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 March 31, 2000
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.
California 33-0433017
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
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
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State the aggregate market value of the voting and non-voting common equity 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
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PART I.
Item 1. Business
Organization
WNC California Housing Tax Credits II, L.P. ("CHTC" 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 other limited partnerships or limited liability companies ("Local
Limited Partnerships") which own multifamily housing complexes that are eligible
for low-income housing federal and, in certain cases, California income tax
credits ("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. Wilfred N. Cooper,
Sr., through the Cooper Revocable Trust, owns 66.8% of the outstanding stock of
Associates. John B. Lester, Jr. was the original limited partner of the
Partnership and owns, through the Lester Family Trust, 28.6% of the outstanding
stock of Associates. Wilfred N. Cooper, Jr., President of Associates, owns 2.1%
of the outstanding stock of Associates. The business of the Partnership is
conducted primarily through Associates, as the Partnership has no employees of
its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission, 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 on 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 or non-managing member in
Local Limited Partnerships each of which will own and operate a multi-family
housing complex (the "Housing 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
to reduce 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
Housing Complex is subject to a fifteen-year compliance period (the "Compliance
Period"), and under state law may have to be maintained as low income housing
for 30 or more years.
In general, in order to avoid recapture of Low Income Housing 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 any Local Limited Partnership of its Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership's Agreement of Limited
Partnership, as amended by the Supplements thereto (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 its Housing Complex, it
is anticipated that the local general partner ("Local General Partner") will
either continue to operate such Housing Complex or take such other actions as
the Local General Partner believes to be in the best interest of the Local
Limited Partnership. Notwithstanding the preceding, circumstances beyond the
control of the General Partner or the Local General Partners may occur during
the Compliance Period, which would require the Partnership to approve the
disposition of a Housing Complex prior to the end thereof, possibly resulting in
recapture of Low Income Housing Credits.
3
<PAGE>
As of March 31, 2000, the Partnership had invested in fifteen Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is eligible for the federal Low Income Housing Credit and twelve of them
were eligible for the California Low Income Housing Credit. Certain Local
Limited Partnerships may 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 multi-unit residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness. If a Local Limited Partnership does not make its mortgage
payments, the lender could foreclose resulting in a loss of the Housing Complex
and Low Income Housing Credits. As a limited partner or non-managing member of
the Local Limited Partnerships, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships, and will rely
totally on the general partners or managing members of the Local Limited
Partnerships for management of the Local 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 Housing
Complexes and the Partnership. In addition, each Local Limited Partnership is
subject to risks relating to environmental hazards and natural disasters, which
might be uninsurable. Because the Partnership's 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 the anticipated Low Income
Housing Credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the Low Income Housing Credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All Partnership management
decisions are made by the General Partner.
As a limited partner or non-managing member, the Partnership's liability for
obligations of each Local Limited Partnership is limited to its investment. The
Local General Partners of each Local Limited Partnership retain responsibility
for developing, constructing, maintaining, operating and managing the Housing
Complexes.
Item 2. Properties
Through its investments in Local Limited Partnerships, the Partnership holds
limited partnership interests in the Housing Complexes. The following table
reflects the status of the fifteen Housing Complexes as of the dates indicated:
4
<PAGE>
<TABLE>
<CAPTION>
-------------------------------- ------------------------------------------------
As of March 31, 2000 As of December 31, 1999
-------------------------------- ------------------------------------------------
Partnership's Estimated Encumbrances
Total Investment Amount of Low Income of Local
General Partner in Local Limited Investment Number of Occu- Housing Limited
Partnership Name Location Name Partnerships Paid to Date Units pancy Credits Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
601 Main Street Stockton, Daniels C. Louge $ 1,656,000 $ 1,656,000 165 93% $ 4,080,000 $ 3,997,000
Investors California
ADI Development Delhi, Anthony Donovan 699,000 699,000 31 94% 1,757,000 1,220,000
Partners California
Bayless Garden Red Bluff, Douglas W. Young 1,110,000 1,110,000 46 96% 2,741,000 1,284,000
Apartments California
Investors
Blackberry Lodi, Bonita Homes
Oaks, Ltd California Incorporated 463,000 463,000 42 100% 1,063,000 1,930,000
Jacob's Square Exeter, Philip R. Hammond,
California Jr. and Diane M.
Hammond 1,324,000 1,324,000 45 91% 2,933,000 1,586,000
Mecca Mecca, Sam Jack, Jr. and
Apartments II California Sam Jack and
Associates 2,200,000 2,200,000 60 98% 5,183,000 2,512,000
Nevada Meadows Grass Valley, Thomas G. Larson,
California William H. Larson
and Raymond L.
Tetzlaff 459,000 459,000 34 100% 1,030,000 1,933,000
Northwest Tulare Ivanhoe, Philip R. Hammond,
Associates California Jr. and Diane M.
Hammond 1,226,000 1,226,000 54 76% 2,950,000 1,778,000
Orland Orland, Richard E. Huffman
Associates California and Robert A. Ginno 432,000 432,000 40 100% 972,000 1,714,000
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
-------------------------------- ------------------------------------------------
As of March 31, 2000 As of December 31, 1999
-------------------------------- ------------------------------------------------
Partnership's Estimated Encumbrances
Total Investment Amount of Low Income of Local
General Partner in Local Limited Investment Number of Occu- Housing Limited
Partnership Name Location Name Partnerships Paid to Date Units pancy Credits Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pine Gate Ahoskie, Regency Investment
Limited California Associates, Inc.,
Partnership Boyd Management,
Inc. and Gordon L.
Blackwell 272,000 272,000 56 100% 611,000 1,452,000
Silver Birch Huron, Philip R. Hammond,
Associates California Jr. and Diane M.
Hammond 378,000 378,000 35 94% 1,131,000 1,343,000
Twin Pines Groveland, Donald S. Kavanagh
Apartments California and John N. Brezzo 1,278,000 1,278,000 39 79% 3,055,000 1,788,000
Associates
Ukiah Terrace Ukiah, Thomas G. Larson,
California William H. Larson
and Raymond L.
Tetzlaff 349,000 349,000 41 98% 825,000 1,775,000
Woodlake Garden Woodlake, David J. Michael
Apartments California and Pamela J.
Michael 548,000 548,000 48 94% 1,374,000 1,936,000
Yucca-Warren Joshua Tree, WNC & Associates,
Vista California Inc. 520,000 520,000 50 98% 1,251,000 2,162,000
Associates, Ltd. --------- ---------- ---- ---- ---------- ----------
$ 12,914,000 $ 12,914,000 786 94% $ 30,956,000 $ 28,410,000
========== ========== ==== ==== ========== ==========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
------------------------------------------
For the year ended December 31, 1999
------------------------------------------
Low Income
Housing Credits
Rental Net Allocated to
Partnership Name Income Loss Partnership
--------------------------------------------------------------------------------
<S> <C> <C> <C>
601 Main Street Investors $ 360,000 $ (351,000) 99%
ADI Development Partners 121,000 (56,000) 99%
Bayless Garden Apartments Investors 163,000 (124,000) 99%
Blackberry Oaks, Ltd 214,000 (19,000) 99%
Jacob's Square 186,000 (109,000) 99%
Mecca Apartments II 261,000 (158,000) 99%
Nevada Meadows 195,000 (37,000) 99%
Northwest Tulare Associates 171,000 (123,000) 99%
Orland Associates 202,000 (11,000) 99%
Pine Gate Limited Partnership 226,000 8,000 99%
Silver Birch Associates 134,000 (29,000) 99%
Twin Pines Apartments Associates 99,000 (236,000) 99%
Ukiah Terrace 184,000 (56,000) 99%
Woodlake Garden Apartments 182,000 (59,000) 95%
Yucca-Warren Vista Associates, Ltd 223,000 (25,000) 99%
--------- ----------
$ 2,921,000 $ (1,385,000)
========= ==========
</TABLE>
7
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Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
PART II.
