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, 1996
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: 0-20056
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
California 33-0433017
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
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 NONE
Securities registered pursuant to section
12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTERESTS
<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. In applicable.
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
<PAGE>
Item 1. Business
PART I.
Organization
WNC California Tax Credits II, L.P. ("CHTC II" or the "Partnership") is a
California limited partnership formed under the laws of the State of California
on September 13, 1990. The Partnership was formed to acquire limited partnership
interests in local limited partnerships ("Local Limited Partnerships") which own
multifamily apartment complexes that are eligible for Federal and (in some
cases) California low-income tax credits ("the Low Income Housing Credit").
The general partner of the Partnership is WNC Tax Credit Partners, L.P. (the
"General Partner"). WNC & Associates, Inc. ("Associates") and Wilfred N. Cooper,
Sr. are the general partners of WNC Tax Credit Partners, L.P. The business of
the Partnership is conducted primarily through Associates as neither the General
Partner nor the Partnership has employees of its own.
On January 22, 1991, the Partnership commenced a public offering of 20,000 Units
of Limited Partnership Interest ("Units"), at a price of $1,000 per Unit. As of
the close of the public offering, January 21, 1993 a total of 17,726 Units
representing $17,726,000 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 each of which will own and operate an apartment complex ("Apartment
Complex") which will qualify for the Low Income Housing Credits. 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. In general, under Section 17058
of the California Revenue and Taxation Code, an owner of low-income housing can
receive the Low Income Housing Credit to be used against California taxes
otherwise due in each year of a four year period. The Apartment Complex is
subject to a 15-year compliance period (the "Compliance Period").
In general, in order to avoid recapture of the Housing Tax Credits, the
Partnership does not expect that it will dispose of its interests 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 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's Agreement of Limited Partnership ("Partnership
Agreement") will be able to be accomplished promptly at the end of the 15-year
period. If a Local 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.
2
<PAGE>
As of December 31, 1996, CHTC II has invested in 15 Local Limited Partnerships.
Each of these Local Partnerships own an Apartment Complex that is eligible for
the Federal Housing Tax Credit. Twelve of the these fifteen Apartment Complexes
are eligible for the California Housing Tax Credit. All of the Local
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 Housing Tax Credits could be recaptured and that neither the
Partnership's investments nor the Apartment Complexes owned by the Local Limited
Partnerships will be readily marketable. Additionally, there can be no assurance
that the Partnership will be able to dispose of its interest in the 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 Local General Partners, 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, 1996, the 15 Apartment Complexes acquired by CHTC II were
completed and in operation. The Apartment Complexes were developed by Local
General Partners who acquired the sites and applied for applicable mortgages and
subsidies. CHTC II became the principal limited partner in these Local Limited
Partnerships pursuant to arm's-length negotiations with the Local General
Partner. As a limited partner, CHTC II liability for obligations of Local
Partnership is limited to its investment. The Local General Partners of each
Local Limited Partnership retain responsibility for maintaining, operating and
managing the Apartment Complex.
3
<PAGE>
The following is a schedule of the status, as of December 31, 1996, of the
Apartment Complexes owned by Local Partnerships in which CHTC II is a limited
partner.
<TABLE>
<CAPTION>
SCHEDULE OF PROJECTS OWNED BY LOCAL PARTNERSHIPS
IN WHICH THE PARTNERSHIP HAS AN INVESTMENT
AS OF DECEMBER 31, 1996
No. of Units Units Percentage of Total
Name & Location Apts. Completed Occupied Units Occupied
<S> <C> <C> <C> <C>
601 Main Street Investors 156 156 151 97%
Stockton, California
ADI Development Partners, Ltd. 31 31 27 87
Delhi, California
Bayless Garden Apartments 46 46 45 98
Red Bluff, California
Blackberry Oaks, Ltd. 42 42 42 100
Lodi, California
Jacob's Square 45 45 36 80
Exeter, California
Mecca Apartments II 60 60 56 93
Mecca, California
Nevada Meadows 34 34 34 100
Grass Valley, California
Northwest Tulare Associates 54 54 51 94
Ivanhoe, California
Orland Associates, Ltd. 39 39 39 100
Orland, California
Pinegate 56 56 56 100
Ahoskie, North Carolina
Silver Birch 35 35 33 94
Huron, California
Twin Pines Apartments Association 39 39 39 100
Groveland, California
Ukiah Terrace 42 42 42 100
Ukiah, California
Woodlake Garden Apts. 48 48 42 88
Woodlake, California
Yucca Warren Vista, Ltd. 50 50 46 92
Joshua Tree, California
------- ------ ------ ------
777 777 739 95%
=== === === ==
</TABLE>
Item 2. Properties
Through its investment in Local Partnerships CHTC II holds an interest 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.
