FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1997
OR
o 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: 0-20057
WNC HOUSING TAX CREDIT FUND II, L.P.
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
California 33-0391979
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
Title of Securities Exchanges on which Registered
NONE NOT APPLICABLE
Securities registered pursuant to section 12(g) of the Act:
NONE
<PAGE>
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 X No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Inapplicable.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
NONE
2
<PAGE>
Item 1. Business
Organization
- ------------
WNC Housing Tax Credit Fund II, L.P. ("HTCF II" or the "Partnership") is a
California limited partnership formed under the laws of the State of California
on January 19, 1990. The Partnership was formed to invest primarily in other
limited partnerships which will own and operate multi-family housing complexes
that will qualify for low income housing credits (the "Low Income Housing
Credit").
The general partner of the Partnership is WNC Financial Group, L.P. (the
"General Partner"). The general partners of WNC Financial Group, L.P. are WNC &
Associates, Inc. ("Associates" .) and Wilfred N. Cooper, Sr. Wilfred N. Cooper,
Sr. through the Cooper Revocable Trust, owns just less than 70% of the
outstanding stock of Associates John B. Lester, Jr. is the original limited
partner of the Partnership and owns, through the Lester Family Trust, just less
than 30% 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.
On April 27, 1990, the Partnership commenced a public offering of 12,000 units
of Limited Partnership Interests ("Units"), at a price of $1,000 per Unit. The
General Partner concluded the sale of Units on December 31, 1992. A total of
7,000 Units representing $7,000,000 had been sold. Holders of Units are referred
to herein as "Limited Partners."
Description of Business
- -----------------------
The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner in local limited
partnerships ("Local Limited Partnerships") each of which will own and operate
an apartment complex ("Apartment Complex") which will qualify for the Low Income
Housing Credit. In general, under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against Federal taxes otherwise due in each year of a ten year period (the
"Credit Period". The Apartment Complex is subject to a fifteen-year compliance
period (the "Compliance Period").
In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its interest in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by a Local Limited Partnership of any Apartment Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Apartment
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more year in the future, and (iii) the inability of the
Partnership to directly cause the sale of Apartment Complexes by the general
partners of the respective Local Limited Partnerships ("Local General
Partners"), but generally only to require such Local General Partners to use
their respective best efforts to find a purchaser for the Apartment Complexes,
it is not possible at this time to predict whether the liquidation of
substantially all of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership Agreement will be able to
be accomplished promptly at the end of the 15-year period. If a Local Limited
Partnership is unable to sell an Apartment Complex, it is anticipated that the
Local General Partner will either continue to operate such Apartment Complex or
take such other actions as the Local General Partner believes to be in the best
interest of the Local Limited Partnership. In addition, circumstances beyond the
control of the General Partner may occur during the Compliance Period which
would require the Partnership to approve the disposition of an Apartment Complex
prior to the end thereof.
3
<PAGE>
As of December 31, 1997, HTCF II had invested in twenty seven Local Limited
Partnerships. Each of these Local Limited Partnerships own an Apartment Complex
that is eligible for the Low Income Housing Credit. All of the Local Limited
Partnerships also benefit from government programs promoting low or moderate
income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low income housing and to the
management and ownership of multifamily residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and neither the
Partnership's investments nor the Apartment Complexes owned by Local Limited
Partnerships will be readily marketable. Additionally, there can be no assurance
that the Partnership will be able to dispose of its interests in Local Limited
Partnerships at the end of the Compliance Period. The value of the Partnership's
investments will be subject to changes in national and local economic
conditions, including unemployment conditions, which could adversely impact
vacancy levels, rental payment defaults and operating expenses. This, in turn,
could substantially increase the risk of operating losses for the Apartment
Complexes and the Partnership. The Apartment Complexes could be subject to loss
through foreclosure. In addition, each Local Limited Partnership is subject to
risks relating to environmental hazards which might be uninsurable. Because the
Partnership's ability to control its operations will depend on these and other
factors beyond the control of the General Partner and the general partners of
the Local Limited Partnerships, there can be no assurance that Partnership
operations will be profitable or that the anticipated Low Income Housing Credits
will be available to Limited Partners.
As of December 31, 1997, all of the Apartment Complexes were completed and in
operation. The Apartment Complexes owned by the Local Limited Partnerships in
which HTCF II has invested were developed by the Local General Partners who
acquired the sites and applied for applicable mortgages and subsidies. HTCF II
became the principal limited partner in these Local Limited Partnerships
pursuant to arm's-length negotiations with Local General Partners. As a limited
partner, HTCF II liability for obligations of the Local Limited Partnership is
limited to its investment. The Local General Partner of the Local Limited
Partnership retains responsibility for maintaining, operating and managing the
Apartment Complex.