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 were sold through a
public offering. It is not anticipated that any public market will develop
for the purchase and sale of any Unit and none exists. Units can be
assigned only if certain requirements in the Partnership Agreement are
satisfied.
(b) At March 31, 2000, there were 1,280 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.
(d) No unregistered securities were sold by the Partnership during the year
ended March 31, 2000.
Item 5b.
NOT APPLICABLE
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
<TABLE>
<CAPTION>
March 31 December 31
-------------------------- -------------------------------------------------
2000 1999 1998 1997 1996 1995
---------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents $ 314,630 $ 364,853 $ 379,754 $ 377,378 $ 517,151 $ 1,113,575
Investments in
limited
partnerships, net 5,442,623 6,240,560 6,439,942 7,291,595 8,447,282 9,640,622
Due from affiliates 38,540 - - - - -
Other assets - - - - 12,492 34,288
---------- ------------ ----------- ----------- ----------- -----------
$ 5,795,793 $ 6,605,413 $ 6,819,696 $ 7,668,973 $ 8,976,925 $ 10,788,485
========== ============ =========== =========== =========== ===========
LIABILITIES
Due to limited
partnerships $ - $ - $ - $ - $ - $ 555,000
Accrued fees and
expenses due to
general partner
and affiliates 1,278,242 1,077,385 1,044,307 836,316 703,693 566,653
PARTNERS' EQUITY 4,517,551 5,528,028 5,775,389 6,832,657 8,273,232 9,666,832
---------- ------------ ----------- ----------- ----------- -----------
$ 5,795,793 $ 6,605,413 $ 6,819,696 $ 7,668,973 $ 8,976,925 $ 10,788,485
========== ============ =========== =========== =========== ===========
</TABLE>
8
<PAGE>
Selected results of operations, cash flows and other information for the
Partnership is as follows:
<TABLE>
<CAPTION>
For the
Year Ended For the Three Months For the Years Ended
March 31 Ended March 31 December 31
----------- ------------------------ --------------------------------------------------
2000 1999 1998 1998 1997 1996 1995
----------- ----------- ----------- ---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Loss from operations $ (273,480) $ (68,998) $ (65,161) $ (274,539) $ (284,989) $ (264,807) $ (253,862)
Equity in losses of
limited partnerships (736,997) (178,363) (241,600) (782,729) (1,155,586) (1,128,793) (1,579,652)
----------- ---------- ---------- ----------- ---------- ---------- ----------
Net loss $ (1,010,477) $ (247,361) $ (306,761) $(1,057,268) $ (1,440,575) $ (1,393,600) $ (1,833,514)
=========== ========== ========== ========== ========== ========== ==========
Net loss allocated to:
General partner $ (10,105) $ (2,474) $ (3,068) $ (10,573) $ (14,406) $ (13,936) $ (18,335)
=========== ========== =========== ========== ========== ========== ==========
Limited partners $ (1,000,372) $ (244,887) $ (303,693) $(1,046,695) $ (1,426,169) $ (1,379,664) $ (1,815,179)
=========== ========== =========== ========== ========== ========== ==========
Net loss per limited
partnership unit $ (56.44) $ (13.82) $ (17.13) $ (59.05) $ (80.46) $ (77.83) $ (102.40)
=========== ========== =========== ========== ========== ========== ==========
Outstanding weighted
limited partner
units 17,726 17,726 17,726 17,726 17,726 17,726 17,726
=========== ========== =========== ========== ========== ========== ==========
For the
Year Ended For the Three Months For the Years Ended
March 31 Ended March 31 December 31
-------------- ------------------------- ---------------------------------------------------
2000 1999 1998 1998 1997 1996 1995
---------- ----------- ----------- ----------- ---------- ---------- ----------
(Unaudited)
Net cash provided by
(used in):
Operating
activities $ (57,948) $ (22,613) $ (1,469) $ (13,320) $ (95,215) $ (46,174) $ (68,921)
Investing
activities 7,725 7,712 3,606 15,696 (44,558) (550,250) (510,064)
---------- ----------- ----------- ----------- ---------- ---------- ----------
Net change in cash (50,223) (14,901) 2,137 2,376 (139,773) (596,424) (578,985)
and cash equivalents
Cash and cash
equivalents,
beginning of period 364,853 379,754 377,378 377,378 517,151 1,113,575 1,692,560
---------- ----------- ----------- ----------- ---------- ---------- ----------
Cash and cash
equivalents, end of
period $ 314,630 $ 364,853 $ 379,515 $ 379,754 $ 377,378 $ 517,151 $ 1,113,575
========== =========== =========== =========== ========== ========== ==========
Low Income Housing Credit per limited partner unit was as follows for the years
ended December 31:
1999 1998 1997 1996 1995
--------------- --------------- ---------------- --------------- ---------------
Federal $ 117 $ 117 $ 117 $ 116 $ 108
State - 9 27 37 98
=============== =============== ================ =============== ===============
Total $ 117 $ 126 $ 144 $ 153 $ 206
=============== =============== ================ =============== ===============
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Financial Condition
The Partnership's assets at March 31, 2000 consisted primarily of $314,630 in
cash and aggregate investments in the fifteen Local Limited Partnerships of
$5,442,623. Liabilities at March 31, 2000 primarily consisted of $1,278,152 of
accrued annual management fees due to the General Partners.
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Results of Operations
Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. The
Partnership's net loss for the year ended March 31, 2000 was $(1,010,000),
reflecting a decrease of $47,000 from the net loss experienced for the year
ended December 31, 1998. The decline in net loss is primarily due to equity in
losses from limited partnerships which declined by $46,000 to $(737,000) for the
year ended March 31, 2000 from $(783,000) for the year ended December 31, 1998.
This decrease was a result of the Partnership not recognizing certain losses of
the Local Limited Partnerships. The investments in such Local Limited
Partnerships had reached $0 at March 31, 2000. Since the Partnership's liability
with respect to its investments is limited, losses in excess of investment are
not recognized.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
The Partnership's net loss for the three months ended March 31, 1999 was
$(247,000), reflecting a decrease of $60,000 from the net loss experienced for
the three months ended March 31, 1998. The decline in net loss is primarily due
to equity in losses of limited partnerships which declined by $64,000 to
$(178,000) for the three months ended March 31, 1999 from $(242,000) for the
three months ended March 31, 1998. This decrease was a result of the Partnership
not recognizing certain losses of the Local Limited Partnerships. The
investments in such Local Limited Partnerships reached $0 during 1998. Since the
Partnership's liability with respect to its investments is limited, losses in
excess of investment are not recognized. The reduction in equity losses
recognized was partially offset by an increase in loss from operations of $4,000
to $(69,000) for the three months ended March 31, 1999 from $(65,000) for the
three months ended March 31, 1998, due to a comparable increase in operating
expense allocations.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. The
Partnership's net loss for 1998 was $(1,057,000), reflecting a decrease of
$384,000 from the net loss experienced in 1997. The decline in net loss is
primarily due to equity in losses from limited partnerships which declined to
$(783,000) in 1998 from $(1,156,000) in 1997. This decrease was a result of the
Partnership not recognizing certain losses of the Local Limited Partnerships.
The investments in such Local Limited Partnerships reached $0 during 1998. Since
the Partnership's liability with respect to its investments is limited, losses
in excess of investment are not recognized. Other operating expenses also
fluctuate $(8,000) to $(10,000) per year, depending on the needs of the
Partnership.