4
<PAGE>
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
PART II.
The Units are not traded on a public exchange but were sold through a public
offering. It is not anticipated that any public market will develop for the
purchase and sale of any Unit. Units can be assigned only if certain
requirements in Partnership Agreement are satisfied.
At December 31, 1996, there were 1,269 Limited Partners. The Partnership was not
designed to provide cash distributions to Limited Partners in circumstances
other than refinancing of Apartment Complexes or disposition of its in Local
Limited Partnership Interests. The Limited Partners received Low Income Housing
Credits per Unit as follows:
1996 1995
---- ----
Federal $116 $108
California 37 98
------ ------
Total $153 $206
==== ====
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $24,231 $52,399 $61,226 $133,580 $72,092
Partnership operating
expenses (289,038) (306,261) (403,236) (210,562) (140,600)
Equity in loss of
Local Partnerships (1,128,793) (1,579,652) (1,194,095) (1,081,114) (731,542)
---------- ---------- ---------- ---------- --------
Net loss $(1,393,600) $(1,833,514) $(1,536,105) ($1,158,096) ($800,050)
=========== =========== =========== =========== =========
Net loss per Limited
Partnership interest $(78) $(102) $(86) $(65) $(193)
=== ==== === === ====
Total assets $8,976,925 $10,788,485 $12,876,510 $16,332,339 $14,570,911
========== =========== =========== =========== ===========
Net investment in
Limited Partnerships $8,447,282 $9,640,622 $11,178,031 $12,182,746 $9,064,962
========== ========== =========== =========== ==========
</TABLE>
5
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $596,000 for the period
ended December 31, 1996. This decrease in cash resulted primarily from uses by
investing activities, and secondarily from operations. Cash used by investing
activities consisted primarily of capital contributions to limited partnerships
and loans receivable of approximately $555,000 and $6,000 and cash provided by
investing activities from distributions of $11,000 from limited partnerships.
Cash used in operations represents revenues resulting from interest earned on
cash balances offset by the payment of operating expenses and the payment of
management fees to the General Partner.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $579,000 for the period
ended December 31, 1995. This decrease in cash resulted primarily from uses by
investing activities, and secondarily from operations and financing activities.
Cash used by investing activities consisted primarily of capital contributions
to limited partnerships and loans receivable of approximately $512,000 and
$2,000 and cash provided by investing activities from distributions of $4,000
from limited partnerships. Cash used in operations represents revenues resulting
from interest earned on cash balances offset by the payment of operating
expenses and the payment of management fees to the General Partner.
As of December 31, 1996 the Partnership was indebted to the General Partner in
the amount of approximately $703,700. The component items of such indebtedness
were as follows: accrued asset management fees of approximately $699,800 and
advances for operation expense of $3,900.
The Partnership raised $17,726,000 from investors by means of a public offering.
The Net Proceeds available for investment were disbursed for the payment of
Acquisition Fees and Acquisition Expenses, the establishment of Reserves, the
payment of operating expenses and the acquisition of investments in Local
Partnerships which own the Apartment Complexes. As of December 31, 1996, the
Partnership had made capital contributions to Local Limited Partnerships of
approximately $12,840,000 and had no commitments for additional capital
contributions.
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.
6
<PAGE>
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 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 Units is sufficient
to fund the Partnership's operations.
Subsequent to the close of its public offering, the Partnership established
working capital reserves of approximately 4.2% of capital contributions (or
approximately $738,000), an amount which 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. 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 Limited 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.