The following is a schedule of the status as of December 31, 1997, of the
Apartment Complexes owned by Local Limited Partnerships in which HTCF II is a
limited partner.
<TABLE>
<CAPTION>
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH HTCF II HAS AN INVESTMENT
December 31, 1997
-----------------------------------------------------------------
Percentage of
No.of Units Units Total Units
Name & Location Units Completed Occupied Occupied
- --------------- ----- --------- -------- --------
<S> <C> <C> <C> <C>
Airport Road Assoc. 40 40 40 100%
Slidell, Louisiana
Am-Kent Associates, Ltd. 32 32 32 100%
Amite & Kentwood, Louisiana
Arizona I 42 42 32 76%
Show Low, Arizona
Ashland Investment Group 40 40 39 98%
Ashland, Oregon
Brantley Housing, Ltd. 19 19 19 100%
Brantley, Alabama
Brian's Village Apartments, Ltd. 28 28 28 100%
Mannford, Oklahoma
Candlerigde Apartments of Perry LP 23 23 23 100%
Perry, Iowa
4
<PAGE>
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH HTCF II HAS AN INVESTMENT
December 31, 1997
-----------------------------------------------------------------
Percentage of
No.of Units Units Total Units
Name & Location Units Completed Occupied Occupied
- --------------- ----- --------- -------- --------
<S> <C> <C> <C> <C>
Candlerigde Apts. of Runnells L.P. 15 15 15 100%
Runnells, Iowa
Casa Allegre Limited Partnership 42 42 42 100%
Las Vegas, New Mexico
Castroville Village, Ltd. 40 40 40 100%
Castroville, Texas
Cherokee 31 31 31 100%
Rogersville, Tennessee
Divall Midland Associates Limited II 32 32 25 78%
Port Washington, Wisconsin
Eclectic Housing, Ltd 15 15 15 100%
Electic, Alabama
Elizabeth Square 48 48 47 98%
Raceland, Louisiana
Emory Capital, L.P. 16 16 15 94%
Emory, Texas
Emory Manor, L.P. 24 24 23 96%
Emory, Texas
Idalou Manor, L.P. 24 24 24 100%
Idalou, Texas
Jefferson Capital, L.P. 30 30 28 93%
Jefferson, Texas
Jefferson Manor, L.P. 32 32 29 91%
Jefferson, Texas
Lake View, a Wisconsin Limited 40 40 39 98%
Partnership
Littlefield Manor, L.P. 24 24 20 83%
Littlefield, Texas
Perry County Housing, Ltd. 15 15 15 100%
Uniontown, Alabama
Pine Hill Housing, Ltd. 19 19 18 95%
Pine Hill, Alabama
Rociada Partners Limited 28 28 27 96%
Hereford, Texas
Wadley Housing, Ltd. 15 15 14 93%
Wadley, Alabama
Whitewater Woods, 40 40 38 95%
Whitewater, Wisconsin
Willcox Investment Group 30 30 28 93%
Willcox, Arizona
---- ----------- ---------- ----------------
Totals 784 784 746 95%
==== === === ===
</TABLE>
5
<PAGE>
Item 2. Properties
Through its investment in Local Limited Partnerships HTCF II holds interests in
Apartment Complexes. See Item 1 for information pertaining to these Apartment
Complexes.
Item 3. Legal Proceedings
NONE.
Item 4. Submission of Matters to a Vote of Security Holders
NONE.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Item 5a.
(a) The Units are not traded on a public exchange but are being sold through a
public offering. It is not anticipated that any public market will develop for
the purchase and sale of any Unit. Units can be assigned only if certain
requirements in the Partnership Agreement are satisfied.
(b) At December 31, 1997, there were 575 Limited Partners.
