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EX-32.1 - CERTIFICATION - WNC HOUSING TAX CREDIT FUND V LP SERIES 4wnc_ex321.htm
EX-32.2 - CERTIFICATION - WNC HOUSING TAX CREDIT FUND V LP SERIES 4wnc_ex322.htm
EX-31.1 - CERTIFICATION - WNC HOUSING TAX CREDIT FUND V LP SERIES 4wnc_ex311.htm
EX-31.2 - CERTIFICATION - WNC HOUSING TAX CREDIT FUND V LP SERIES 4wnc_ex312.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 (Mark One)

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

For the quarterly period ended June 30, 2015

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  incorporation or organization)   (I.R.S. Employer 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 þ No o
 
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 þ No o
 
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 o Accelerated filer o Non-accelerated filer þ Smaller reporting company o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
 


 
 
 
 
 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)

INDEX TO FORM 10-Q

For the Quarterly Period Ended June 30, 2015
 
      Page
PART I. FINANCIAL INFORMATION    
       
  Item 1. Financial Statements   3
       
    Condensed Balance Sheets As of June 30, 2015 and March 31, 2015   3
         
    Condensed Statements of Operations For the Three Months Ended June 30, 2015 and 2014   4
         
    Condensed Statement of Partners' Equity (Deficit) For the Three Months Ended June 30, 2015   5
         
    Condensed Statements of Cash Flow For the Three Months Ended June 30, 2015 and 2014   6
         
    Notes to Condensed Financial Statements   7
         
  Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations   15
       
  Item 3. Quantitative and Qualitative Disclosures About Market Risk   17
       
  Item 4. Controls and Procedures   17
       
PART II. OTHER INFORMATION    
       
  Item 1. Legal Proceedings   18
       
  Item 1A. Risk Factors   18
       
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   18
       
  Item 3. Defaults Upon Senior Securities   18
       
  Item 4. Mine Safety Disclosures   18
       
  Item 5. Other Information   18
       
  Item 6. Exhibits.   18
       
  Signatures   19
 
 
2

 
 
(A California Limited Partnership)

(Unaudited)
 
   
June 30,
2015
   
March 31,
2015
 
ASSETS
Cash and cash equivalents
  $ 1,469,273     $ 1,305,542  
Other assets
    2,500       1,100  
Due from affiliates, net (Note 4)
    -       -  
Investments in Local Limited Partnerships, net (Note 2)
    -       -  
                 
                 Total Assets
  $ 1,471,773     $ 1,306,642  
                 
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
                 
Liabilities:
               
  Accrued fees and expenses due to
               
General Partner and affiliates (Note 3)
  $ 9,387     $ 12,322  
Prepaid disposition proceeds
    30,000       30,000  
                 
                 Total Liabilities
    39,387       42,322  
                 
Partners’ Equity (Deficit):
               
  General Partner
    (670,498 )     (672,179 )
  Limited Partners (25,000 Partnership Units authorized; 21,738 and 21,810 Partnership Units issued and outstanding, respectively)
    2,102,884       1,936,499  
 
               
                 Total Partners’ Equity (Deficit)
    1,432,386       1,264,320  
                 Total Liabilities and Partners’ Equity (Deficit)
  $ 1,471,773     $ 1,306,642  
 
See accompanying notes to condensed financial statements
 
 
3

 
 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
 (A California Limited Partnership)


For the Three Months Ended June 30, 2015 and 2014
(Unaudited)
 
   
2015
   
2014
 
   
Three Months
   
Three Months
 
             
Operating income:
           
   Distribution income
  $ -     $ 9,290  
Total operating income
    -       9,290  
                 
Operating expenses:
               
  Asset management fees (Note 3)
    1,559       5,681  
  Legal and accounting fees
    7,157       4,876  
Write off of other assets
    -       3,281  
Other
    1,567       657  
                 
    Total operating expenses
    10,283       14,495  
                 
Loss from operations
    (10,283 )     (5,205 )
                 
Gain on sale of Local Limited Partnerships (Note 2)
    177,700       -  
                 
Interest income
    649       155  
                 
Net income (loss)
  $ 168,066     $ (5,050 )
                 
Net income (loss) allocated to:
               
  General Partner
  $ 1,681     $ (50 )
                 
  Limited Partners
  $ 166,385     $ (5,000 )
                 