Cash Flows
Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. Net cash
used during the year ended March 31, 2000 was $(50,000), compared to net cash
increase for the year ended December 31, 1998 of $2,000. The change was due
primarily to the Partnership advancing approximately $39,000 to two Local
Limited Partnerships to cover operating cash deficits, which did not occur in
the year ended December 31, 1998. In addition, the Partnership experienced an
increase in cash paid to the General Partner for annual management fees of
$10,000 and a decrease in distributions received from Local Limited Partnerships
of $8,000.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net cash used during the three months ended March 31, 1999 was $(15,000),
compared to a net increase in cash for the three months ended March 31, 1998 of
$2,000. The change was due primarily to an increase in cash paid to the general
partner or affiliates of $19,000, and an increase in operating costs paid to
third parties of $5,000, partially offset by an increase in distributions
received from Local Limited Partnerships of $4,000.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. The net
decrease in cash used in operating activities of $82,000 was primarily due to an
increase in the deferral of fees and expenses due to the General Partner and
affiliates. Net cash provided by investing activities increased to $16,000 in
1998 compared to a use of $(45,000) in 1997 primarily as a result of the
Partnership making its final, scheduled capital contributions to Local Limited
Partnerships in 1997.
10
<PAGE>
During the year ended March 31, 2000, the three months ended March 31, 1999 and
the year ended December 31, 1998, accrued payables, which consist of related
party management fees due to the General Partner, increased by $201,000, $33,000
and $208,000, respectively. The General Partner does not anticipate that these
accrued fees will be paid until such time as capital reserves are in excess of
future foreseeable working capital requirements of the Partnership.
The Partnership expects its future cash flows, together with its net available
assets at March 31, 2000, to be sufficient to meet all currently foreseeable
future cash requirements.
Impact of Year 2000
WNC & Associates, Inc.
Status of Readiness
Information Technology (IT) Systems. The Partnership relies on the IT systems of
WNC, its ultimate general partner. IT systems include computer hardware and
software used to produce financial reports and tax return information. This
information is then used to generate reports to investors and regulatory
agencies, including the Internal Revenue Service and the Securities and Exchange
Commission. The IT systems of WNC are year 2000 compliant.
Non-IT Systems. The Partnership also relies on the non-IT systems of WNC. Non-IT
systems include machinery and equipment such as telephones, voice mail and
electronic postage equipment. The non-IT systems of WNC are year 2000 compliant.
Service Providers. WNC also relies on the IT and non-IT systems of service
providers. Service providers include utility companies, financial institutions,
telecommunications carriers, municipalities, and other outside vendors. WNC has
obtained verbal assurances from its material service providers (electrical power
provider, financial institutions and telecommunications carriers) that their IT
and non-IT systems are year 2000 compliant. To date, WNC has not encountered
significant year 2000 issues or business disruptions from its service providers.
Costs to Address Year 2000 Issues
The cost to address year 2000 issues for WNC has been less than $25,000.
Risk of Year 2000 Issues
Although WNC has encountered no significant year 2000 issues to date, the most
reasonable and likely result from non-year 2000 compliance of systems of the
service providers noted above would be the disruption of normal business
operations for WNC. This disruption could, in turn, lead to delays in performing
reporting and fiduciary responsibilities on behalf of the Partnership. The worst
case scenario would be the replacement of a service provider. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.
Local Limited Partnerships
Status of Readiness
To date, WNC and the Partnership have encountered no significant year 2000
issues with respect to the Local Limited Partnerships.
11
<PAGE>
Costs to Address Year 2000 Issues
There has been and will be no cost to the Partnership as a result of assessing
year 2000 issues for the Local Limited Partnerships. Although no significant
year 2000 issues have been encountered to date, the cost to deal with potential
year 2000 issues of the Local Limited Partnerships cannot be estimated at this
time.
Risk of Year 2000 Issues
Although no significant year 2000 issues have been encountered to date, there
can be no assurance that the Partnership will be unaffected by year 2000 issues.
The most reasonable and likely result from non-year 2000 compliance will be the
disruption of normal business operations for the Local Limited Partnerships,
including but not limited to the possible failure to properly collect rents and
meet their obligations in a timely manner. This disruption would, in turn, lead
to delays by the Local Limited Partnerships in performing reporting and
fiduciary responsibilities on behalf of the Partnership. The worst-case scenario
would include the initiation of foreclosure proceedings on the property by
mortgage debt holders. Under these circumstances, WNC or its affiliates will
take actions necessary to minimize the risk of foreclosure, including the
removal and replacement of a Local General Partner by the Partnership. These
delays would likely be temporary and would likely not have a material effect on
the Partnership or WNC.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NOT APPLICABLE
Item 8. Financial Statements and Supplementary Data
12
<PAGE>
Report of Independent Certified Public Accountants
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
March 31, 2000 and 1999, and December 31, 1998, and the related statements of
operations, partners' equity (deficit) and cash flows for the year ended March
31, 2000, the three months ended March 31, 1999 and the year ended December 31,
1998. 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. A significant portion of the financial
statements of the limited partnerships in which the Partnership is a limited
partner were audited by other auditors whose reports have been furnished to us.
As discussed in Note 2 to the financial statements, the Partnership accounts for
its investments in limited partnerships using the equity method. The portion of
the Partnership's investment in limited partnerships audited by other auditors
represented 74%, 76% and 76% of the total assets of the Partnership at March 31,
2000 and 1999, and December 31, 1998. Our opinion, insofar as it relates to the
amounts included in the financial statements for the limited partnerships which
were audited by others, 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 March 31, 2000 and 1999, and December 31,
1998, and the results of its operations and its cash flows for the year ended
March 31, 2000, the three months ended March 31, 1999 and the year ended
December 31, 1998, in conformity with generally accepted accounting principles.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
June 6, 2000
13
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC California Housing Tax Credits II, L.P.