(c) The Partnership was not designed to provide cash distributions to Limited
Partners in circumstances other than refinancing or disposition of its
investments in Local Limited Partnerships. The Limited Partners received The
Limited Partners received Low Income Housing Credits of $145, $145 and $145 for
1997,1996 and 1995, respectively, per Unit.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Years ended December31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $5,785 $10,157 $11,368 $9,287 $11,193
Partnership operating
expenses (179,503) (234,161) (186,417) (181,780) (176,139)
Equity in loss of
Local Limited (143,021) (568,488) (602,163) (544,630) (634,893)
-------- -------- -------- --------- --------
Partnership
Net loss $(316,739) $(792,492) $(777,212) $ (717,123) $(799,839)
======== ======== ======= ========= ========
Net loss per Limited
Partnership Interest $ (45) $ (112) $ (110) $ (101) $ (113)
======= ======== ======== ========= =========
Total assets $2,010,083 $2,214,272 $2,898,812 $3,530,041 $4,189,583
========= ========= ========= ========= =========
6
<PAGE>
<CAPTION>
Years ended December31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net investment in
Local Limited Partnerships $1,828,770 $2,005,382 $2,606,673 $3,289,100 $3,812,614
========= ========= ========= ========= ==========
Capital contributions
payable to
Local Limited Partnerships $ 0 $ 0 $ 0 $ 0 $ 132,820
========= ========== ========= ========== ==========
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Liquidity and Capital Resources
- -------------------------------
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash of approximately $27,000 for the period ended December 31,
1997. This decrease in cash consisted of cash used in investing activities of
approximately $12,200 and used in operating activities of approximately $39,200.
Cash provided by investing activities consisted entirely of distributions from
Local Limited Partnerships. Cash provided by operating activities consisted of
interest income. Cash used in operating activities consisted primarily of
payments for operating fees and expenses. The major components of all these
activities are discussed in greater detail below.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash of approximately $30,200 for the period ended December 31,
1996. This decrease in cash was as a result of cash from investing activities
consisting entirely of distributions from Local Limited Partnerships of
approximately $11,400 offset by operating activities of approximately $41,600.
Cash provided by operating activities consisted of interest income and payment
of receivable from affiliates. Cash used in operating activities consisted
primarily of payments for operating fees and expenses. The major components of
all these activities are discussed in greater detail below.
As of December 31, 1997, the General Partner has invested in 27 Local Limited
Partnerships. The Partnership raised $7,000,000 from investors by means of its
public offering and applied the Net Proceeds thereof available for investment to
the payment of Acquisition Fees and Acquisition Expenses, the establishment of
Reserves, the payment of operating expenses and the acquisition of investments
in Local Limited Partnerships which own the Apartment Complexes.
Prior to sale of the Apartment Complexes, it is not expected that any of the
Local Limited Partnerships in which the Partnership has invested or will invest
will generate cash sufficient to provide distributions to The Partnership of any
material amount. Distributions to the Partnership would first by used to meet
operating expenses of the Partnership, including the payment of the Asset
Management Fee to the General Partner. See Item 11 hereof. As a result, it is
not anticipated that the Partnership will provide distributions to the Limited
Partners prior to the same of the Apartment Complexes.
The Partnership's investments are not readily marketable and may be affected by
adverse general economic conditions which, in turn, could substantially increase
the risk of operating losses for the Apartment Complexes, the Local Limited
Partnerships and the Partnership. These problems may result from a number of
factors, many of which cannot be controlled by the General Partner.
Nevertheless, the General Partner anticipates that capital raised from the sale
of the Limited Partnership Interests is sufficient to fund the Partnership's
operations.
7
<PAGE>
Upon completion of its public offering (in 1992) the Partnership established
working capital reserves of approximately 3.0% of the Limited Partners' capital
contributions. This amount is anticipated to be sufficient to satisfy general
working capital and administrative expense requirements of the Partnership
including payment of the asset management fee as well as expenses attendant to
the preparation of tax returns and reports to the Limited Partners and other
investor servicing obligations of the Partnership. Liquidity would, however, be
adversely affected by unanticipated or greater than anticipated operating costs.
To the extent that working capital reserves are insufficient to satisfy the cash
requirements of the Partnership, it is anticipated that additional funds would
be sought through bank loans or other institutional financing. The General
Partner may also apply any cash distributions received from the local limited
partnerships for such purposes or to replenish or increase working capital
reserves.
Under its partnership agreement the Partnership does not have the ability to
assess its partners for additional capital contributions to provide capital if
needed by the Partnership or Local Limited Partnerships. Accordingly, if
circumstances arise that cause the Local Limited Partnerships to require capital
in addition to that contributed by the Partnership and any equity of the local
general partners, the only sources from which such capital needs will be able to
be satisfied (other than the limited reserves available at the Partnership
level) will be (i) third-party debt financing (which may not be available, if,
as expected, the apartment complexes owned by the local limited partnerships are
already substantially leveraged), (ii) additional equity contributions or
advances of the local general partners, (iii) other equity sources (which could
adversely affect the Partnership's interest in tax credits, cash flow and/or
proceeds of sale or refinancing of the apartment complexes and result in adverse
tax consequences to the Limited Partners), or (iv) the sale or disposition of
the apartment complexes (which could have the same adverse effects as discussed
in (iii) above). There can be no assurance that funds from any of such sources
would be readily available in sufficient amounts to fund the capital requirement
of the local limited partnerships in question. If such funds are not available,
the Local Limited Partnerships would risk foreclosure on their apartment
complexes if they were unable to renegotiate the terms of their first mortgages
and any other debt secured by the apartment complexes to the extent the capital
requirements of the local limited partnerships relate to such debt.
