, December 31, 2010 (iv) the Condensed Statements of Cash Flows for the three months ended June 30, 2010 and 2009, the six months ended September 30, 2010 and 2009 and the nine months ended December 31, 1010 and 2009 (v) the Notes to Condensed Financial Statements.
		Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.

 

 

SIGNATURES

 

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

 

WNC HOUSING TAX CREDIT FUNDV, L.P., SERIES 4

 

By: WNC & ASSOCIATES, INC.         General Partner

 

By:	/s/ Wilfred N. Cooper, Jr.
Wilfred N. Cooper, Jr.
President and Chief Executive Officer of WNC & Associates, Inc

 

Date: November 4, 2013

 

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

 

Date: November 4, 2013