We have audited the accompanying statements of operations, partners' equity
(deficit) and cash flows of WNC California Housing Tax Credits II, L.P. (a
California Limited Partnership) (the "Partnership") for the year ended December
31, 1997. 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 audit. 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 95% of the total assets of WNC California
Housing Tax Credits II, L.P. at December 31, 1997. 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 results of operations and cash flows of WNC California Housing Tax Credits
II, L.P. (a California Limited Partnership) for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
/s/ CORBIN & WERTZ
CORBIN & WERTZ
Irvine, California
April 1, 1998
14
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
------------------------------ ----------------
2000 1999 1998
------------- ------------- ----------------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 314,630 $ 364,853 $ 379,754
Investments in limited partnerships,
net (Note 2) 5,442,623 6,240,560 6,439,942
Due from affiliates (Note 2) 38,540 - -
------------- ------------- ----------------
$ 5,795,793 $ 6,605,413 $ 6,819,696
============= ============= ================
LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)
Liabilities:
Accrued fees and expenses due to General
Partner and affiliates (Note 3) $ 1,278,242 $ 1,077,385 $ 1,044,307
------------- ------------- ----------------
Commitments and contingencies
Partners' equity (deficit):
General partner (120,087) (109,982) (107,508)
Limited partners (20,000 units authorized;
17,726 units issued and outstanding) 4,637,638 5,638,010 5,882,897
------------- ------------- ----------------
Total partners' equity 4,517,551 5,528,028 5,775,389
------------- ------------- ----------------
$ 5,795,793 $ 6,605,413 $ 6,819,696
============= ============= ================
</TABLE>
See accompanying notes to financial statements
15
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the
Year For the Three
Ended Months Ended For the Years Ended
March 31 March 31 December 31
------------ --------------- ----------------------------
2000 1999 1998 1997
------------ --------------- ------------ ------------
<S> <C> <C> <C> <C>
Interest income $ 16,614 $ 4,060 $ 16,353 $ 13,218
Distribution income 1,500 - - -
------------ --------------- ------------ ------------
Total income 18,114 4,060 16,353 13,218
------------ --------------- ------------ ------------
Operating expenses:
Amortization (Note 2) 53,215 13,307 53,228 54,445
Asset management fees (Note 3) 210,084 52,521 210,084 210,084
Other 28,295 7,230 27,580 33,678
------------ --------------- ------------ ------------
Total operating expenses 291,594 73,058 290,892 298,207
------------ --------------- ------------ ------------
Loss from operations (273,480) (68,998) (274,539) (284,989)
Equity in losses of limited
partnerships (Note 2) (736,997) (178,363) (782,729) (1,155,586)
------------ --------------- ------------ ------------
Net loss $ (1,010,477) $ (247,361) $ (1,057,268) $ (1,440,575)
============ =============== ============ ============
Net loss allocated to:
General partner $ (10,105) $ (2,474) $ (10,573) $ (14,406)
============ =============== ============ ============
Limited partners $ (1,000,372) $ (244,887) $ (1,046,695) $ (1,426,169)
============ =============== ============ ============
Net loss per limited partnership
unit $ (56.44) $ (13.82) $ (59.05) $ (80.46)
============ =============== ============ ============
Outstanding weighted limited
partner units 17,726 17,726 17,726 17,726
============ =============== ============ ============
</TABLE>
See accompanying notes to financial statements
16
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the Year Ended March 31, 2000,
For the Three Months Ended March 31, 1999 and
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Partners' equity (deficit) at January 1, 1997 $ (82,529) $ 8,355,761 $ 8,273,232
Net loss (14,406) (1,426,169) (1,440,575)
--------------- --------------- ---------------
Partners' equity (deficit) at December 31, 1997 (96,935) 6,929,592 6,832,657
Net loss (10,573) (1,046,695) (1,057,268)
--------------- --------------- ---------------
Partners' equity (deficit) at December 31, 1998 (107,508) 5,882,897 5,775,389
Net loss (2,474) (244,887) (247,361)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 1999 (109,982) 5,638,010 5,528,028
Net loss (10,105) (1,000,372) (1,010,477)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2000 $ (120,087) $ 4,637,638 $ 4,517,551
=============== =============== ===============
</TABLE>
See accompanying notes to financial statements
17
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the
Year Ended Three Months For the Years Ended
March 31 Ended March 31 December 31
------------ -------------- ---------------------------
2000 1999 1998 1997
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,010,477) $ (247,361) $ (1,057,268) $ (1,440,575)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Amortization 53,215 13,307 53,228 54,445
Equity in losses of limited
partnerships 736,997 178,363 782,729 1,155,586
Change in other assets - - - 2,706
Change in due from affiliates (38,540) - - -
Increase in accrued fees and
expenses due to General
Partner and affiliates 200,857 33,078 207,991 132,623
------------ ------------- ----------- ------------
Net cash used in operating activities (57,948) (22,613) (13,320) (95,215)
------------ ------------- ----------- ------------
Cash flows from investing activities:
Investments in limited
partnerships, net - - - (75,526)
Distributions from limited
partnerships 7,725 7,712 15,696 22,399
Change in loans receivable - - - 8,569
------------ ------------- ----------- ------------
Net cash provided by (used in)
investing activities 7,725 7,712 15,696 (44,558)
------------ ------------- ----------- ------------
Net increase (decrease) in cash and
cash equivalents (50,223) (14,901) 2,376 (139,773)
Cash and cash equivalents, beginning
of period 364,853 379,754 377,378 517,151
------------ ------------- ----------- ------------
Cash and cash equivalents, end of
period $ 314,630 $ 364,853 $ 379,754 $ 377,378
============ ============= =========== ============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Taxes paid $ 800 $ - $ 800 $ 800
============ ============== =========== ============
</TABLE>
See accompanying notes to financial statements
18
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Year Ended March 31, 2000,
For the Three Months Ended March 31, 1999 and
For the Years Ended December 31, 1998 and 1997
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 (the "Local Limited Partnerships") which own and operate
multi-family housing complexes (the "Housing Complex") that are eligible for low
income housing tax credits. The local general partners (the "Local General
Partners") of each Local Limited Partnership retain responsibility for
maintaining, operating and managing the Housing Complex.
The general partner is WNC Tax Credit Partners, L.P. (the "General Partner").
WNC & Associates, Inc. ("WNC") and Wilfred N. Cooper are the general partners of
WNC Tax Credit Partners, L.P. Wilfred N. Cooper Sr., through the Cooper
Revocable Trust owns 66.8% of the outstanding stock of WNC. John B. Lester, Jr.
was the original limited partner of the Partnership and owns, through the Lester
Family Trust, 28.6% of the outstanding stock of WNC. Wilfred N. Cooper, Jr.,
President of WNC, owns 2.1% of the outstanding stock of WNC.
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 financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.
The Partnership Agreement authorized the sale of up to 20,000 units 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, taxable income and losses, cash available for distribution from the
Partnership and tax credits of the Partnership. The limited partners will be
allocated the remaining 99% of these items 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 proceeds
equal to its capital contribution and a subordinated disposition fee (as
described in Note 3) from the remainder, any additional sale or refinancing
proceeds will be distributed 90% to the limited partners (in proportion to their
respective investments) and 10% to the General Partner.
Change in Reporting Year End
In 1999, the Partnership elected to change its year end for financial reporting
purposes from December 31 to March 31. All financial information reflected in
the financial statements and related footnotes has been adjusted for this change
in year end except for the combined condensed financial information relating to
the Local Limited Partnerships included in Note 2.
19
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Year Ended March 31, 2000,
For the Three Months Ended March 31, 1999 and
For the Years Ended December 31, 1998 and 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Risks and Uncertainties
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 multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local 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 Housing Complexes and the
Partnership. In addition, each Local Limited Partnership is subject to risks
relating to environmental hazards and natural disasters which might be
uninsurable. Because the Partnership's 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 the anticipated low income housing
credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partner.
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 the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of the
investment account and are being amortized over 30 years (see Note 2).
Losses from limited partnerships for the years ended December 31, 1998 and 1997
have been recorded by the Partnership based on reported results provided by the
Local Limited Partnerships. Losses from limited partnerships for the three
months ended March 31, 1999 have been estimated by management of the
Partnership. Losses from limited partnerships for the year ended March 31, 2000
have been recorded by the Partnership based on nine months of reported results
provided by the Local Limited Partnerships and on three months of results
estimated by management of the Partnership. Losses from Local Limited
Partnerships allocated to the Partnership are not recognized to the extent that
the investment balance would be adjusted below zero.
20
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Year Ended March 31, 2000,
For the Three Months Ended March 31, 1999 and
For the Years Ended December 31, 1998 and 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
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 at the end
of all periods presented.
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.
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. As of
March 31, 2000 and 1999, and December 31, 1998, the Partnership had cash
equivalents of $314,630, $363,876 and $378,777, respectively.
Concentration of Credit Risk
At March 31, 2000, the Partnership maintained cash balances at a certain
financial institution in excess of the federally insured maximum.
Net Loss Per Limited Partner Unit
Net loss per limited partnership unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit
includes no dilution and is computed by dividing loss available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net loss per unit is not required.
Reporting Comprehensive Income
In June 1997, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income. This statement establishes
standards for reporting the components of comprehensive income and requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be included in a financial statement that is
displayed with the same prominence as other financial statements. Comprehensive
income includes net income as well as certain items that are reported directly
within a separate component of partners' equity and bypass net income. The
Partnership adopted the provisions of this statement in 1998. For the periods
presented, the Partnership has no elements of other comprehensive income, as
defined by SFAS No. 130.