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
Partnerships in which the Partnership has invested will generate cash flow
sufficient to provide for distributions to Limited Partners in any material
amount.
However, in 1992 the Partnership returned approximately $271,000 in offering
proceeds to Limited Partners admitted to the Partnership as of December 31,
1991. No future distributions of offering proceeds are anticipated.
7
<PAGE>
In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its 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 years in the future, and
(iii) the inability of the Partnership to directly cause the sale of Apartment
Complexes by 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
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.
As of December 31, 1996, the Partnership had acquired 15 Local Limited
Partnership Interests. Each of the 15 Apartment Complexes owned by the 15 Local
Limited Partnerships receives or is expected to receive Government Assistance
and each of them has received a reservation for Low Income Housing Credits. As
of December 31, 1996 all 15 of the Apartment Complexes had commenced operations.
Consistent with the Partnership's investment objective, each Local Partnership
is generating Housing Tax 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
$1,393,600, $1,833,514 , and $1,536,105 for the years ended December 31, 1996,
1995, and 1994, 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 as Reserves. 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 fee 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 asset management fee incurred was
$209,807, $199,751, and $175,287, for the years ended December 31, 1996, 1995,
and 1994, respectively.
For 1994, other operating expenses includes the write off of $160,000 advanced
to the Twin Pines limited partnership. These advances were made in 1993 and 1994
and were for landscaping and operating deficits. Twin Pines is in the process of
re-negotiating its mortgage with the lender. Additionally, in 1994 a non-profit
entity was installed as the local general partner which will result in the
abatement of future property taxes. In April 1997, the Partnership advanced
$72,000 in connection with a work-out of the permanent loan on the property. It
is not anticipated that the Partnership will have to advance additional funds in
a material amount to Twin Pines. The remaining portion of other expenses
consists of the Partnership's administrative expenses, such as accounting and
legal fees, bank charges and investor reporting expenses.
8
<PAGE>
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
are expected to generate losses during each year of operations; this is so
because, although rental income is generally expected to exceed cash operating
expenses, depreciation and amortization deductions claimed by the Local Limited
Partnerships are expected to exceed net rental income.
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.
<PAGE>
Item 8. Financial Statements and Supplementary Data
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
FINANCIAL STATEMENTS
For The Years Ended
December 31, 1996, 1995 and 1994
with
INDEPENDENT AUDITORS' REPORT THEREON
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC California Housing Tax Credits II, L.P.
We have audited the accompanying balance sheets of WNC California Housing Tax
Credits II, L.P. (a California Limited Partnership) (the "Partnership") as of
December 31, 1996 and 1995, and the related statements of operations, partners'
equity (deficit) and cash flows for the years ended December 31, 1996, 1995 and
1994. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We did not audit the financial statements of the
limited partnerships in which WNC California Housing Tax Credits II, L.P. is a
limited partner. These investments, as discussed in Note 2 to the financial
statements, are accounted for by the equity method. The investments in these
limited partnerships represented 94% and 89% of the total assets of WNC
California Housing Tax Credits II, L.P., at December 31, 1996 and 1995,
respectively. The financial statements of the limited partnerships were audited
by other auditors whose reports have been furnished to us, and our opinion,
insofar as it relates to the amounts included for these limited partnerships, is
based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC California Housing Tax Credits II, L.P. (a
California Limited Partnership) as of December 31, 1996 and 1995, and the
results of its operations and its cash flows for the years ended December 31,
1996, 1995 and 1994 in conformity with generally accepted accounting principles.