Net income (loss) per
               
  Partnership Unit
  $ 8     $ -  
Outstanding weighted Partnership Units
    21,738       21,872  
 
See accompanying notes to condensed financial statements
 
 
4

 
 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)


For the Three Months Ended June 30, 2015
(Unaudited)
 
   
General
   
Limited
       
   
Partner
   
Partners
   
Total
 
                   
Partners’ equity (deficit) at March 31, 2015
  $ (672,179 )   $ 1,936,499     $ 1,264,320  
                         
Net income
    1,681       166,385       168,066  
                         
Partners’ equity (deficit) at June 30, 2015
  $ (670,498 )   $ 2,102,884     $ 1,432,386  
 
See accompanying notes to condensed financial statements
 
 
5

 
 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
 (A California Limited Partnership)


For the Three Months Ended June 30, 2015 and 2014
(Unaudited)
 
   
2015
   
2014
 
Cash flows from operating activities:
           
  Net income (loss)
  $ 168,066     $ (5,050 )
    Adjustments to reconcile net income (loss) to net
               
      cash used in operating activities:
               
(Increase) decrease in other assets
    (1,400 )     2,262  
        Decrease in accrued  fees and expenses due to
               
           General Partner and affiliates
  $ (2,935 )   $ (17,003 )
Gain on sale of Local Limited Partnerships
    (177,700 )     -  
Net cash used in operating activities
    (13,969 )     (19,791 )
                 
Cash flows from in investing activities:
               
   Net proceeds from sale of Local Limited Partnerships
    177,700       -  
        Net cash provided by investing activities
    177,700       -  
                 
Net increase (decrease) in cash and cash equivalents
    163,731       (19,791 )
                 
Cash and cash equivalents, beginning of period
    1,305,542       1,254,665  
                 
Cash and cash equivalents, end of period
  $ 1,469,273     $ 1,234,874  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
                 
   Taxes paid
  $ -     $ -  
 
See accompanying notes to condensed financial statements
 
 
6

 
 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
 (A California Limited Partnership)


For the Quarterly Period Ended June 30, 2015
 (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, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2016.  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, 2015.

Organization

WNC Housing Tax Credit Fund, V, L.P., Series 4 (the "Partnership") is a California Limited Partnership formed under the laws of the State of California on July 26, 1995 and commenced operations on July 1, 1996.  The Partnership was formed to acquire limited partnership interests in other limited partnerships (“Local Limited Partnerships”) which own and operate multi-family or senior 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 the partners may have outside of their interests in the Partnership, or to any obligations, including income taxes, of the partners.

The partnership agreement authorized the sale of up to 25,000 units of limited partnership interest (“Partnership Units”) at $1,000 per Partnership Unit.  The offering of Partnership Units concluded on July 11, 1997 at which time 22,000 Partnership Units, representing subscriptions in the amount of $21,914,830, net of discounts of $79,550 for volume purchases and $5,620 for dealer discounts, had been accepted. As of June 30, 2015 and March 31, 2015, 21,738 and 21,810 Partnership Units, respectively, remain outstanding.  The General Partner has a 1% interest in operating profits and losses, taxable income and losses, 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.
 
 
7

 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the Quarterly Period Ended June 30, 2015
(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
 
 
8

 
 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the Quarterly Period Ended June 30, 2015
(Unaudited)
 
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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

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

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.  The remaining Housing Complex has completed its 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 June 30, 2015.

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, 2015, the Housing Complexes of Mesa Verde Apartments, L.P, The North Central Limited Partnership , Blessed Rock of El Monte, a CA Partnership, and Ashford Place Limited Partnership had been sold. The Partnership also sold its Local Limited Partnership Interests in Lamar Plaza Apartments, LP, D. Hilltop Apartments, Ltd, Woodland, Ltd., Greyhound Associates I, L.P., Crescent City Apartment, a California Limited Partnership, Cleveland Apartments, L.P, Mountain Vista Associates Limited Partnership, and Bolivar Plaza Apartments.
 
 
9

 
 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the Quarterly Period Ended June 30, 2015
(Unaudited)
 
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

During the three months ended June 30, 2015, the Partnership sold its Local Limited Partnership interest in Belen Vista Associates Limited Partnership (“Belen Vista”). Belen Vista was appraised for $1,750,000. The mortgage note balance was $1,430,864 as of December 31, 2014. The Partnership received $180,000 in cash proceeds, all of which will be placed in the Partnership’s reserves for future operating expenses. The Partnership incurred $2,300 in sales related expenses which were be netted against the proceeds from the sale in calculating the gain on sale. The investment balance was zero at the time of the sale of the Local Limited Partnership; therefore a gain of $177,700 was recorded during the period. The Compliance Period for Belen Vista has expired therefore there is no risk of recapture to the investors of the Partnership.