21
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Year Ended March 31, 2000,
For the Three Months Ended March 31, 1999 and
For the Years Ended December 31, 1998 and 1997
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of the periods presented, the Partnership has acquired limited partnership
interests in fifteen Local Limited Partnerships each of which owns one Housing
Complex consisting of an aggregate of 786 apartment units. The respective
general partners of the Local Limited Partnerships manage the day to day
operations of the entities. Significant Local Limited Partnership business
decisions require approval from the Partnership. The Partnership, as a limited
partner, is generally entitled to 99%, as specified in the Local Limited
Partnership agreements, of the operating profits and losses, taxable income and
losses and tax credits of the Limited Partnerships.
The Partnership's investments in Local Limited Partnerships as shown in the
balance sheets at March 31, 2000 and 1999 are approximately $2,155,000 and
$1,636,000, respectively, greater than the Partnership's equity at the preceding
December 31 as shown in the Local Limited Partnerships combined financial
statements presented below. This difference is primarily due to unrecorded
losses, as discussed below, and acquisition, selection and other costs related
to the acquisition of the investments which have been capitalized in the
Partnership's investment account. The Partnership's investment is also lower
than the Partnership's equity as shown in the Local Limited Partnership's
combined financial statements due to the estimated losses recorded by the
Partnership for the three month period ended March 31.
Equity in losses of the Local Limited Partnerships is recognized in the
financial statements until the related investment account is reduced to a zero
balance. Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income.
At March 31, 2000, the investment accounts in certain Local Limited Partnerships
have reached a zero balance. Consequently, a portion of the Partnership's
estimate of its share of losses for the year ended March 31, 2000 and the three
months ended March 31, 1999, amounting to approximately $556,141 and $166,072,
respectively, have not been recognized. The Partnership's share of losses during
the years ended December 31, 1998 and 1997 amounting to approximately $567,892
and $152,775, respectively, have not been recognized. As of March 31, 2000, the
aggregate share of net losses not recognized by the Partnership amounted to
$1,442,880.
Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented:
<TABLE>
<CAPTION>
For the Year For the Three
Ended Months Ended For the Years Ended
March 31 March 31 December 31
--------------- --------------- ------------------------------
2000 1999 1998 1997
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Investments per balance sheet, beginning of period $ 6,240,560 $ 6,439,942 $ 7,291,595 $ 8,447,282
Capital contributions paid, net - - - 75,526
Distributions received (7,725) (7,712) (15,696) (22,399)
Equity in losses of limited partnerships (736,997) (178,363) (782,729) (1,155,586)
Amortization of paid acquisition fees and costs (53,215) (13,307) (53,228) (53,228)
--------------- --------------- ------------- -------------
Investments per balance sheet, end of period $ 5,442,623 $ 6,240,560 $ 6,439,942 $ 7,291,595
=============== =============== ============= =============
</TABLE>
22
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Year Ended March 31, 2000,
For the Three Months Ended March 31, 1999 and
For the Years Ended December 31, 1998 and 1997
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
The financial information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted against
interest expense. Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships as of December
31 and for the years then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
ASSETS
<S> <C> <C>
Buildings and improvements,(net of accumulated
depreciation for 1999 and 1998 of $9,065,000
and $7,793,000, respectively) $ 30,062,000 $ 31,200,000
Land 2,465,000 2,465,000
Other assets 2,813,000 2,656,000
--------------- ---------------
$ 35,340,000 $ 36,321,000
=============== ===============
LIABILITIES
Mortgage and construction loans payable $ 28,410,000 $ 28,626,000
Due to related parties 715,000 582,000
Other liabilities 2,657,000 2,137,000
--------------- ---------------
31,782,000 31,345,000
--------------- ---------------
PARTNERS' CAPITAL
WNC California Housing Tax Credits II, L.P. 3,288,000 4,605,000
Other partners 270,000 371,000
--------------- ---------------
3,558,000 4,976,000
--------------- ---------------
$ 35,340,000 $ 36,321,000
=============== ===============
</TABLE>
23
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Year Ended March 31, 2000,
For the Three Months Ended March 31, 1999 and
For the Years Ended December 31, 1998 and 1997
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues $ 3,077,000 $ 3,034,000 $ 3,021,000
--------------- --------------- ---------------
Expenses:
Operating expenses 2,252,000 2,220,000 2,137,000
Interest expense 924,000 924,000 935,000
Depreciation and amortization 1,286,000 1,284,000 1,276,000
--------------- --------------- ---------------
Total expenses 4,462,000 4,428,000 4,348,000
--------------- --------------- ---------------
Net loss $ (1,385,000) $ (1,394,000) $ (1,327,000)
=============== =============== ===============
Net loss allocable to the Partnership $ (1,310,000) $ (1,351,000) $ (1,312,000)
=============== =============== ===============
Net loss recorded by the Partnership $ (737,000) $ (783,000) $ (1,156,000)
=============== =============== ===============
</TABLE>
Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership may be required to sustain the operations of
such Local Limited Partnerships. If additional capital contributions are not
made when they are required, the Partnership's investment in certain of such
Local Limited Partnerships could be impaired and the loss and recapture of the
related tax credits could occur.
The Partnership has advanced approximately $38,540 to two Local Limited
Partnerships as of March 31, 2000 to cover operating cash deficits, which is
presented as Due from Affiliates in the accompanying 2000 balance sheet.
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
Units as compensation for services rendered in connection with the
acquisition of Local Limited Partnerships. At the end of all periods
presented, the Partnership incurred acquisition fees of $1,595,340.
Accumulated amortization of these capitalized costs was $417,850,
$364,674 and $351,380 as of March 31, 2000 and 1999 and December 31,
1998, respectively.
Reimbursement of costs incurred by an affiliate of the General Partner
in connection with the acquisition of Local Limited Partnerships.
These reimbursements have not exceeded 1.7% of the gross proceeds. As
of the end of all periods presented, the Partnership incurred
acquisition costs of $1,520 which have been included in investments in
limited partnerships. Accumulated amortization was insignificant for
the periods presented.
An annual management fee equal to 0.5% of the invested assets of the
Local Limited Partnerships, including the Partnership's allocable
share of the mortgages. Management fees of $210,084 and $52,521 were
incurred during the year ended March 31, 2000 and three months ended
March 31, 1999, respectively, and $210,084 and $210,084 were incurred
for the years ended December 31, 1998 and 1997, respectively, of which
$10,000 and $19,400 were paid during the year ended March 31, 2000 and
the three months ended March 31, 1999, respectively, and $0 and
$75,000 were paid during the years ended December 31, 1998 and 1997,
respectively.
24
<PAGE>
WNC CALIFORNIA HOUSING TAX CREDITS II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Year Ended March 31, 2000,
For the Three Months Ended March 31, 1999 and
For the Years Ended December 31, 1998 and 1997
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
A subordinated disposition fee in an amount equal to 1% of the sales
price of real estate 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 in the sales
effort.
An affiliate of the General Partner provides management services for
two of the properties in the Local Limited Partnerships. Management
fees were earned by the affiliate in the amount of $26,186 and $7,300
for the year ended March 31, 2000 and the three months ended March 31,
1999, respectively, and $40,513 and $4,130 for the years ended
December 31, 1998 and 1997, respectively. In May 1999, the affiliate
of the General Partner refunded $14,503 and $2,076 of the management
fees related to 1998 and 1997, respectively, in accordance with the
Partnership's prospectus.