Liquidity
- ---------
HTCF II's primary source of funds was the proceeds of its public offering. Other
sources of liquidity include interest earned on cash balances and distributions
from Local Limited Partnerships. The Local Limited Partnerships are expected to
maintain working capital reserves independent of those maintained by the
Partnership to the extent that (i) the terms of mortgage debt encumbering the
Apartment Complexes or the terms of any government assistance program so
require, or (ii) the Local General Partner determines that such reserves are
necessary or advisable. Although reserves are to be maintained at both the
Partnership and Local Limited Partnership levels, if such reserves and other
available income, if any, are insufficient to cover the Partnership's or any
Local Limited Partnership's operating expenses and liabilities, it may be
necessary to accumulate additional funds from distributions received from Local
Limited Partnerships which would otherwise be available for distribution to the
Limited Partners, or to liquidate the Partnership's investment in one or more
Local Limited Partnerships.
Reserves of the Partnership and reserves of the Local Limited Partnership may be
increased or decreased from time to time by the General Partner or the Local
General Partner, as the case may be, in order to meet anticipated costs and
expenses. The amount of cash flow available for distribution and/or Sale or
Refinancing Proceeds, if any, which is available for distribution to the Limited
Partners may be affected accordingly.
Results of Operations
- ---------------------
The Partnership was formed to provide various benefits to its Limited Partners
as discussed in Item 1. It is not expected that any of the Local Limited
8
<PAGE>
Partnerships in which the Partnership has invested will generate cash flow
sufficient to provide for distributions to Limited Partners in any material
amount. The Partnership accounts for its investments in the Local Limited
Partnerships on the equity method, thereby adjusting its investment balance by
its proportionate share of the income or loss of the local limited partnerships.
Consistent with the Partnership's investment objectives, each Local Limited
Partnership is generating or is expected to generate Low Income Housing Credits
for a period of approximately ten years, commencing with completion of
construction or rehabilitation of its Apartment Complex(es) and is generating or
is expected to generate losses until sale of the Apartment Complex(es).
As reflected on its Statements of Operations, the Partnership had losses of
$316,739, $792,492, and $777,212, for the years ended December 31, 1997, 1996,
and 1995, respectively. The component items of revenue and expense are discussed
below.
Revenue. Partnership revenues consisted entirely of interest earned on cash
deposits held in financial institutions (i) as Reserves, or (ii) pending
investment in Local Limited Partnerships. Interest revenue in future years will
be a function of prevailing interest rates and the amount of cash balances.
Expenses. The most significant component of operating expenses is expected to be
the Asset Management Fee. The Asset Management Fees is equal to 0.5% of Invested
asset in local Limited Partnerships: accordingly the amount to be incurred in
the future is a function of the level of such invested assets (i.e., the sum of
the Partnerships' capital contributions to the Local Limited Partnerships plus
the Partnership's share of the debts related to the Apartment Complexes owned by
such Local Limited Partnerships). The annual management fee incurred was
$144,903, $144,903, and $144,903 for the years ended December 31, 1997, 1996,
and 1995, respectively, of which $32,000 and $35,000 were paid in 1997 and 1996,
respectively.
Office expense consists of the Partnership's administrative expenses, such as
accounting and legal fees, bank charges and investor reporting expenses.
Equity in losses from Local Limited Partnerships. The Partnership's equity in
losses from Local Limited Partnerships is equal to 99% of the aggregate net loss
of the Local Limited Partnerships. After rent-up, the Local Limited Partnerships
have generated and are expected to continue generating losses during each year
of operations. This is so because, although rental income is expected to exceed
cash operating expenses, depreciation and amortization deductions claimed by the
Local Limited Partnerships are expected to exceed net rental income. These
losses were greater for the years ended December 31, 1996 and 1995 as compared
to the year ended December 31, 1997 period reflecting lower interest expense and
suspended recognition of losses for those limited partnerships reaching zero
balance in their related investment account.
The Partnership, as a Limited Partner in the Local Limited Partnerships in which
it has invested, is subject to the risks incident to the construction,
management, and ownership of improved real estate. The Partnership investments
are also subject to adverse general economic conditions, and accordingly, the
status of the national economy, including substantial unemployment and
concurrent inflation, could increase vacancy levels, rental payment defaults,
and operating expenses, which in turn, could substantially increase the risk of
operating losses for the Apartment Complexes.
