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EX-32.2 - EXHIBIT 32.2 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex32-2.htm
EX-31.2 - EXHIBIT 31.2 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex31-2.htm
EX-32.1 - EXHIBIT 32.1 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - WNC HOUSING TAX CREDIT FUND V LP SERIES 4ex31-1.htm
EXCEL - IDEA: XBRL DOCUMENT - WNC HOUSING TAX CREDIT FUND V LP SERIES 4Financial_Report.xls

 

 

  

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, 2011

For the quarterly period ended September 30, 2011

For the quarterly period ended December 31, 2011

 

OR

 

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

 

For the transition period from ________ to ___________

 

Commission file number: 0-21897

 

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, 2011, September 30, 2011

and December 31, 2011

 

PART I. FINANCIAL INFORMATION    
       
Item 1. Financial Statements   F-1
       
  Condensed Balance Sheets  
  As of June 30, 2011, September 30, 2011, December 31, 2011 and March 31, 2011   F-1
       
  Condensed Statements of Operations    
  For the Three Months Ended June 30, 2011 and 2010   F-2
  For the Three and Six Months Ended September 30, 2011 and 2010   F-3
  For the Three and Nine Months Ended December 31, 2011 and 2010   F-4
       
  Condensed Statements of Partners’ Equity    
  For the Three Months Ended June 30, 2011   F-5
  For the Six Months Ended September 30, 2011   F-5
  For the Nine Months Ended December 31, 2011   F-5
       
  Condensed Statements of Cash Flows    
  For the Three Months Ended June 30, 2011 and 2010   F-6
  For the Six Months Ended September 30, 2011 and 2010   F-7
  For the Nine Months Ended December 31, 2011 and 2010   F-8
       
  Notes to Condensed Financial Statements   F-9 - F-24
       
Item 2. Management’s Discussion and Analysis of Financial  Condition and Results of Operations   3
       
Item 3. Quantitative and Qualitative Disclosures About Market Risk   8
       
Item 4. Controls and Procedures   8
       
PART II. OTHER INFORMATION   9
       
Item 1. Legal Proceedings   9
       
Item 1A. Risk Factors   9
       
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   9
       
Item 3. Defaults Upon Senior Securities   9
       
Item 4. Mine Safety Disclosures   9
       
Item 5. Other Information   9
       
Item 6. Exhibits.   9
       
  Signatures   10

 

2
 

 

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, 2011     September 30, 2011     December 31, 2011     March 31, 2011  
ASSETS                                
                                 
Cash   $ 144,707     $ 146,641     $ 85,466     $ 153,987  
Prepaid expenses     22,333       -       -       28,130  
Investments in Local Limited Partnerships, net (Notes 2 and 3)     606,478       614,097       621,716       606,786  
                                 
Total Assets   $ 773,518     $ 760,738     $ 707,182     $ 788,903  
                                 
LIABILITIES AND PARTNERS’ EQUITY                                
                                 
Liabilities:                                
Payables to Local Limited Partnerships (Note 4)   $ 33,810     $ 33,810     $ 33,810     $ 33,810  
Accrued fees and expenses due to General Partner and affiliates (Note 3)     119,328       121,845       138,429       131,632  
Accounts Payable     -       -       -       920  
                                 
Total Liabilities     153,138       155,655       172,239       166,362  
                                 
Partners’ Equity:                                
General Partner     44,247       44,094       43,393       44,269  
Limited Partners (25,000 Partnership Units authorized; 21,990, 21,955, 21,955, and 21,955 Partnership Units issued and outstanding)     576,133       560,989       491,550       578,272  
                                 
Total Partners’ Equity     620,380       605,083       534,943       622,541  
Total Liabilities and Partners’ Equity   $ 773,518     $ 760,738     $ 707,182     $ 788,903  

 

See accompanying notes to condensed financial statements

 

F-1
 

 

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, 2011 and 2010

(unaudited)

 

   2011   2010 
   Three Months   Three Months 
Reporting fees  $6,000   $- 
Distribution income   5,786    5,000 
Total operating income   11,786    5,000 
           
Operating expenses and loss:          
Amortization (Note 3)   1,800    1,800 
Asset management fees (Note 3)   12,696    14,081 
Impairment loss (Note 2)   -    87,338 
Legal and accounting fees   1,026    15,131 
Write off of advances to Local Limited Partnerships (Note 5)   4,020    - 
Other   3,851    7,153 
           