As of June 30, 2015, the Partnership has identified the following Local Limited Partnership for possible disposition as listed in the table below.
 
Local Limited Partnerships
 
Expected closing date
 
Appraisal value
   
Mortgage balance of Local Limited Partnership as of 12/31/2014
   
Estimated sales price
   
Estimated sales related expenses
   
Estimated gain (loss) on sale
 
Wynwood Place, Limited Partnership
 
8/31/2015
  $ 283,863     $ 376,783     $ 30,000 (*)   $ 1,100     $ 28,900  

(*)- This amount has been received by the Partnership as of June 30, 2015 and is recorded as prepaid disposition proceeds in the accompanying condensed balance sheets.

The Compliance Period for Wynwood Place, Limited Partnership has expired so there is no risk of tax credit recapture to the investors in the Partnership and investor approval is not required. Once the sale is 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. Upon the sale of Wynwood Place, Limited Partnership, any cash remaining after all Partnership debts are paid would then be distributed to the Limited Partners.

 
10

 

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the Quarterly Period Ended June 30, 2015
(Unaudited)
 
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Method of Accounting for Investments in Local Limited Partnerships

The Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable.  Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the sum of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership.  If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments were capitalized as part of the investment account and were being amortized over 27.5 years (see Note 2).

“Equity in income (losses) of Local Limited Partnerships” for each of the periods ended June 30, 2015 and 2014 has been recorded by the Partnership. Management’s estimate for the three 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 income (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.

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.

 
11

 
 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the Quarterly Period Ended June 30, 2015
(Unaudited)
 
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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, 2015 and March 31, 2015, all investment accounts in Local Limited Partnerships had reached zero.

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.  As of June 30, 2015 and March 31, 2015, the Partnership had $1,469,273 and $1,305,542 in cash and cash equivalents, respectively.

Reporting Comprehensive Income

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

Income Taxes

The Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns.  The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. Income tax returns filed by the Partnership are subject to examination by the Internal Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue Service, tax years since 2012 remain open.

 
12

 
 
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the Quarterly Period Ended June 30, 2015
(Unaudited)
 
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Net Income (Loss) Per Partnership Unit

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

Revenue Recognition

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

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

As of June 30, 2015 and March 31, 2015, the Partnership has acquired limited partnership interests in one and two Local Limited Partnerships, respectively, each of which owns one Housing Complex consisting of an aggregate of 24 and 81 apartment units, respectively, for the periods presented.  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%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses and Low Income Housing Tax Credits of the Local Limited Partnerships.

Selected financial information for the three months ended June 30, 2015 and 2014 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
 
   
2015
   
2014
 
Revenues
  $ 37,000     $ 400,000  
Expenses:
               
  Interest expense
    8,000       72,000  
  Depreciation and amortization
    -       101,000  
  Operating expenses
    38,000       304,000  
Total expenses
    46,000       477,000  
                 
Net loss
  $ (9,000 )   $ (77,000 )
Net loss allocable to the Partnership
  $ (9,000 )   $ (76,000 )
Net loss recorded by the Partnership
  $ -     $ -  

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.
 
 
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WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 4
(A California Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the Quarterly Period Ended June 30, 2015
(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)  
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. For the three months ended June 30, 2015 and 2014, the Partnership incurred asset management fees of $1,559 and $5,681, respectively. The Partnership paid asset management fees of $304 and $0, respectively, during the three months ended June 30, 2015 and 2014.

(b)  
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, 2006 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. For the three months ended June 30, 2015 and 2014, the Partnership reimbursed operating expenses of $16,918 and $29,237, respectively.

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

   
June 30,
2015
   
March 31,
2015
 
             
Asset management fee payable
  $ 1,255     $ -  
Expenses paid by the General Partners or an affiliate on behalf of the Partnership
    8,132       12,322  
Total
  $ 9,387     $ 12,322  

NOTE 4 –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 both June 30 and March 31, 2015, the Partnership in total had advanced $4,939 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.