Item 7A. Quantitative and Qualitative and Qualitative Disclosures About Market
Risk
NONE.
9
<PAGE>
Item 8. Financial Statements and Supplementary Data
OMITTED
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Item 10. Directors and Executive Officers of the Registrant
Directors of Registrant
The Partnership has no directors or executive officers of its own. The following
biographical information is presented for the directors and executive officers
of Associates which has principal responsibility for the Partnership's affairs.
Directors and Executive Officers of WNC & Associates, Inc.
The directors of Associates are Wilfred N. Cooper, Sr., who serves as Chairman
of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N. Cooper, Jr. and
Kay L. Cooper. Substantially all of the shares of Associates are owned by
Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, and John B. Lester,
Jr., through the Lester Family Trust.
WILFRED N. COOPER, SR., age 67, has been the principal shareholder and a
Director of WNC & ASSOCIATES, INC. since its organization in 1971, of SHELTER
RESOURCE CORPORATION since its organization in 1981 and of WNC RESOURCES, INC.
from its organization in 1988 through its acquisition by WNC & ASSOCIATES, INC.
in 1991, serving as President of those companies until 1992 and as Chief
Executive Officer since 1992, and has been a Director of WNC CAPITAL CORPORATION
since its organization. He is also a general partner with WNC & ASSOCIATES, INC.
in WNC FINANCIAL GROUP, L.P. and WNC TAX CREDIT PARTNERS, L.P. During 1970 and
1971 he was a principal of Creative Equity Development Corporation, a
predecessor of WNC & ASSOCIATES, INC., and of Creative Equity Corporation, a
real estate investment firm. For 12 years prior to that, Mr. Cooper was employed
by Rockwell International Corporation, last serving as its manager of housing
and urban developments. Previously, he had responsibility for new business
development including factory-built housing evaluation and project management in
urban planning and development. Mr. Cooper is a Director of the Executive
Committee of the National Association of Home Builders (NAHB) and a past
Chairman of the NAHB's Rural Housing Council, a Director of the National Housing
Conference, a Director of the Affordable Housing Tax Credit Coalition, a past
President of the California Council of Affordable Housing (CCAH) (formerly Rural
Builders Council of California), and a past President of Southern California
Chapter II of the Real Estate Syndication and Securities Institute (RESSI) of
the National Association of Realtors (NAR). Mr. Cooper graduated from Pomona
College in 1956 with a Bachelor of Arts degree.
JOHN B. LESTER, JR., age 64, has been a shareholder, a Director and Secretary of
WNC & ASSOCIATES, INC. since 1986, Executive Vice President from 1986 to 1992,
and President and Chief Operating Officer since 1992, and has been a Director of
WNC CAPITAL CORPORATION since its organization. He was a shareholder, Executive
Vice President, Secretary and a Director of WNC RESOURCES, INC. from 1988
through its acquisition by WNC & ASSOCIATES, INC. in 1991. From 1973 to 1986 he
was Chairman of the Board and Vice President or President of E & L Associates,
Inc., a provider of engineering and construction services to the oil refinery
and petrochemical industries which he co-founded in 1973. Mr. Lester is a former
Director of the Los Angeles Chapter of the Associated General Contractors of
California. His responsibilities at WNC & ASSOCIATES, INC. include property
acquisitions and company operations. Mr. Lester graduated from the University of
Southern California in 1956 with a Bachelor of Science degree in Mechanical
Engineering.
10
<PAGE>
DAVID N. SHAFER, age 45, has been a Director of WNC & ASSOCIATES, INC. since
1997, a Senior Vice President since 1992, and General Counsel since 1990, and
served as Asset Management Director from 1990 to 1992, and has been a Director
and Secretary of WNC Management, Inc. since its organization. Previously he was
employed as an associate attorney by the law firms of Morinello, Barone, Holden
& Nardulli from 1987 until 1990, Frye, Brandt & Lyster from 1986 to 1987 and
Simon and Sheridan from 1984 to 1986. Mr. Shafer is a Director and President of
CCAH, a member of NAHB's Rural Housing Council, a past President of Southern
California Chapter II of RESSI, a past Director of the Council of Affordable and
Rural Housing and Development and a member of the State Bar of California. Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts degree, from the New England School of Law in 1983 with a
Juris Doctor degree and from the University of San Diego in 1986 with a Master
of Law degree in Taxation.