Total operating expenses and loss   23,393    125,503 
           
Loss from operations   (11,607)   (120,503)
           
Equity in income (losses) of Local Limited Partnerships (Note 2)   9,419    (4,970)
           
Gain on sale of Local Limited Partnerships (Note 2)   -    137,413 
           
Interest income   27    840 
           
Net income (loss)  $(2,161)  $12,780 
           
Net income (loss) allocated to:          
General Partner  $(22)  $128 
Limited Partners  $(2,139)  $12,652 
           
Net income (loss) per Partnership Unit  $-   $1 
           
Outstanding weighted Partnership Units   21,990    21,990 

 

See accompanying notes to condensed financial statements

 

F-2
 

  

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, 2011 and 2010

(unaudited)

 

   2011   2010 
   Three   Six   Three   Six 
   Months   Months   Months   Months 
                 
Reporting fees  $1,916   $7,916   $10,581   $10,581 
Distribution income   -    5,786    -    5,000 
Total operating income   1,916    13,702    10,581    15,581 
                     
Operating expenses and loss:                    
Amortization (Note 3)   1,800    3,600    1,800    3,600 
Asset management fees (Note 3)   12,696    25,392    14,081    28,162 
Impairment loss (Note 2)   -    -    -    87,338 
Legal and accounting fees   1,101    2,127    5,180    20,311 
Write off of advances to Local Limited Partnerships
(Note 5)
   -    4,020    -    - 
Other   11,053    14,904    584    7,737 
                     
Total operating expenses and loss   26,650    50,043    21,645    147,148 
                     
Loss from operations   (24,734)   (36,341)   (11,064)   (131,567)
                     
Equity in income of Local Limited Partnerships (Note 2)   9,419    18,838    8,552    3,582 
                     
Gain on sale of Local Limited Partnerships (Note 2)   -    -    -    137,413 
                     
Interest income   18    45    879    1,719 
                     
Net income (loss)  $(15,297)  $(17,458)  $(1,633)  $11,147 
                     
Net income (loss) allocated to:                    
General Partner  $(153)  $(175)  $(17)  $111 
Limited Partners  $(15,144)  $(17,283)  $(1,616)  $11,036 
                     
Net income (loss) per Partnership Unit  $(1)  $(1)  $-   $1 
                     
Outstanding weighted Partnership Units   21,955    21,955    21,990    21,990 

 

See accompanying notes to condensed financial statements

 

F-3
 

  

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, 2011 and 2010

(unaudited)

 

   2011 2010 
   Three   Nine   Three   Nine 
   Months   Months   Months   Months 
                 
Reporting fees  $-   $7,916   $-   $10,581 
Distribution income   -    5,786    -    5,000 
Total operating income   -    13,702    -    15,581 
                     
Operating expenses and loss:                    
Amortization (Note 3)   1,800    5,400    1,800    5,400 
Asset management fees (Note 3)   12,696    38,088    14,131    42,293 
Impairment loss (Note 2)   -    -    -    87,338 
Legal and accounting fees   2,804    4,931    -    20,311 
Write off of advances to Local Limited Partnerships
(Note 5)
   61,190    65,210    -    - 
Other   1,084    15,988    2,492    10,229 
                     
Total operating expenses and loss   79,574    129,617    18,423    165,571 
                     
Loss from operations   (79,574)   (115,915)   (18,423)   (149,990)
                     
Equity in income (losses) of Local Limited Partnerships
(Note 2)
   9,419    28,257    8,553    12,135 
                     
Gain on sale of Local Limited Partnerships (Note 2)   -    -    20,000    157,413 
                     
Interest income   15    60    422    2,141 
                     
Net income (loss)  $(70,140)  $(87,598)  $10,552   $21,699 
                     
Net income (loss) allocated to:                    
General Partner  $(701)  $(876)  $106   $217 
Limited Partners  $(69,439)  $(86,722)  $10,446   $21,482 
                    
Net income (loss) per Partnerships Unit  $(3)  $(4)  $0   $1 
                     
Outstanding weighted Partnership Units   21,955    21,955    21,990    21,990 

 

See accompanying notes to condensed financial statements

 

F-4
 

 