/s/ Corbin & Wertz
_______________________________
CORBIN & WERTZ
Irvine, California
March 25, 1997
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS 1996 1995
---------- ----------
Cash and cash equivalents $ 517,151 $ 1,113,575
Investments in limited partnerships
(Note 2) 8,447,282 9,640,622
Other assets 12,492 34,288
----------- -----------
$ 8,976,925 $10,788,485
========= ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payable to limited partnerships
(Note 4) $ --- $ 555,000
Accrued fees and expenses due to
General Partner and affiliates
(Note 3) 703,693 566,653
------- -------
Total liabilities 703,693 1,121,653
------- ---------
Partners' equity (deficit):
General partner (82,529) (68,593)
Limited partners (20,000 units authorized;
17,726 units issued and outstanding at
December 31, 1996 and 1995) 8,355,761 9,735,425
--------- ---------
Total partners' equity 8,273,232 9,666,832
--------- ---------
$ 8,976,925 $10,788,485
========= ==========
See accompanying notes to financial statements
FS-2
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
---------- ---------- ----------
Interest income $ 24,231 $ 52,399 $ 61,226
------ ------ ------
Operating expenses:
Amortization 54,836 54,836 47,565
Partnership management fees
(Note 3) 209,807 199,751 175,287
Other (Note 3) 24,395 51,674 180,384
------ ------ -------
Total operating expenses 289,038 306,261 403,236
------- ------- -------
Loss from operations (264,807) (253,862) (342,010)
Equity in losses from limited
partnerships (Note 2) (1,128,793) (1,579,652) (1,194,095)
---------- ---------- ----------
Net loss $ (1,393,600) $ (1,833,514) $(1,536,105)
========== ========== ==========
Net loss allocable to:
General partners $ (13,936) $ (18,335) $ (15,361)
======= ======= =======
Limited partners $ (1,379,664) $ (1,815,179) $(1,520,744)
========== ========== ==========
Net loss per weighted number
of limited partner units $ (77.83) $ (102.40) $ (85.79)
====== ======= ======
Outstanding weighted number of
limited partner units 17,726 17,726 17,726
====== ====== ======
See accompanying notes to financial statements
FS-3
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended December 31, 1996, 1995 and 1994
General Limited
Partner Partners Total
------------- ------------ ------------
Balance (deficit),
January 1, 1994 $ (34,897) $13,071,348 $13,036,451
Net loss (15,361) (1,520,744) (1,536,105)
---------- ---------- ----------
Balance (deficit),
December 31, 1994 (50,258) 11,550,604 11,500,346
Net loss (18,335) (1,815,179) (1,833,514)
---------- ---------- ----------
Balance (deficit),
December 31, 1995 (68,593) 9,735,425 9,666,832
Net loss (13,936) (1,379,664) (1,393,600)
---------- ---------- ----------
Balance (deficit),
December 31, 1996 $ (82,529) $ 8,355,761 $ 8,273,232
========== ========== ==========
See accompanying notes to financial statements
FS-4
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net loss $(1,393,600) $(1,833,514) $(1,536,105)
Adjustments to reconcile net
loss to net cash (used in)
provided by operating activities:
Amortization 54,836 54,836 47,565
Equity in losses of limited
partnerships 1,128,793 1,579,652 1,194,095
Bad debts (Note 3) -- -- 160,072
Change in other assets 26,757 (27,977) 1,119
Increase in accrued fees and
expenses due to General Partner
and affiliates 137,040 158,082 175,287
------- ------- -------
Net cash (used in) provided by
operating activities (46,174) (68,921) 42,033
------- ------- ------
Cash flows from investing activities:
Investments in limited partnerships (555,000) (512,103) (2,300,399)
Increase in receivable from affiliate -- -- (105,477)
Capitalized acquisition costs and
fees -- -- (29,949)
Distributions from limited partnerships 11,319 4,039 --
Change in loans receivable (6,569) (2,000) 136,020
------ ------ -------
Net cash used in investing activities (550,250) (510,064) (2,299,805)
-------- -------- ----------
Net decrease in cash and cash equivalents (596,424) (578,985) (2,257,772)
Cash and cash equivalents, beginning of
year 1,113,575 1,692,560 3,950,332
--------- --------- ---------
Cash and cash equivalents, end of year $ 517,151 $ 1,113,575 $ 1,692,560
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ -- $ -- $ --
=========== =========== ===========
Taxes paid $ 800 $ 800 $ 800
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements
FS-5
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC California Housing Tax Credits II, L.P. (A California Limited Partnership)
(the "Partnership") was formed on September 13, 1990 under the laws of the State
of California. The Partnership was formed to invest primarily in other limited
partnerships which own and operate multifamily housing complexes that are
eligible for low income housing tax credits.