WILFRED N. COOPER, JR., age 35, has been employed by WNC & ASSOCIATES, INC.
since 1988 and has been a Director since 1997 Executive Vice President since
1998, and a Senior Vice President since 1992. Mr. Cooper heads the Acquisition
Originations department at WNC, has been President of, and a registered
principal with, WNC CAPITAL CORPORATION, a member firm of the NASD, since its
organization, and has been a Director of WNC Management Inc. since its
organization. Previously, he was employed as a government affairs assistant by
Honda North America from 1987 to 1988, and as a legal assistant with respect to
Federal legislative and regulatory matters by the law firm of Schwartz, Woods
and Miller from 1986 to 1987. Mr. Cooper is an alternate director and member of
NAHB's Rural Housing Council and serves as Chairman of its Membership Committee.
Mr. Cooper graduated from The American University in 1985 with a Bachelor of
Arts degree.
THEODORE M. PAUL, age 42, has been Vice President - Finance of WNC & ASSOCIATES,
INC. since 1992 and Chief Financial Officer since 1990, and has been a Director
and Chief Financial Officer of WNC Management Inc. since its organization.
Previously, he was a Vice President and Chief Financial Officer of National
Partnership Investments Corp., a sponsor and general partner of syndicated
partnerships investing in affordable rental housing qualified for tax credits,
from 1986 until 1990, and was employed as an associate by the accounting firms
of Laventhol & Horwath, during 1985, and Mann & Pollack Accountants, from 1979
to 1984. Mr. Paul is a member of the California Society of Certified Public
Accountants and the American Institute of Certified Public Accountants. His
responsibilities at WNC & ASSOCIATES, INC. include supervision of investor
partnership accounting and tax reporting matters and monitoring the financial
condition of the Local Limited Partnerships in which the Partnership will
invest. Mr. Paul graduated from the University of Illinois in 1978 with a
Bachelor of Science degree and is a Certified Public Accountant in the State of
California.
THOMAS J. RIHA, age 43, has been Vice President - Asset Management of WNC &
ASSOCIATES, INC. since 1994, and has been a Director and Chief Executive Officer
of WNC Management Inc. since its organization. He has more than 17 years'
experience in commercial and multi-family real estate investment and management.
Previously, Mr. Riha was employed by Trust Realty Advisor, a real estate
acquisition and management company, from 1988 to 1994, last serving as Vice
President - Operations. His responsibilities at WNC & ASSOCIATES, INC. include
monitoring the operations and financial performance of, and regulatory
compliance by, properties in the WNC portfolio. Mr. Riha graduated from the
California State University, Fullerton in 1977 with a Bachelor of Arts degree
(cum laude) in Business Administration with a concentration in Accounting and is
a Certified Public Accountant in the State of California and a member of the
American Institute of Certified Public Accountants.
SY P. GARBAN, age 52, has 20 years' experience in the real estate securities and
syndication industry. He has been associated with WNC & ASSOCIATES, INC., since
1989, serving as National Sales Director through 1992 and as Vice President -
National Sales since 1992. Previously, he was employed as Executive Vice
President by MRW, Inc., Newport Beach, California from 1980 to 1989, a real
estate development and management firm. Mr. Garban is a member of the
International Association of Financial Planners. He graduated from Michigan
State University in 1967 with a Bachelor of Science degree in Business
Administration.
11
<PAGE>
CARL FARRINGTON, age 55, has been associated with WNC & ASSOCIATES, INC. since
1993, and has served as Director - Originations since 1994. Mr. Farrington has
more than 12 years' experience in finance and real estate acquisitions.
Previously, he served as Acquisitions Director for The Arcand Company from 1991
to 1993, and as Treasurer and Director of Finance and Administrator for Polytron
Corporation from 1988 to 1991. Mr. Farrington is a member and Director of the
Council of Affordable and Rural Housing and Development. Mr. Farrington
graduated from Yale University with a Bachelor of Arts degree in 1966 and from
Dartmouth College with a Master of Business Administration in 1970.
DAVID TUREK, age 43, has been Director - Originations of WNC & ASSOCIATES, INC.
since 1996. He has 23 years' experience in real estate finance and acquisitions.
Previously, from 1995 to 1996 Mr. Turek served as a consultant for a national
Low Income Housing Credit sponsor where he was responsible for on-site
feasibility studies and due diligence analyses of Low Income Housing Credit
properties, from 1992 to 1995 he served as Executive Vice President for Levcor,
Inc., a multi-family development company, and from 1990 to 1992 he served as
Vice President for the Paragon Group where he was responsible for Low Income
Housing Credit development activities. Mr. Turek graduated from Southern
Methodist University in 1976 with a Bachelor of Business Administration degree.