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, 2011, Six Months Ended September 30, 2011
and Nine Months Ended December 31, 2011

(unaudited)

 

For the Three Months Ended June 30, 2011
 
   General   Limited     
   Partner   Partners   Total 
             
Partners’ equity at March 31, 2011  $44,269   $578,272   $622,541 
                
Net loss   (22)   (2,139)   (2,161)
                
Partners’ equity at June 30, 2011  $44,247   $576,133   $620,380 

 

For the Six Months Ended September 30, 2011
 
   General   Limited     
   Partner   Partners   Total 
             
Partners’ equity at March 31, 2011  $44,269   $578,272   $622,541 
                
Net loss   (175)   (17,283)   (17,458)
                
Partners’ equity at September 30, 2011  $44,094   $560,989   $605,083 

 

For the Nine Months Ended December 31, 2011
 
   General   Limited     
   Partner   Partners   Total 
             
Partners’ equity at March 31, 2011  $44,269   $578,272   $622,541 
                
Net loss   (876)   (86,722)   (87,598)
                
Partners’ equity at December 31, 2011  $43,393   $491,550   $534,943 

 

See accompanying notes to condensed financial statements

  

F-5
 

 

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, 2011 and 2010

(unaudited)

 

   2011   2010 
Cash flows from operating activities:          
Net income (loss)  $(2,161)  $12,780 
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Amortization   1,800    1,800 
Impairment loss   -    87,338 
Equity in (income) losses of Local Limited Partnerships   (9,419)   4,970 
Decrease in prepaid expenses   5,797    - 
Decrease in accrued fees and expenses due to General Partner and affiliates   (13,224)   (8,657)
Gain on sale of Local Limited Partnerships   -    (137,413)
Net cash used in operating activities   (17,207)   (39,182)
           
Cash flows from investing activities:          
Net proceeds from sale of Local Limited Partnerships   -    69,438 
Advances made to Local Limited Partnerships   (4,020)   - 
Write off of advances made to Local Limited Partnerships   4,020    - 
Distributions received from Local Limited Partnerships   7,927    - 
Net cash provided by investing activities   7,927    69,438 
           
Net increase (decrease) in cash   (9,280)   30,256 
           
Cash, beginning of period   153,987    25,677 
           
Cash, end of period  $144,707   $55,933 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
           
Taxes paid  $-   $- 

 

See accompanying notes to condensed financial statements

 

F-6
 

 

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, 2011 and 2010

(unaudited)

 

   2011   2010 
Cash flows from operating activities:          
Net income (loss)  $(17,458)  $11,147 
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Amortization   3,600    3,600 
Impairment loss   -    87,338 
Equity in income of Local Limited Partnerships   (18,838)   (3,582)
Decrease in prepaid expenses   28,130    - 
Decrease in accrued fees and expenses due to General Partner and affiliates   (10,707)   (89,712)
Gain on sale of Local Limited Partnerships   -    (137,413)
Net cash used in operating activities   (15,273)   (128,622)
          
Cash flows from in investing activities:          
Net proceeds from sale of Local Limited Partnerships   -    99,440 
Advances made to Local Limited Partnerships   (4,020)   - 
Write off of advances made to Local Limited Partnerships   4,020    - 
Distributions received from Local Limited Partnerships   7,927    17,137 
Net cash provided by investing activities   7,927    116,577 
           
Net decrease in cash   (7,346)   (12,045)
           
Cash, beginning of period   153,987    25,677 
           
Cash, end of period  $146,641   $13,632 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
           
Taxes paid  $-   $- 

 

See accompanying notes to condensed financial statements

 

F-7
 

 

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, 2011 and 2010

(unaudited)

 

   2011   2010 
Cash flows from operating activities:          
Net income (loss)  $(87,598)  $21,699 
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Amortization   5,400    5,400 
Impairment loss   -    87,338 
Equity in income of Local Limited Partnerships   (28,257)   (12,135)
Decrease in prepaid expenses   28,130    - 
Increase (decrease) in accrued fees and expenses due to          
General Partner and affiliates   5,877    (73,088)
Gain on sale of Local Limited Partnerships   -    (157,413)
Net cash used in operating activities   (76,448)   (128,199)
           
Cash flows from investing activities:          
Net proceeds from sale of Local Limited Partnerships   -    149,440 
Advances made to Local Limited Partnerships   (65,210)   - 
Write off of advances made to Local Limited Partnerships   65,210    - 
Distributions received from Local Limited Partnerships   7,927    17,137 
Net cash provided by investing activities   7,927    166,577 
           
Net increase (decrease) in cash   (68,521)   38,378 
           
Cash, beginning of period   153,987    25,677 
           
Cash, end of period  $85,466   $64,055 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
          
           
Taxes paid  $-   $- 

 

F-8
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(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, 2011, six months ended September 30, 2011 and nine months ended December 31, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2012. 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, 2011.