The accrued fees and expenses due to General Partner and affiliates consist of
the following:
<TABLE>
<CAPTION>
March 31 December 31
-------------------------------- ----------------
2000 1999 1998
-------------- -------------- ----------------
<S> <C> <C> <C>
Reimbursement for expenses paid by the $ 90 $ (683) $ (640)
General Partner or an affiliate
Asset management fee payable 1,278,152 1,078,068 1,044,947
-------------- -------------- ----------------
Total $ 1,278,242 $ 1,077,385 $ 1,044,307
============== ============== ================
The General Partner does not anticipate that these accrued fees will be paid in
full until such time as capital reserves are in excess of future foreseeable
working capital requirements of the Partnership.
NOTE 4 - 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.
</TABLE>
25
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NOT APPLICABLE
PART III.
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 WNC & Associates, Inc. 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. The principal shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.
Wilfred N. Cooper, Sr., age 69, is the founder, Chairman, Chief Executive
Officer and a Director of WNC & Associates, Inc., a Director of WNC Capital
Corporation, and a general partner in some of the programs previously sponsored
by the Sponsor. Mr. Cooper has been involved in real estate investment and
acquisition activities since 1968. Previously, during 1970 and 1971, he was
founder and 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 where he had responsibility for factory-built housing evaluation
and project management in urban planning and development. Mr. Cooper is a
Director of the National Association of Home Builders (NAHB) and a National
Trustee for NAHB's Political Action Committee, a Director of the National
Housing Conference (NHC) and a member of NHC's Executive Committee and a
Director of the National Multi-Housing Council (NMHC). Mr. Cooper graduated from
Pomona College in 1956 with a Bachelor of Arts degree.
John B. Lester, Jr., age 66, is Vice-Chairman, a Director, member of the
Acquisition Committee of WNC & Associates, Inc., and a Director of WNC Capital
Corporation. Mr. Lester has 27 years of experience in engineering and
construction and has been involved in real estate investment and acquisition
activities since 1986 when he joined the Sponsor. Previously, 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 graduated from the
University of Southern California in 1956 with a Bachelor of Science degree in
Mechanical Engineering.
Wilfred N. Cooper, Jr., age 37, is President, Chief Operating Officer, a
Director and a member of the Acquisition Committee of WNC & Associates, Inc. He
is President of, and a registered principal with, WNC Capital Corporation, a
member firm of the NASD, and is a Director of WNC Management, Inc. He has been
involved in investment and acquisition activities with respect to real estate
since he joined the Sponsor in 1988. Prior to this, he served as Government
Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper is a
member of the Advisory Board for LIHC Monthly Report, a Director of NMHC and an
Alternate Director of NAHB. He graduated from The American University in 1985
with a Bachelor of Arts degree.
David N. Shafer, age 48, is Executive Vice President, a Director, General
Counsel, and a member of the Acquisition Committee of WNC & Associates, Inc.,
and a Director and Secretary of WNC Management, Inc. Mr. Shafer has been
involved in real estate investment and acquisition activities since 1984. Prior
to joining the Sponsor in 1990, he was practicing law with a specialty in real
estate and taxation. Mr. Shafer is a Director and President of the California
Council of Affordable Housing 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 (cum laude) and from the University of San Diego in 1986
with a Master of Law degree in Taxation.
26
<PAGE>
Michael L. Dickenson, age 43, is Vice President and Chief Financial Officer, and
a member of the Acquisition Committee of WNC & Associates, Inc., and Chief
Financial Officer of WNC Management, Inc. He has been involved with acquisition
and investment activities with respect to real estate since 1985. Prior to
joining the Sponsor in March 1999, he was the Director of Financial Services at
TrizecHahn Centers Inc., a developer and operator of commercial real estate,
from 1995 to 1999, a Senior Manager with E&Y Kenneth Leventhal Real Estate
Group, Ernst & Young, LLP, from 1988 to 1995, and Vice President of Finance with
Great Southwest Companies, a commercial and residential real estate developer,
from 1985 to 1988. Mr. Dickenson is a member of the Financial Accounting
Standards Committee for the National Association of Real Estate Companies and
the American Institute of Certified Public Accountants, and a Director of
HomeAid Southern California, a charitable organization affiliated with the
building industry. He graduated from Texas Tech University in 1978 with a
Bachelor of Business Administration - Accounting degree, and is a Certified
Public Accountant in California and Texas.
Thomas J. Riha, age 45, is Vice President - Asset Management and a member of the
Acquisition Committee of WNC & Associates, Inc. and a Director and Chief
Executive Officer of WNC Management, Inc. Mr. Riha has been involved in
acquisition and investment activities with respect to real estate since 1979.
Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty
Advisor, a real estate acquisition and management company, last serving as Vice
President - Operations. 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 and a member of the American Institute of Certified Public
Accountants.
Sy P. Garban, age 54, is Vice President - Institutional Investments of WNC &
Associates, Inc. and has been employed by the Sponsor since 1989. Mr. Garban has
been involved in real estate investment activities since 1978. Prior to joining
the Sponsor he served as Executive Vice President of MRW, Inc., 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.
N. Paul Buckland, age 37, is Vice President - Acquisitions and a member of the
Acquisition Committee of WNC & Associates, Inc. He has been involved in real
estate acquisitions and investments since 1986 and has been employed with WNC &
Associates, Inc. since 1994. Prior to that, he served on the development team of
the Bixby Ranch that constructed apartment units and Class A office space in
California and neighboring states, and 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.
David Turek, age 45, is Vice President - Originations of WNC & Associates, Inc.
He has been involved with real estate investment and finance activities since
1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to
1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties. From 1990 to 1995, he was involved in the development of
conventional and tax credit multi-family housing. He is a Director with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.
Kay L. Cooper, age 63, is a Director of WNC & Associates, Inc. Mrs. Cooper was
the founder and sole proprietor of Agate 108, a manufacturer and retailer of
home accessory products, from 1975 until 1998. She is the wife of Wilfred N.
Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B.
Lester, Jr. Ms. Cooper graduated from the University of Southern California in
1958 with a Bachelor of Science degree.
27
<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 its affiliates during the current or future years for the following
fees:
(a) Annual Asset Management Fee. An annual asset management fee in an amount
equal to 0.5% of the Invested Assets of the Partnership, as defined.
"Invested Assets" means 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 Housing
Complexes owned by such Local Limited Partnerships. Fees of $210,084,
$52,521 and $210,084 were incurred during the year ended March 31, 2000,
the three months ended March 31, 1999 and the year ended December 31, 1998,
respectively. The Partnership paid the General Partner or its affiliates,
$10,000, $19,400 and $0 of those fees during the year ended March 31, 2000,
the three months ended March 31, 2000 and the year ended December 31, 1998,
respectively.
(b) Subordinated Disposition Fee. A subordinated disposition fee in an amount
equal to 1% of the sale price received in connection with the sale or
disposition of a Housing 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 Preferred
Return on investment 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 Partner's capital contribution is
received by the Partnership, calculated at the following rates: (i) 16%
through December 31, 2001, and (ii) 6% for the balance of the Partnerships
term. No disposition fees have been paid.
(c) Operating Expense. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $16,000, $0 and $1,000
during the year ended March 31, 2000, the three months ended March 31, 1999
and the year ended December 31, 1998, respectively.
(d) Interest in Partnership. The General Partners receive 1% of the
Partnership's allocated Low Income Tax Housing Credits, which approximated
$21,000 and $22,000 for the General Partner for the years ended December
31, 1999 and 1998, respectively. The General Partners are also entitled to
receive 1% of cash distributions. There were no distributions of cash to
the General Partners during the year ended March 31, 2000, the three months
ended March 31, 1999 or the year ended December 31, 1998.
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, 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.
28
<PAGE>
(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 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 any time remove the
General Partner of the Partnership and elect a successor General Partner.