N. PAUL BUCKLAND, age 36, has been employed by WNC & ASSOCIATES, INC. since 1994
and currently serves as Vice President Acquisitions. He has 11 years' experience
in analysis pertaining to the development of multi-family and commercial
properties. Previously, from 1986 to 1994 he served on the development team of
the Bixby Ranch which constructed more than 700 apartment units and more than
one million square feet of "Class A" office space in California and neighboring
states, and from 1984 to 1986 he served as a land acquisition coordinator with
Lincoln Property Company where he identified and analyzed multi-family
developments. Mr. Buckland graduated from California State University, Fullerton
in 1992 with a Bachelor of Science degree in Business Finance.
MICHELE M. TAYLOR, age 43, has been employed by WNC & ASSOCIATES, INC. since
1986, serving as a paralegal and office manager, and currently is the Investor
Services Director. Previously she was self-employed between 1982 and 1985 in
non-financial services activities and from 1978 to 1981 she was employed as a
paralegal by a law firm which specialized in real estate limited partnership
transactions. Ms. Taylor graduated from the University of California, Irvine in
1976 with a Bachelor of Arts degree.
THERESA I. CHAMPANY, age 40, has been employed by WNC & ASSOCIATES, INC. since
1989 and currently is the Marketing Services Director and a registered principal
with WNC CAPITAL CORPORATION. Previously, she was employed as Manager of
Marketing Services by August Financial Corporation from 1986 to 1989 and as
office manager and Assistant to the Vice President of Real Estate Syndications
by McCombs Securities Co., Inc. from 1979 to 1986. Ms. Champany attended
Manchester (Conn.) Community College from 1976 to 1978.
KAY L. COOPER, age 61, has been an officer and Director of WNC & ASSOCIATES,
INC. since 1971 and of WNC RESOURCES, INC. from 1988 through its acquisition by
WNC & ASSOCIATES, INC. in 1991. Mrs. Cooper has also been the sole proprietor of
Agate 108, a manufacturer and retailer of home accessory products, since 1975.
She is the wife of Wilfred N. Cooper, Sr., the mother of Wilfred N. Cooper, Jr.
and the sister of John B. Lester, Jr. Mrs. Cooper graduated from the University
of Southern California
12
<PAGE>
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or Associates for the following fees:
(a) Organization and Offering Expenses. The Partnership paid the General Partner
or its affiliates as of December 31, 1997 approximately $1,037,000 for selling
commissions and other fees and expenses of the Partnership's offering of Units.
Of the total paid to the General Partner or its affiliates, approximately
$1,037,000 was paid (reallowed) by the General Partner or its affiliates to
unaffiliated persons participating in the Partnership's offering or rendering
other services in connection with the Partnership's offering.
(b) Acquisition fees in an amount equal to 9% of the gross proceeds of the
Partnership's offering ("Gross Proceeds"). The Partnership paid the General
Partner or its affiliates as of December 31, 1997 acquisition fees of $630,000.
(c) The Partnership reimbursed the General Partner or its affiliates as of
December 31, 1997 for acquisition expenses expended by such persons on behalf of
the Partnership in the amounts $10,581.
(d) An annual asset management fee in an amount equal to 0.5% of invested assets
(the sum of the Partnership's Investment in Local Limited Partnership Interests
and the Partnership's allocable share of the amount of the mortgage loans on and
other debts related to, the Apartment Complexes owned by such Local Limited
Partnerships.) Fees of $144,903, $144,903, $144,903, $144,903, and $134,168 were
incurred for 1997, 1996, 1995,1994, and 1993, respectively.
(e) A subordinated disposition fee in an amount equal to 1% of the sale price
received in connection with the sale or disposition of an Apartment Complex or
Local Limited Partnership Interest. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital contributions
and payment of the Return on Investment to the Limited Partners. "6% Preferred
Return" means a 6% annual, cumulative but not compounded, "return" to the
Limited Partners (including Low Income Housing Credits) as a class on their net
capital contributions. For this purpose, the net capital contributions of the
Limited Partners shall be equal to their Capital Contributions, reduced by the
amount treated as returned to the Limited Partners.
(f) The General Partner was allocated Low Income Housing Credits of $10,257 and
10,258 for 1997 and 1996, respectively.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
No person is known to the General Partner to own beneficially in excess of 5%
of the outstanding Limited Partnership Interests.
13
<PAGE>
(b) Security Ownership of Management
Neither the General Partner, its affiliates, nor any of the officers or
directors of the General Partner or its affiliates own directly or beneficially
any Units in the Partnership.