 

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 June 30, September 30, and December 31, 2011 the Partnership Units that remain outstanding were 21,990, 21,955, and 21,955, respectively. 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.

 

F-9
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(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

 

F-10
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(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.

 

As of June 30, September 30, and December 31, 2011, 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.

 

Anticipated future and existing cash resources of the Partnership are not sufficient to pay existing liabilities of the Partnership. However, substantially all of the existing liabilities of the Partnership are payable to the General Partner and/or its affiliates. Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.

 

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

 

Exit Strategy

 

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

 

Upon the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits. A sale prior to the end of the Compliance Period could result in recapture if certain conditions are not met. Two 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, 2011.

 

F-11
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

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

 

As of March 31, 2011, the Partnership sold the Housing Complexes of Mesa Verde Apartments, L.P, The North Central Limited Partnership, and the Local Limited Partnership Interest in Lamar Plaza Apartments, LP.

 

Subsequent to December 31, 2011,the Partnership identified and sold the Housing Complexes of 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 subsequent to December 31, 2011. The Compliance Period for all Local Limited Partnerships had expired as the date of sale so there was no risk of tax credit recapture to the investors in the Partnership.

 

The following table reflects dispositions that occurred subsequent to December 31, 2011:

 

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 
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 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, 2011:

 

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
 
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 

 

F-12
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

Subsequent to December 31, 2011, 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.

 

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 income (losses) of Local Limited Partnerships” for each year of the periods ended June 30, September 30 and December 31, 2011 and 2010 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, 2011, respectively, as soon as the investment balance reached zero, the related costs for acquiring the investment were written off.

 

F-13
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

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.

 

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, 2011, September 30, 2011, December 31, 2011, and March 31, 2011, ten 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.

 

F-14
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 

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.

 

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, 2011 and 2010 was $0 and $87,338, respectively. For the six months ended September 30, 2011 and 2010, impairment loss of $0 and $87,338, respectively, was recorded. Impairment loss for the nine months ended December 31, 2011 and 2010 was $0 and $87,338, 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, 2011 and 2010 was $1,800. For the six months ended September 30, 2011 and 2010 amortization expense was $3,600. For the nine months ended December 31, 2011 and 2010 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.

 

F-15
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

 

As of June 30, September 30, December 31, 2011, and March 31, 2011 the Partnership has acquired limited partnership interests in eleven Local Limited Partnerships, each of which owns one Housing Complex consisting of an aggregate of 597 apartment units. The respective Local General Partners of the Local Limited Partnerships manage the day to day operations of the entities. Significant Local Limited Partnership business decisions, as defined, require approval from the Partnership. The Partnership, as a Limited Partner, is generally entitled to 98.98% to 99.98%, except for one Local Limited Partnership which the Partnership is entitled to 49.50%, as specified in the Local Partnership agreements, of the operating profits and losses, taxable income and losses, and Low Income Housing Tax Credits of the Local Limited Partnerships.

 

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, 2011 and 2010 was $0 and $87,338, respectively. For the six months ended September 30, 2011 and 2010, impairment loss of $0 and $87,338, respectively, was recorded. Impairment loss for the nine months ended December 31, 2011 and 2010 was $0 and $87,338, 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, 2011
   For the Year Ended
March 31, 2011
 
Investments per balance sheet, beginning of period  $606,786   $697,775 
Impairment loss   -    (87,338)
Equity in income of Local Limited Partnerships   9,419    20,687 
Distributions received from Local Limited Partnerships   (7,927)   (17,138)
Amortization of capitalized acquisition fees and costs   (1,800)   (7,200)
Investments per balance sheet, end of period  $606,478   $606,786 

 