 
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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, 2015 and 2014 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, 2015 consisted of $1,469,000 in cash and cash equivalents and $3,000 in other assets.  Liabilities at June 30, 2015 consisted of $9,000 of accrued fees and expenses due to the General Partner and/or its affiliates and $30,000 in prepaid disposition proceeds.

Results of Operations

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014  The Partnership’s net income was $168,000 for the three months ended June 30, 2015 compared to $5,000 net loss incurred during the three months ended June 30, 2014. The change was primarily due to the increase of $178,000 in gain on sale of Local Limited Partnerships for the three months ended June 30, 2015. 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 value of such Housing Complexes, and the closing dates of the transactions. Distribution income decreased by $9,000 for the three months ended June 30, 2015 compared to the three months ended June 30, 2014 due to the fact that Local Limited Partnerships pay the distributions to the Partnership when the Local Limited Partnerships' cash flows will allow for the payment. Accounting and legal fees increased by $2,000 due to the timing of work performed. There was a $4,000 decrease in asset management fees for the three months ended June 30, 2015. The 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. Write off of other assets decreased by $3,000 during the three months ended June 30, 2015. Capitalized costs from the potential disposition of the Local Limited Partnerships were expensed due to the length of time it has taken to dispose of the properties.
 
 
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Capital Resources and Liquidity

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014  Net cash provided during the three months ended June 30, 2015 was $164,000, compared to net cash used during the three months ended June 30, 2014 of $20,000.  The change was due primarily to the fact that during the three months ended June 30, 2015, the Partnership received $178,000 more in cash proceeds from the sale of a Local Limited Partnership. Proceeds received from the disposition of Local Limited Partnerships will vary from period to period as discussed above. During the three months ended June 30, 2015, the Partnership paid the General Partner or an affiliate $17,000 for operating expenses paid on its behalf compared to $29,000 reimbursed during the three months ended June 30, 2014.  The reimbursement of operating expenses are paid after management reviews the cash position of the Partnership. During the three months ended June 30, 2015, the Partnership received $9,000 less in distribution income compared to the three months ended June 30, 2014 as discussed above.

During the three months ended June 30, 2015, accrued payables, which consist primarily of related party asset management fees and advances due to the General Partner, decreased by $3,000. The General Partner does not anticipate that these accrued fees and advances will be paid until such time as capital reserves are in excess of foreseeable working capital requirements of the Partnership.

Recent Accounting Changes

In January 2014, the FASB issued an amendment to the accounting and disclosure requirements for investments in qualified affordable housing projects. The amendments provide guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments are effective for interim and annual periods beginning after December 15, 2014 and should be applied retrospectively to all periods presented. Early adoption is permitted. The adoption of this update is not expected to materially affect the Partnership's financial statements.

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis”. This will improve certain areas of consolidation guidance for reporting organizations that are required to evaluate whether to consolidate certain legal entities such as limited partnerships, limited liability corporations and securitization structures. ASU 2015-02 simplifies and improves GAAP by: eliminating the presumption that a general partner should consolidate a limited partnership, eliminating the indefinite deferral of FASB Statement No. 167, thereby reducing the number of Variable Interest Entity (VIE) consolidation models from four to two (including the limited partnership consolidation model) and clarifying when fees paid to a decision maker should be a factor to include in the consolidation of VIEs. ASU 2015-02 will be effective for periods beginning after December 15, 2015. The Partnership is currently evaluating the potential impact of the adoption of this guidance on its financial statements.
 
 
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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 quarter ended June 30, 2015 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


NONE

 
No material changes in risk factors as previously disclosed in the Partnership’s Form 10-K.


NONE


NONE


NOT APPLICABLE


NONE

 
Exhibit No.   Description
     
 
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)
     
 
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)
     
 
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, 2015 and March 31, 2015 (ii) the Condensed Statements of Operations for the three months ended June 30, 2015 and 2014 (iii) the Condensed Statements of Partners' Equity (Deficit) for the three months ended June 30, 2015 (iv) the Condensed Statements of Cash Flows for the three months ended June 30, 2015 and 2014, and (v) the Notes to Condensed Financial Statements.
 
Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.
 
18

 

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 FUND V, 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: August 5, 2015  
       
       
 
By:
/s/ Melanie R. Wenk  
    Melanie R. Wenk  
   
Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc.
 
       
    Date: August 5, 2015  

 

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