(c) Changes in Control
The management and control of the General Partners may be changed at any time in
accordance with their respective organizational documents, without the consent
or approval of the Limited Partners. In addition, the Partnership Agreement
provides for the admission of one or more additional and successor General
Partners in certain circumstances.
First, with the consent of any other General Partners and a majority-in-interest
of the Limited Partners, any General Partner may designate one or more persons
to be successor or additional General Partners. In addition, any General Partner
may, without the consent of any other General Partner or the Limited Partners,
(I) substitute in its stead as General Partner any entity which has, by merger,
consolidation or otherwise, acquired substantially all of its assets, stock or
other evidence of equity interest and continued its business, or (ii) cause to
be admitted to the Partnership an additional General Partner or Partners if it
deems such admission to be necessary or desirable so that the Partnership will
be classified a partnership for Federal income tax purposes. Finally, a
majority-in-interest of the Limited Partners may at anytime remove the General
Partner of the Partnership and elect a successor General Partner
Item 13. Certain Relationships and Related Transactions
WNC & Associates, Inc. All of the Partnership's affairs are managed by the
General Partner, through Associates. The transactions with the General Partner
and Associates are primarily in the form of fees paid by the Partnership for
services rendered to the Partnership, as discussed in Item 11 and in the notes
to the accompanying financial statements.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Financial Statements: Report of independent public accountants.
Balance sheet as of December 31, 1997 and 1996.
Statements of Operations for the years ended December 31, 1997, 1996, and 1995.
Statement of Partners' Equity for the years ended December 31, 1997, 1996, and
1995.
Statements of Cash Flows for the years ended December 31, 1997, 1996, and 1995.
Notes to Financial Statements.
Financial Statement Schedules
N/A
14
<PAGE>
Exhibits
(3) Articles of incorporation and by-laws: The registrant is not incorporated.
The Partnership Agreement is included as Exhibit B to the Prospectus, filed as
Exhibit 28.1 to Form 10 K for the year ended December 31, 1994. (10) Material
contracts 10.1 Amended and Restated Agreement of Limited Partnership of
Candleridge Apartments of Perry, L.P. II filed as exhibit 10.1 to Form
8-K dated May 26, 1994 is hereby incorporated herein by reference as exhibit
10.1.
10.2 Second Amended and Restated Agreement of Limited Partnership of Parlier
Garden Apts. filed as exhibit 10.2 to the current report Form 8-K dated May 26,
1994 is hereby incorporated herein by reference as exhibit 10.2.
10.3 Agreement of Limited Partnership of Rosewood Apartments Limited Partnership
filed as exhibit 10.3 to the current report Form 8-K dated May 26, 1994 is
hereby incorporated herein by reference as exhibit 10.3.
10.4 Agreement of Limited Partnership of Limited Partnership of Nueva Sierra
Vista Associates filed as exhibit 10.4 to the Form 8-K/A Amendment No. 1 to
Current Report dated May 26, 1994 is hereby incorporated herein by reference as
exhibit 10.4.
10.5 Amended and Restated Agreement of Limited Partnership of Memory Lane
Limited Partnership filed as exhibit 10.1 to Form 8-K dated July 7, 1994 is
hereby incorporated herein by reference as exhibit 10.5.
10.6 Second Amended and Restated Agreement of Limited Partnership of Tahoe Pines
Apartments filed as exhibit 10.1 to Form 8-K dated July 27, 1994 is hereby
incorporated herein by reference as exhibit 10.6.
Reports on Form 8-K
No current reports of Form 8-K were filed during the fourth quarter ended
December 31, 1997.
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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 II, L.P.
By: WNC Financial Group, L.P. General Partner of the Registrant
By: WNC & Associates, Inc. General Partner of WNC Financial Group, L.P.
By: /s/ John B. Lester, Jr.
- -----------------------------------------------------
John B. Lester, Jr. President of WNC & Associates, Inc.
Date: April 13, 1998
By: /s/ Theodore M. Paul
- -----------------------------------------------------
Theodore M. Paul Vice-president Finance of WNC & Associates, Inc.
Date: April 13, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Wilfred N. Cooper, Sr.
- -----------------------------------------------------
Wilfred N. Cooper, Sr. Chairman of the Board of WNC & Associates, Inc.
Date: April 13, 1998
By: /s/ John B. Lester, Jr.
- -----------------------------------------------------
John B. Lester, Jr. Director of WNC & Associates, Inc.
Date: April 13, 1998
By: /s/ David N. Shafer.
- -----------------------------------------------------
John B. Lester, Jr. Director of WNC & Associates, Inc.
Date: April 13, 1998
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