F-16
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

   For the Six Months Ended
September 30, 2011
  

For the Year

Ended
March 31, 2011

 
Investments per balance sheet, beginning of period  $606,786   $697,775 
Impairment loss   -    (87,338)
Equity in income of Local Limited Partnerships   18,838    20,687 
Distributions received from Local Limited Partnerships   (7,927)   (17,138)
Amortization of capitalized acquisition fees and costs   (3,600)   (7,200)
Investments per balance sheet, end of period  $614,097   $606,786 

 

   For the Nine Months Ended
December 31, 2011
   For the Year
Ended
March 31, 2011
 
Investments per balance sheet, beginning of period  $606,786   $697,775 
Impairment loss  -    (87,338)
Equity in income of Local Limited Partnerships  28,257    20,687 
Distributions received from Local Limited Partnerships  (7,927)   (17,138)
Amortization of capitalized acquisition fees and costs  (5,400)   (7,200)
Investments per balance sheet, end of period  $621,716   $606,786 

 

   For the Three Months Ended
June 30, 2011
   For the Year
Ended
March 31, 2011
 
Investments in Local Limited Partnerships, net  $491,299   $489,807 
Acquisition fees and costs, net of accumulated amortization of $21,600 and $19,800   115,557    116,979 
Investments per balance sheet, end of period  $606,478   $606,786 

 

   For the Six Months Ended
September 30, 2011
  

For the Year

Ended
 March 31, 2011

 
Investments in Local Limited Partnerships, net  $500,718   $489,807 
Acquisition fees and costs, net of accumulated amortization of $23,400 and $19,800   113,379    116,979 
Investments per balance sheet, end of period  $614,097   $606,786 

 

F-17
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

   For the Nine Months Ended
 December 31, 2011
   For the Year
Ended  
March 31, 2011
 
Investments in Local Limited Partnerships, net  $510,137   $489,807 
Acquisition fees and costs, net of accumulated amortization of $25,200 and $19,800   111,579    116,979 
Investments per balance sheet, end of period  $621,716   $606,786 

 

Selected financial information for the three months ended June 30, 2011 and 2010 from the unaudited combined condensed financial statements of the Local Limited Partnerships in which the Partnership has invested is as follows:

 

COMBINED CONDENSED STATEMENT OF OPERATIONS

 

   2011   2010 
Revenues  $842,000   $870,000 
Expenses:          
Interest expense   150,000    154,000 
Depreciation and amortization   233,000    247,000 
Operating expenses   572,000    613,000 
Total expenses   955,000    1,014,000 
           
Net loss  $(113,000)  $(144,000)
           
Net loss allocable to the Partnership  $(122,000)  $(151,000)
           
Net income (loss) recorded by the Partnership  $9,000   $(5,000)

 

F-18
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

Selected financial information for the six months ended September 30, 2011 and 2010 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 

 

   2011   2010 
Revenues  $1,683,000   $1,741,000 
Expenses:          
Interest expense   301,000    308,000 
Depreciation and amortization   466,000    494,000 
Operating expenses   1,144,000    1,226,000 
Total expenses   1,911,000    2,028,000 
           
Net loss  $(228,000)  $(287,000)
           
Net loss allocable to the Partnership  $(245,000)  $(302,000)
           
Net loss recorded by the Partnership  $19,000   $4,000 

 

Selected financial information for the nine months ended December 31, 2011 and 2010 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 

 

   2011   2010 
Revenues  $2,525,000   $2,611,000 
Expenses:          
Interest expense   451,000    462,000 
Depreciation and amortization   700,000    740,000 
Operating expenses   1,716,000    1,840,000 
Total expenses   2,867,000    3,042,000 
           
Net loss  $(342,000)  $(431,000)
           
Net loss allocable to the Partnership  $(367,000)  $(453,000)
           
Net loss recorded by the Partnership  $28,000   $12,000 

 

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.

 

F-19
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

 

Troubled Housing Complexes

 

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 for 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.

 

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 for all periods presented. The Compliance Period for Ashford ends on December 31, 2012.