The general partner is WNC Tax Credit Partners, L.P. WNC & Associates, Inc. and
Wilfred N. Cooper are the general partners of WNC Tax Credit Partners, L.P. The
Cooper Revocable Trust owns 70% of the stock of WNC & Associates, Inc.
The Partnership shall continue in full force and effect until December 31, 2045
unless terminated prior to that date pursuant to the partnership agreement or
law.
The Partnership Agreement authorized the sale of up to 20,000 units of Limited
Partnership Interest at $1,000 per Unit ("Units"). The offering of Units
concluded in January 1993 at which time 17,726 Units, representing subscriptions
in the amount of $17,726,000, had been accepted. The General Partner has a 1%
interest in operating profits and losses of the Partnership. The limited
partners will be allocated the remaining 99% interest in proportion to their
respective investments.
After the limited partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership Agreement) and the General Partner has received a
subordinated disposition fee (as described in Note 3), 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.
The Partnership's investments in limited partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate,
and include the risks that neither the Partnership's investments nor the
apartment complexes owned by the limited partnerships will be readily
marketable. Additionally there can be no assurance that the Partnership will be
able to dispose of its interest in the limited partnerships. 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 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 limited partnerships, there can be no assurance that Partnership
operations will be profitable or that the anticipated housing tax credits will
be available to limited partners.
Continued
FS-6
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Method of Accounting For Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of each limited partnership's results of operations and
for any distributions received. The limited partnership's accounting policies
are consistent with those of the Partnership. Costs incurred by the Partnership
in acquiring the investments in limited partnerships are capitalized as part of
the investment account and are being amortized over 30 years (see Note 2).
Losses from operating partnerships allocated to the Partnership are not
recognized to the extent that the investment balance would be adjusted below
zero.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents.
Concentration of Credit Risk
At December 31, 1996, the Partnership maintained cash balances at certain
financial institutions in excess of the federally insured maximum.
Other Assets
Other assets include organization costs of $8,039 which are presented net of
accumulated amortization of $6,822 and $5,214 at December 31, 1996 and 1995,
respectively.
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. The General Partner is obligated to
pay all offering and organization costs in excess of 15% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of limited partners' capital and amounted to $2,389,519 as of
December 31, 1996 and 1995.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
Continued
FS-7
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Net Loss Per Weighted Number of Limited Partner Units
Net loss per weighted number of limited partner units is computed by dividing
the limited partners' share of net loss by the weighted number of limited
partner units outstanding during the year.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of December 31, 1996, the Partnership has acquired limited partnership
interests in fifteen limited partnerships which own and operate apartment
complexes consisting of 777 apartment units. The respective general partners of
the limited partnerships manage the day to day operations of the limited
partnerships. Significant limited partner business decisions, as defined,
require Partnership approval. The Partnership, as a limited partner, is
generally entitled to 99% of the operating profits and losses of the limited
partnerships.
The Partnership's investment in limited partnerships as shown in the
accompanying balance sheets at December 31, 1996 and 1995 are approximately
$1,301,000 and $1,354,000, respectively, greater than the Partnership's equity
as shown in the limited partnerships' combined financial statements. This
difference is due primarily to acquisition, selection and other costs related to
the acquisition of the limited partnerships which were capitalized in the
Partnership's investment account and to capital contributions payable to the
limited partnerships which were netted against partner capital in the limited
partnerships' financial statements (see Note 3). The capitalized costs are being
amortized over 30 years.