Item 13. Certain Relationships and Related Transactions
The General Partner manages all of the Partnership's affairs. The transactions
with the General Partner are primarily in the form of fees paid by the
Partnership for services rendered to the Partnership and the General Partner's
interest in the Partnership, as discussed in Item 11 and in the notes to the
Partnership's financial statements.
29
<PAGE>
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof:
Report of Independent Certified Public Accountants
Independent Auditors' Report
Balance Sheets, March 31, 2000 and 1999 and December 31, 1998
Statements of Operations for the year ended March 31, 2000, the three
months ended March 31, 1999 and the years ended December 31, 1998
and 1997
Statements of Partners' Equity for the year ended March 31, 2000, the
three months ended March 31, 1999 and the years ended December 31,
1998 and 1997
Statements of Cash Flows for the year ended March 31, 2000, the three
months ended March 31, 1999 and the years ended December 31, 1998 and
1997
Notes to Financial Statements
(a)(2) Financial statement schedules included in Part IV hereof:
Report of Independent Certified Public Accountants on Financial
Statement Schedules
Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K.
1. A Form 8-K dated May 13, 1999 was filed on May 14, 1999 reporting the
Partnership's change in fiscal year end to March 31. No financial
statements were included.
(c) Exhibits.
Agreement of Limited Partnership dated as of September 13, 1990,
included as Exhibit 28.1 to the Form 10-K filed for the year ended
December 31, 1992, is hereby incorporated herein as Exhibit 3.1.
10.1 Amended and Restated Agreement of Limited Partnership of 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 Amended and Restated Agreement of Limited Partnership of Ukiah Terrace
a California 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 of 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 of 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.
30
<PAGE>
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.
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 herei 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.
21.1 Financial Statements of Mecca Apartments II, for the years ended
December 31, 1999 and 1998 together with Independent Auditors Report
thereon; a significant subsidiary of the Partnership.
(d) Financial statement schedules follow, as set forth in subsection
(a)(2) hereof.
31
<PAGE>
Report of Independent Certified Public Accountants on Financial Statement
Schedules
To the Partners
California Housing Tax Credits II, L.P.
The audits referred to in our report dated June 6, 2000 relating to the 2000,
1999 and 1998 financial statements of WNC California Housing Tax Credits II,
L.P. (the "Partnership"), which are contained in Item 8 of this Form 10-K,
included the audit of the accompanying financial statement schedules. The
financial statement schedules are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statement schedules based upon our audits.
In our opinion, such financial statement schedules present fairly, in all
material respects, the financial information set forth therein.
/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP
Orange County, California
June 6, 2000
32
<PAGE>
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
----------------------------------- ------------------------------------------------------
As of March 31, 2000 As of December 31, 1999
----------------------------------- ------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Paid Local Limited Property and Accumulated Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
601 Main Street Stockton,
Investors California $ 1,656,000 $ 1,656,000 $ 3,997,000 $ 5,553,000 $ 1,496,000 $ 4,057,000
ADI Development Delhi,
Partners California 699,000 699,000 1,220,000 1,904,000 392,000 1,512,000
Bayless Garden Red Bluff,
Apartments Investors California 1,110,000 1,110,000 1,284,000 2,570,000 754,000 1,816,000
Blackberry Oaks, Ltd Lodi,
California 463,000 463,000 1,930,000 2,430,000 403,000 2,027,000
Jacob's Square Exeter,
California 1,324,000 1,324,000 1,586,000 2,860,000 597,000 2,263,000
Mecca Apartments II Mecca,
California 2,200,000 2,200,000 2,512,000 4,361,000 553,000 3,808,000
Nevada Meadows Grass Valley,
California 459,000 459,000 1,778,000 2,599,000 354,000 2,245,000
Northwest Tulare Ivanhoe,
Associates California 1,226,000 1,226,000 1,933,000 2,959,000 856,000 2,103,000
Orland Associates Orland,
California 432,000 432,000 1,714,000 2,250,000 425,000 1,825,000
Pine Gate Limited Ahoskie,
Partnership California 272,000 272,000 1,452,000 1,803,000 243,000 1,560,000
</TABLE>
33
<PAGE>
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
----------------------------------- ------------------------------------------------------
As of March 31, 2000 As of December 31, 1999
----------------------------------- ------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Paid Local Limited Property and Accumulated Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Silver Birch Huron,
Associates California 378,000 378,000 1,343,000 1,714,000 431,000 1,283,000
Twin Pines Groveland,
Apartments Associates California 1,278,000 1,278,000 1,788,000 3,316,000 938,000 2,378,000
Ukiah Terrace Ukiah,
California 349,000 349,000 1,775,000 2,301,000 673,000 1,628,000
Woodlake Garden Woodlake,
Apartments California 548,000 548,000 1,936,000 2,458,000 481,000 1,977,000
Yucca-Warren Vista Joshua Tree,
Associates, Ltd. California 520,000 520,000 2,162,000 2,514,000 469,000 2,045,000
---------- ---------- ---------- ---------- --------- ----------
$ 12,914,000 $ 12,914,000 $ 28,410,000 $ 41,592,000 $ 9,065,000 $ 32,527,000
========== ========== ========== ========== ========= ==========
</TABLE>
34
<PAGE>
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
For the year ended December 31, 1999
-------------------------------------------------------------------------------------
Year
Investment Estimated Useful
Partnership Name Rental Income Net Income (Loss) Acquired Status Life (Years)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
601 Main Street Investors $ 360,000 $ (351,000) 1991 Completed 39
ADI Development Partners 121,000 (56,000) 1991 Completed 40
Bayless Garden Apartments Investors 163,000 (124,000) 1992 Completed 27.5
Blackberry Oaks, Ltd. 214,000 (19,000) 1992 Completed 40
Jacob's Square 186,000 (109,000) 1993 Completed 27.5
Mecca Apartments II 261,000 (158,000) 1993 Completed 40
Nevada Meadows 195,000 (37,000) 1993 Completed 40
Northwest Tulare Associates 171,000 (123,000) 1991 Completed 27.5
Orland Associates 202,000 (11,000) 1991 Completed 40
Pine Gate Limited Partnership 226,000 8,000 1994 Completed 50
Silver Birch Associates 134,000 (29,000) 1992 Completed 27.5
Twin Pines Apartments Associates 99,000 (236,000) 1991 Completed 27.5
Ukiah Terrace 184,000 (56,000) 1991 Completed 27.5
Woodlake Garden Apartments 182,000 (59,000) 1991 Completed 40
Yucca-Warren Vista Associates, Ltd. 223,000 (25,000) 1991 Completed 50
--------- ---------
$ 2,921,000 $ (1,385,000)
========= =========
</TABLE>
35
<PAGE>
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
-------------------------------- ---------------------------------------------------------
As of March 31, 1999 As of December 31, 1998
-------------------------------- ---------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Paid Local Limited Property and Accumulated Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
601 Main Street Stockton,