 

F-20
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

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 $21,600, $23,400, $25,200 and $19,800 as of June 30, 2011, September 30, 2011, December 31, 2011, and March 31, 2011, 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 $12,696 and $14,081 were incurred during each of the three months ended June 30, 2011 and 2010. For each of the six months ended September 30, 2011 and 2010, the Partnership incurred asset management fees of $25,392 and $28,162. Management fees of $38,088 and $42,293 were incurred during each of the nine months ended December 31, 2011 and 2010. Asset management reimbursements were $25,000 and $0 during the three months ended June 30, 2011 and 2010, respectively. For the six months ended September 30, 2011 and 2010, the Partnership reimbursed asset management fees of $25,000 and $0, respectively. For the nine months ended December 31, 2011 and 2010, asset management fee reimbursements were $25,000 and $0, respectively.

 

(d)A subordinated disposition fee in an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the limited partners receiving a preferred return of 14% through December 31, 2011 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 $0 and $25,000 during the three months ended June 30, 2011 and 2010, respectively. For the six months ended September 30, 2011 and 2010, the Partnership reimbursed operating expenses of $0 and $115,900, respectively. For the nine months ended December 31, 2011 and 2010, operating expense reimbursements were $0 and $115,900, respectively. During the three months ended June 30, 2011, the Partnership overpaid its reimbursements by $22,333 which is included as prepaid expenses on the June 30, 2011 balance sheet.

 

F-21
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 3 - RELATED PARTY TRANSACTIONS, continued

 

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

 

   June 30, 2011   September 30, 2011   December 31, 2011   March 31, 2011 
                 
Asset management fee payable  $103,687   $116,383   $129,079   $115,991 
Advances made to the Partnership from General Partner or affiliates   15,641    -    -    15,641 
Expenses paid by the General Partners or an affiliate on behalf of the Partnership   -    5,462    9,350    - 
Total  $119,328   $121,845   $138,429   $131,632 

 

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, 2011, September 30, 2011, December 31, 2011 and March 31, 2011 $33,810 was payable.

 

NOTE 5 –ADVANCES TO LOCAL LIMITED PARTNERSHIPS

 

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

 

As of June 30, 2011, September 30, 2011, December 31, 2011 and March 31, 2011 the Partnership in total had advanced $284,051, $284,051, $345,241, 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, 2011, September 30, 2011, December 31, 2011 and March 31, 2011 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.

 

F-22
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 6–SUBSEQUENT EVENTS

 

Subsequent to December 31, 2011, the Partnership identified and sold the Housing Complexes of 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, and Crescent City Apartment, a CA Limited Partnership subsequent to December 31, 2011. The Compliance Period for all Local Limited Partnerships had expired as the date of sale so there was no risk of tax credit recapture to the investors in the Partnership.

 

The following table reflects dispositions that occurred subsequent to December 31, 2011:

 

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

 
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 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, 2011:

 

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 
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 

 

F-23
 

 

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, 2011, September 30, 2011 and

December 31, 2011

(unaudited)

 

NOTE 6 –SUBSEQUENT EVENTS, continued

 

Subsequent to December 31, 2011, 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.

 

F-24
 

 

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, 2011 and 2010, the three and six months ended September 30, 2011 and 2010, and the three and nine months ended December 31, 2011 and 2010, 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, 2011 consisted primarily of $145,000 in cash, $22,000 in prepaid expenses and aggregate investments in the eleven Local Limited Partnerships of $606,000. Liabilities at June 30, 2011 primarily consisted of $34,000 of payables to Local Limited Partnerships and $119,000 of accrued fees and expenses due to the General Partner and/or its affiliates.

 

The Partnership’s assets at September 30, 2011 consisted primarily of $147,000 in cash and aggregate investments in the eleven Local Limited Partnerships of $614,000. Liabilities at September 30, 2011 primarily consisted of $34,000 of payables to Local Limited Partnerships and $122,000 of accrued fees and expenses due to the General Partner and/or its affiliates.

 

The Partnership’s assets at December 31, 2011 consisted primarily of $85,000 in cash and aggregate investments in the eleven Local Limited Partnerships of $622,000. Liabilities at December 31, 2011 primarily consisted of $34,000 of payables to Local Limited Partnerships and $138,000 of accrued fees and expenses due to the General Partner and/or its affiliates.