The following is a summary of the equity method activity of the investments in
limited partnerships for the years ended December 31:
1996 1995
------------ ------------
Investments per balance sheet,
beginning of year $ 9,640,622 $ 11,178,031
Capital contributions to limited
partnerships -- 99,510
Distributions (11,319) (4,039)
Equity in losses of limited partnerships (1,128,793) (1,579,652)
Amortization of capitalized acquisition
costs (53,228) (53,228)
------------ ------------
Investments per balance sheet, end of year $ 8,447,282 $ 9,640,622
============ ============
Continued
FS-8
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
Approximate combined condensed financial information from the individual
financial statements of the limited partnerships as of December 31 and for the
years then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
December 31,
------------
Assets 1996 1995
- ------ ----------- -----------
Buildings and improvements, net of
accumulated depreciation for 1996 and
1995 of $5,257,000 and $3,976,000,
respectively $33,546,000 $34,671,000
Land 2,465,000 2,465,000
Other assets 2,436,000 2,776,000
----------- -----------
Total assets $38,447,000 $39,912,000
=========== ===========
Liabilities
- -----------
Mortgage and construction loans
payable $28,490,000 $29,348,000
Other liabilities 2,227,000 1,637,000
----------- -----------
Total liabilities 30,717,000 30,985,000
----------- -----------
Partners' Capital
- -----------------
WNC California Housing Tax Credits II, L.P. 7,146,000 8,286,000
Other partners 584,000 641,000
----------- -----------
Total partners' capital 7,730,000 8,927,000
----------- -----------
Total liabilities and partners' capital $38,447,000 $39,912,000
=========== ===========
Continued
FS-9
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
COMBINED CONDENSED STATEMENTS OF OPERATIONS
For The Years Ended December 31,
--------------------------------
1996 1995 1994
---------- ---------- -------
Total revenues $ 3,081,000 $ 2,649,000 $ 2,321,000
----------- ----------- -----------
Expenses:
Operating expenses 2,043,000 1,969,000 1,632,000
Interest expense 875,000 992,000 773,000
Depreciation and amort-
ization 1,305,000 1,285,000 1,123,000
--------- --------- ---------
Total expenses 4,223,000 4,246,000 3,528,000
--------- --------- ---------
Net loss $(1,142,000) $(1,597,000) $(1,207,000)
============ ============ ===========
Net loss allocable to the
Partnership $(1,129,000) $(1,580,000) $(1,194,000)
============ ============ ===========
Certain limited partnerships have incurred significant operating losses and have
working capital deficiencies. In the event these limited partnerships continue
to incur significant operating losses, additional capital contributions by the
Partnership may be required to sustain the operations of such limited
partnerships. If additional capital contributions are not made when they are
required, the Partnership's investment in certain of such limited partnerships
could be impaired.
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 for the following items:
Acquisition fees equal to 9% of the gross proceeds from the sale of
partnership units as compensation to the General Partner for services
rendered to the Partnership in connection with the acquisition of
limited partnerships. As of December 31, 1996 and 1995, acquisition
fees of $1,595,340 have been incurred and included in the
Partnership's investment in limited partnerships. Accumulated
amortization amounted to $245,028 and $191,852 as of December 31, 1996
and 1995, respectively.
Reimbursement of costs incurred by an affiliate of the General Partner
in connection with the acquisition of limited partnerships. These
reimbursements have not exceeded 1.7% of the gross proceeds. As of
December 31, 1996 and 1995, acquisition costs of $1,520 have been
incurred and included in the Partnership's investment in partnerships.
Accumulated amortization was insignificant for 1996 and 1995.
Continued
FS-10
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
An annual management fee equal to 0.5% of the invested assets of the
limited partnerships, including the Partnership's allocable share of
the mortgages. Management fees of $209,807, $199,751 and $175,287 were
incurred for 1996, 1995 and 1994, respectively, of which $75,000 and
$43,000 were paid in 1996 and 1995, respectively. No amounts were paid
in 1994.
A subordinated disposition fee in an amount equal to 1% of the sales
price of any property sold. Payment of this fee to the General Partner
is subordinated to the limited partners who receive a 6% preferred
return (as defined in the Partnership Agreement) and is payable only
if the General Partner or its affiliates render services.
The Partnership advanced funds to a limited partnership for operating expenses.
Amounts advanced for the year ended December 31, 1994 totaled $105,477. The
total receivable of $160,072 was written off as uncollectible during 1994 and
has been included in other operating expenses in the accompanying 1994 statement
of operations.