Investors California $ 1,656,000 $ 1,656,000 $ 4,011,000 $ 5,553,000 $ 1,294,000 $ 4,259,000
ADI Development Delhi,
Partners California 699,000 699,000 1,226,000 1,898,000 348,000 1,550,000
Bayless Garden Red Bluff,
Apartments Investors California 1,110,000 1,110,000 1,291,000 2,560,000 655,000 1,905,000
Blackberry Oaks, Ltd Lodi,
California 463,000 463,000 1,934,000 2,419,000 344,000 2,075,000
Jacob's Square Exeter,
California 1,324,000 1,324,000 1,717,000 2,860,000 497,000 2,363,000
Mecca Apartments II Mecca,
California 2,200,000 2,200,000 2,519,000 4,361,000 436,000 3,925,000
Nevada Meadows Grass Valley,
California 459,000 459,000 1,940,000 2,593,000 292,000 2,301,000
Northwest Tulare Ivanhoe,
Associates California 1,226,000 1,226,000 1,787,000 2,952,000 754,000 2,198,000
Orland Associates Orland,
California 432,000 432,000 1,718,000 2,246,000 371,000 1,875,000
Pine Gate Limited Ahoskie,
Partnership California 272,000 272,000 1,458,000 1,801,000 204,000 1,597,000
</TABLE>
36
<PAGE>
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
---------------------------------- --------------------------------------------------------
As of March 31, 1999 As of December 31, 1998
---------------------------------- -------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Paid Local Limited Property and Accumulated Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Silver Birch Huron,
Associates California 378,000 378,000 1,347,000 1,714,000 368,000 1,346,000
Twin Pines Groveland,
Apartments Associates California 1,278,000 1,278,000 1,789,000 3,285,000 812,000 2,473,000
Ukiah Terrace Ukiah,
California 349,000 349,000 1,779,000 2,280,000 596,000 1,684,000
Woodlake Garden Woodlake,
Apartments California 548,000 548,000 1,943,000 2,423,000 412,000 2,011,000
Yucca-Warren Vista Joshua Tree,
Associates, Ltd. California 520,000 520,000 2,167,000 2,513,000 410,000 2,103,000
---------- ---------- ---------- ---------- --------- ----------
$ 12,914,000 $ 12,914,000 $ 28,626,000 $ 41,458,000 $ 7,793,000 $ 33,665,000
========== ========== ========== ========== ========= ==========
</TABLE>
37
<PAGE>
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
For the year ended December 31, 1998
-------------------------------------------------------------------------------------
Year Estimated Useful
Partnership Name Rental Income Net Loss Investment Acquired Status Life (Years)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
601 Main Street Investors $ 366,000 $ (353,000) 1991 Completed 39
ADI Development Partners 119,000 (44,000) 1991 Completed 40
Bayless Garden Apartments Investors 168,000 (99,000) 1992 Completed 27.5
Blackberry Oaks, Ltd. 206,000 (17,000) 1992 Completed 40
Jacob's Square 183,000 (109,000) 1993 Completed 27.5
Mecca Apartments II 252,000 (164,000) 1993 Completed 40
Nevada Meadows 192,000 (20,000) 1993 Completed 40
Northwest Tulare Associates 183,000 (117,000) 1991 Completed 27.5
Orland Associates 187,000 (21,000) 1991 Completed 40
Pine Gate Limited Partnership 225,000 (6,000) 1994 Completed 50
Silver Birch Associates 129,000 (36,000) 1992 Completed 27.5
Twin Pines Apartments Associates 95,000 (263,000) 1991 Completed 27.5
Ukiah Terrace 179,000 (54,000) 1991 Completed 27.5
Woodlake Garden Apartments 181,000 (52,000) 1991 Completed 40
Yucca-Warren Vista Associates, Ltd. 214,000 (39,000) 1991 Completed 50
--------- ---------
$ 2,879,000 $ (1,394,000)
========= =========
</TABLE>
38
<PAGE>
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
As of December 31, 1998
------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Paid Local Limited Property and Accumulated Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
601 Main Street Stockton,
Investors California $ 1,656,000 $ 1,656,000 $ 4,011,000 $ 5,553,000 $ 1,294,000 $ 4,259,000
ADI Development Delhi,
Partners California 699,000 699,000 1,226,000 1,898,000 348,000 1,550,000
Bayless Garden Red Bluff,
Apartments Investors California 1,110,000 1,110,000 1,291,000 2,560,000 655,000 1,905,000
Blackberry Oaks, Ltd Lodi,
California 463,000 463,000 1,934,000 2,419,000 344,000 2,075,000
Jacob's Square Exeter,
California 1,324,000 1,324,000 1,717,000 2,860,000 497,000 2,363,000
Mecca Apartments II Mecca,
California 2,200,000 2,200,000 2,519,000 4,361,000 436,000 3,925,000
Nevada Meadows Grass Valley,
California 459,000 459,000 1,940,000 2,593,000 292,000 2,301,000
Northwest Tulare Ivanhoe,
Associates California 1,226,000 1,226,000 1,787,000 2,952,000 754,000 2,198,000
Orland Associates Orland,
California 432,000 432,000 1,718,000 2,246,000 371,000 1,875,000
Pine Gate Limited Ahoskie,
Partnership California 272,000 272,000 1,458,000 1,801,000 204,000 1,597,000
</TABLE>
39
<PAGE>
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
As of December 31, 1998
-------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Paid Local Limited Property and Accumulated Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Silver Birch Huron,
Associates California 378,000 378,000 1,347,000 1,714,000 368,000 1,346,000
Twin Pines Groveland,
Apartments Associates California 1,278,000 1,278,000 1,789,000 3,285,000 812,000 2,473,000
Ukiah Terrace Ukiah,
California 349,000 349,000 1,779,000 2,280,000 596,000 1,684,000
Woodlake Garden Woodlake,
Apartments California 548,000 548,000 1,943,000 2,423,000 412,000 2,011,000
Yucca-Warren Vista Joshua Tree,
Associates, Ltd. California 520,000 520,000 2,167,000 2,513,000 410,000 2,103,000
---------- ---------- ---------- ---------- --------- ----------
$ 12,914,000 $ 12,914,000 $ 28,626,000 $ 41,458,000 $ 7,793,000 $ 33,665,000
========== ========== ========== ========== ========= ==========
</TABLE>
40
<PAGE>
WNC California Housing Tax Credits II, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
For the year ended December 31, 1998
-------------------------------------------------------------------------------------
Year Estimated Useful
Partnership Name Rental Income Net Loss Investment Acquired Status Life (Years)
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
601 Main Street Investors $ 366,000 $ (353,000) 1991 Completed 39
ADI Development Partners 119,000 (44,000) 1991 Completed 40
Bayless Garden Apartments Investors 168,000 (99,000) 1992 Completed 27.5
Blackberry Oaks, Ltd. 206,000 (17,000) 1992 Completed 40
Jacob's Square 183,000 (109,000) 1993 Completed 27.5
Mecca Apartments II 252,000 (164,000) 1993 Completed 40
Nevada Meadows 192,000 (20,000) 1993 Completed 40
Northwest Tulare Associates 183,000 (117,000) 1991 Completed 27.5
Orland Associates 187,000 (21,000) 1991 Completed 40
Pine Gate Limited Partnership 225,000 (6,000) 1994 Completed 50
Silver Birch Associates 129,000 (36,000) 1992 Completed 27.5
Twin Pines Apartments Associates 95,000 (263,000) 1991 Completed 27.5
Ukiah Terrace 179,000 (54,000) 1991 Completed 27.5
Woodlake Garden Apartments 181,000 (52,000) 1991 Completed 40
Yucca-Warren Vista Associates, Ltd. 214,000 (39,000) 1991 Completed 50
--------- ---------
$ 2,879,000 $ (1,394,000)
========= =========
</TABLE>
41
<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/ Wilfred N. Cooper, Jr.
Wilfred N. Cooper, Jr.,
President-Chief Operating Officer of WNC & Associates, Inc.
Date: June 29, 2000
By: /s/ Michael L. Dickenson
Michael L. Dickenson,
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: June 29, 2000
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: June 29, 2000
By: /s/ John B. Lester, Jr.
John B. Lester, Jr., Director of WNC & Associates, Inc.
Date: June 29, 2000
By: /s/ David N. Shafer
David N Shafer, Director of WNC & Associates, Inc.
Date: June 29, 2000
42