 

3
 

 

Results of Operations

 

Three Months Ended June 30, 2011 Compared to Three Months Ended June 30, 2010. The Partnership’s net loss for the three months ended June 30, 2011 was $(2,000) reflecting a change of approximately $(15,000) from the net income of $13,000 for the three months ended June 30, 2010. The decrease was primarily due to the decrease of $(137,000) gain on sale of Local Limited partnerships for the three months ended June 30, 2011. 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 $87,000 for the three months ended June 30, 2011. 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. Advances of $(4,000) were made to several Local Limited partnerships which were reserved for in full during the three months ended June 30, 2011 compared to no such advances made during the three months ended June 30, 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 income of Local Limited Partnerships of $14,000 for the three months ended June 30, 2011. The equity in income can vary each year depending on the operations of each of the Local Limited Partnerships. Total operating income increased by $7,000 for the three months ended June 30, 2011 compared to the three months ended June 30, 2010 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 was a $1,000 decrease of asset management fees for the three months ended June 30, 2011. 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 September 30, 2011 Compared to the Three Months Ended September 30, 2010 The Partnership’s net loss for the three months ended September 30, 2011 was $(15,000), reflecting an increase of approximately $(13,000) from the net loss of $(2,000) for the three months ended September 30, 2010. Total operating income decreased by $(9,000) for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 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 decreased by $4,000 for the three months ended September 30, 2011 compared to the three months ended September 30, 2010 due to the timing of accounting work performed. There was a $1,000 decrease of asset management fees for the three months ended September 30, 2011. 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.

 

Six Months Ended September 30, 2011 Compared to the Six Months Ended September 30, 2010 The Partnership’s net loss for the six months ended September 30, 2011 was $(17,000), reflecting a decrease of approximately $(28,000) from the net income of $11,000 for the six months ended September 30, 2010. The decrease was primarily due to the decrease of $(137,000) in gain on sale of Local Limited partnerships for the six months ended September 30, 2011. 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 $87,000 for the six months ended September 30, 2011. 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 $15,000 for the six months ended September 30, 2011. The equity in income can vary each year depending on the operations of each of the Local Limited Partnerships. Total operating income decreased by $(2,000) for the six months ended September 30, 2011 compared to the six months ended September 30, 2010 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 $(4,000) of advances made and reserved for in full during the six months ended September 30, 2011 compared to no advances made during the six months ended September 30, 2010. 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 decreased by $(18,000) for the six months ended September 30, 2011 compared to the six months ended September 30, 2010 due to the timing of accounting work performed. Asset management fees decreased by $3,000 for the six months ended September 30, 2011. 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.

 

4
 

 

Three Months Ended December 31, 2011 Compared to the Three Months Ended December 31, 2010 The Partnership’s net loss for the three months ended December 31, 2011 was $(70,000), reflecting a change of approximately $(81,000) from the net income of $11,000 for the three months ended December 31, 2010. Advances of $(61,000) was made to several Local Limited partnerships which were reserved for in full during the three months ended December 31, 2011 compared to no such advances made during the three months ended December 31, 2010. The advances made to the troubled Local Limited Partnerships can vary each year depending on the operations of each Local Limited Partnership. Accounting and legal fees increased by $(3,000) for the three months ended December 31, 2011 compared to the three months ended December 31, 2010 due to the timing of accounting work performed. There was a decrease of $(20,000) in gain on sale of Local Limited Partnerships for the three months ended December 31, 2011. 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 also a $1,000 decrease of asset management fees for the three months ended December 31, 2011. 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.

 

Nine Months Ended December 31, 2011 Compared to Nine Months Ended December 31, 2010 The Partnership’s net loss for the nine months ended December 31, 2011 was $(88,000), reflecting a change of approximately $(110,000) from the net income of $22,000 for the nine months ended December 31, 2010. The change is largely due to a decrease of $(157,000) in gain on sale of Local Limited Partnerships for the nine months ended December 31, 2011 compared to the three months ended December 31, 2010. The gains recorded vary based on sales prices and values of the Local Limited Partnerships sold. There was a decrease in impairment loss of $87,000 for the nine months ended December 31, 2011. 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 net income of Local Limited Partnerships of $16,000 for the nine months ended December 31, 2011. The equity in net income can vary each year depending on the operations of each of the Local Limited Partnerships. Total operating income decreased by $(2,000) for the nine months ended December 31, 2011 compared to the nine months ended December 31, 2010 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. Advances of $(65,000) was made to several Local Limited Partnerships which were reserved in full during the nine months ended December 31, 2011 compared to no such advances made during the nine 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. Accounting and legal fees decreased by $15,000 for the nine months ended December 31, 2011 compared to the nine months ended December 31, 2010 due to the timing of accounting work performed. There was also a $4,000 decrease of asset management fees for the nine months ended December 31, 2011. 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, 2011 Compared to Three Months Ended June 30, 2010 Net cash used during the three months ended June 30, 2011 was $(9,000), compared to net cash provided during the three months ended June 30, 2010 of $30,000. During the three months ended June 30, 2011 the Partnership advanced $(4,000) 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) for accrued asset management fees during the three months ended June 30, 2011 compared to no such payment made during the three months ended June 30, 2010. In addition, during the three months ended June 30, 2010 the Partnership paid the General Partner or affiliates $(25,000) for reimbursement of operating expenses compared to no payment made during the three months ended June 30, 2011. Accrued asset management fees and reimbursement 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 cash proceeds due the sale of its Local Limited Partnerships compared to no such proceeds received during the three months ended June 30, 2011. The proceeds 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. Reporting fees increased by $6,000 and distributions increased by $9,000 for the three months ended June 30, 2011, 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.