The accrued fees and expenses due to General Partner and affiliates consist of
the following:
December 31,
------------
1996 1995
---- ----
Selection fees payable $ -- $ 1,681
Asset management fee payable 699,779 564,972
Reimbursement for expenses paid
by an affiliate 3,914 --
----- -----
$703,693 $566,653
======== ========
NOTE 4 - PAYABLE TO LIMITED PARTNERSHIPS
Payable to limited partnerships at December 31, 1995, represented amounts which
were due at various times based on conditions specified in the respective
limited partnership agreements. These contributions were paid in installments
and were generally due upon the limited partnerships achieving certain operating
benchmarks. Generally such amounts are paid within two years of the
Partnership's initial investment.
NOTE 5 - INCOME TAXES
No provision for income taxes has been recorded in the accompanying financial
statements as any liability for income taxes is the obligation of the partners
of the Partnership.
FS-11
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
Item 10. Directors and Executive Officers of the 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., and Kay L. Cooper. All of the shares of the
Sponsor 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 65, 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 and a member of the
Executive Committee of the National Association of Home Builders ("NAHB") and a
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 Rural Builders Council of California ("RBCC") 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 62, 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.
DAVID N. SHAFER, age 44, has been a Senior Vice President of WNC & ASSOCIATES,
INC. since 1992 and General Counsel since 1990, and served as Asset Management
Director from 1990 to 1992. 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 RBCC, 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.
<PAGE>
WILFRED N. COOPER, JR., age 33, has been employed by WNC & ASSOCIATES, INC.
since 1988 and has been a Senior Vice President or Vice President since 1992.
Mr. Cooper heads the Acquisition Origination department at WNC and has been
President of and a registered principal with WNC CAPITAL CORPORATION, a member
firm of the NASD, 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 a
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 40, has been Vice President - Finance of WNC & ASSOCIATES,
INC. since 1992 and Chief Financial Officer since 1990. 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 41, has been Vice President - Asset Management of WNC &
ASSOCIATES, INC. since 1994. 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 California Society of Certified Public
Accountants and the American Institute of Certified Public Accountants.
SY GARBAN, age 50, has 19 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 by MRW, Inc., Newport
Beach, California from 1980 to 1989, a real estate acquisition, development and
management firm. Mr. Garban is a member of the International Association of
Financial Planners. Mr. Garban graduated from Michigan State University in 1967
with a Bachelor of Science degree in Business Administration.
CARL FARRINGTON, age 50, has been associated with WNC & ASSOCIATES, INC. since
1993, currently serving 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.
<PAGE>
MICHELE M. TAYLOR, age 41, 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 38, 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 59, 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 in 1958 with a Bachelor of Science degree.
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) 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). Fees of $209,807 were incurred
for the twelve months ended December 31, 1996.
(b) 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 Partnership Interest. Subordinated disposition fees will be subordinated
to the prior return of the Limited Partners' capital contributions and paymento
of the Preferred Return to the Limited Partners."Preferred Return" means
an annual, cumulative but not compounded "return" to the Limited Partners
(including Low Income Housing Credits) as a class on their adjusted capital
contributions commencing for each Limited Partner on the last day of the
calendar quarter during which the Limited Partners's capital contribution is
received, calculated at the following rates: (i.) 16% through December 31, 2001,
and (ii) 6% for the balance of the Partnership's term.
(c)The General Partner was allocated Low Income Housing Credits
for 1996 as follows:
Federal $20,798
California 6,562
------
$27,360
=======
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
No person is known to own beneficially in excess of 5% of the outstanding Units.
(b) Security Ownership of Management
Neither the General Partner, Associates nor any of the officers or directors of
Associates own directly or beneficially any limited partnership interests in
CHTC II.
(c) Changes in Control
The management and control of the General Partner may be changed at any time in
accordance with its 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 additonal 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 interestand 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 any time remove the General
Partner of the Parnership and elect a successor General Partner.
Item 13. Certain Relationships and Related Transactions
All of the Partnership's affairs are managed by the General Partner, through
Associates. The transactions with the General 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.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Financial Statements:
Report of independent public accountants
Balance sheets as of December 31, 1996 and 1995.
Statements of Operations for the years ended December 31, 1996, 1995 and 1994.
Statements of Partners' Equity for the years ended December 31, 1996, 1995, and
1994.
Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994.
Notes to Financial Statements.
Financial Statement Schedules:
N/A
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,
1992.
(10) Material contracts:
10.1 Amended and Restated Agreement of Limited Partnership Orland Associates
dated June 15, 1991 filed as exhibit 10.1 to Form 10-K dated December 31, 1992
is hereby incorporated herein by reference as exhibit 10.1.
10.2 Ukiah Terrace a California Limited Partnership, Amended and Restated
Agreement of Limited Partnership dated June 15, 1991 filed as exhibit 10.2 to
Form 10-K dated December 31, 1992 is hereby incorporated herein by reference as
exhibit 10.2.
10.3 Amended and Restated Agreement of Limited Partnership Northwest Tulare
Associates dated July 3, 1991 filed as exhibit 10.3 to Form 10-K dated December
31, 1992 is hereby incorporated herein by reference as exhibit 10.3.
10.4 Second Amended and Restated Agreement of Limited Partnership Yucca Warren
Vista, Ltd. dated July 15, 1991 filed as exhibit 10.4 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit 10.4.
10.5 Amended and Restated Agreement of Limited Partnership of Woodlake Garden
Apartments dated July 17, 1991 filed as exhibit 10.5 to Form 10-K dated December
31, 1992 is hereby incorporated herein by reference as exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of 601 Main Street
Investors dated December 22, 1991 filed as exhibit 10.6 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit 10.6.
10.7 Amended and Restated Agreement of Limited Partnership of ADI Development
Partners dated January 2, 1992 filed as exhibit 10.7 to Form 10-K dated December
31, 1992 is hereby incorporated herein by reference as exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Bayless Garden
Apartment Investors dated January 2, 1992 filed as exhibit 10.8 to Form 10-K
dated December 31, 1992 is hereby incorporated herein by reference as exhibit
10.8.
10.9 Third Amended and Restated Agreement of Limited Partnership of Twin Pines
Apartment Associates dated January 2, 1992 filed as exhibit 10.9 to Form 10-K
dated December 31, 1992 is hereby incorporated herein by reference as exhibit
10.9.
<PAGE>
10.10 Amended and Restated Agreement of Limited Partnership of Blackberry Oaks,
Ltd. dated January 15, 1992 filed as exhibit 10.10 to Form 10-K dated December
31, 1992 is hereby incorporated herein by reference as exhibit 10.10.
10.11 Amended and Restated Agreement of Limited Partnership of Mecca Apartments
II dated January 15, 1992 filed as exhibit 10.11 to Form 10-K dated December 31,
1992 is hereby incorporated herein by reference as exhibit 10.11.
10.12 Amended and Restated Agreement of Limited Partnership of Silver Birch
Limited Partnership dated November 23, 1992 filed as exhibit 10.12 to Form 10-K
dated December 31, 1992 is hereby incorporated herein by reference as exhibit
10.12.
10.13 Amended and Restated Agreement of Limited Partnership of Jacob's Square
dated January 2, 1992 filed as exhibit 10.1 to Form 10-K dated December 31, 1993
is hereby incorporated herein by reference as exhibit 10.13.
10.14 Amended and restated limited partnership agreement of Nevada Meadows, A
California Limited Partnership as exhibit 10.2 to Form 10-K dated December 31,
1993 is hereby incorporated herein by reference as exhibit 10.14.
REPORTS ON 8-K.
No reports on Form 8-K were filed during the fourth quarter ended December 31,
1996.
<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 CALIFORNIA HOUSING TAX CREDITS II, L.P.
By: WNC Tax Credit Partners, L.P. General Partner
By: WNC & Associates, Inc. General Partner
By: /s/ John B. Lester, Jr.
_____________________________________________________
John B. Lester, Jr. President of WNC & Associates, Inc.
Date: April 22, 1997
By: /s/ Theodore M. Paul
_____________________________________________________
Theodore M. Paul Vice-President, Finance
Date: April 22, 1997
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
Date: April 22, 1996
By: /s/ John B. Lester, Jr.
_____________________________________________________
John B. Lester, Jr. Secretary of the Board
Date: April 22, 1997
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