 

5
 

 

Six Months Ended September 30, 2011 Compared to Six Months Ended September 30, 2010 Net cash used during the six months ended September 30, 2011 was $(7,000), compared to net cash used during the six months ended September 30, 2010 of $(12,000). The Partnership reimbursed the General Partner or affiliates $(25,000) during the six months ended September 30, 2011 for accrued asset management fees and of reimbursement of operating expenses compared to $(116,000) paid during the six months ended September 30, 2010. Accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership. Advances of $(4,000) were made to a Local Limited Partnership during the six months ended September 30, 2011 compared to no advances made to a Local Limited Partnership during the six months ended September 30, 2010 as discussed above. The distributions received from Local Limited Partnerships decreased by $(9,000) for the six months ended September 30, 2011 due to the fact that Local Limited Partnerships pay to the partnership when the Local Limited Partnerships cash flows will allow for the payment. During the six months ended September 30, 2010 the Partnership received $99,000 in cash proceeds due the sale of its Local Limited Partnerships compared to no such proceeds received during the three months ended June 30, 2011. The proceeds 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. Reporting fees decreased by $(3,000) and distributions decreased by $(8,000) for the six months ended September 30, 2011, 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.

 

Nine Months Ended December 31, 2011 Compared to Nine Months Ended December 31, 2010 Net cash used during the nine months ended December 31, 2011 was $(69,000), compared to net cash provided during the nine months ended December 31, 2010 of $38,000. The change was due primarily to the fact that during the six months ended December 30, 2010, the Partnership receiving $149,000 in net proceeds from the sale of its Local Limited Partnership compared to no sale proceeds received during the nine months ended December 31, 2011. 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, 2011, the partnership advanced $(65,000) to a Local Limited partnership which was experiencing operational issues compared to no such advances were made during the nine months ended December 31, 2010 as discussed above. The Partnership reimbursed the General Partner or affiliates $(25,000) during the nine months ended December 31, 2011 for accrued asset management fees and of reimbursement of operating expenses compared to $(116,000) paid during the nine months ended December 31, 2010. Accrued asset management fees and reimbursement of operating expenses are paid after management reviews the cash position of the Partnership. The distributions received from Local Limited Partnerships decreased by $(8,000) and the reporting fees decreased by $(3,000) for the nine months ended December 31, 2011, 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.

 

6
 

 

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 this 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 did not materially affect the Partnership’s financial statements.

 

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

 

Item 4. Controls and Procedures
   
  NOT APPLICABLE

 

(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, 2011, September 30, 2011 and December 31, 2011 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

 

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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, 2011, September 30, 2011, December 31, 2011, and March 31, 2011, (ii) the Condensed Statements of Operations for the three, six, and nine-month periods ended June 30, 2011, September 30, 2011, December 31, 2011 and June 30, 2010, September 30, 2010, December 31, 2010 (iii) the Condensed Statements of Partners’ Equity for the three, six, and nine-month periods ended June 30, 2011, September 30, 2011, December 31, 2011 (iv) the Condensed Statements of Cash Flows for the three, six, and nine months ended June 30, 2011, September 30, 2011, December 31, 2011 and June 30, 2010, September 30, 2010, December 31, 2010 and (v) the Notes to Condensed Financial Statements. (filed herewith)
    
   Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.

 

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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  

  

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