Exhibit
Number Exhibit Description
EX-21.1 Financial Statements of Colonial Village Roseville, for the years
ended December 31, 1999 and 1998 together with Independent
auditors' report thereon; a significant subsidiary of the
partnership.
44
<PAGE>
Colonial Village Roseville
Table of Contents
Page
Independent Auditors' Report 46
Financial Statements
Balance Sheet 47
Statements of Operations 49
Statements of Changes in Partners Capital 53
Statements of Cash Flows 54
Notes to Financial Statements 56
45
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Partners
Colonial Village Roseville
(A California Limited Partnership)
Rocklin, California
I have audited the accompanying balance sheets of Colonial Village Roseville (A
California Limited Partnership), as of December 31, 1999 and 1998, and the
related statements of income, partners' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audits 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Colonial Village Roseville (A
California Limited Partnership) as of December 31, 1999 and 1998, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Bernard E. Rea, CPA
Bernard E. Rea, CPA
Stockton, California
March 30, 2000
46
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS 1999 1998
----- -----
<S> <C> <C>
CURRENT ASSETS
Cash $ 78,528 $ 10,495
Rents receivable 587 -
Other receivables - -
Prepaid expense 2,939 2,909
---------- ----------
Total current assets $ 82,054 $ 13,404
---------- ----------
RESTRICTED DEPOSITS AND FUNDED RESERVES
Tenants' security deposits $ 24,903 $ 19,429
Replacement reserve escrow 76,760 57,400
---------- ----------
$ 101,663 $ 76,829
---------- ----------
PROPERTY AND EQUIPMENT, AT COST
Land $ 315,303 $ 315,303
Building 4,808,665 4,802,723
Equipment 167,665 166,914
---------- ----------
$ 5,291,633 $ 5,284,940
Less accumulated depreciation 981,267 791,063
---------- ----------
$ 4,310,366 $ 4,493,877
---------- ----------
OTHER ASSETS
Deferred charges, less accumulated
amortization of $23,662 and $18,449 $ 109,760 $ 114,973
---------- ----------
$ 109,760 $ 114,973
---------- ----------
$ 4,603,843 $ 4,699,083
=========== ===========
</TABLE>
See Notes to Financial Statements.
47
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1999 and 1998
<TABLE>
<CAPTION>
LIABILITIES AND PARTNERS' EQUITY 1999 1998
----- ----
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt $ 27,320 $ 25,309
Accounts payable 8,021 11,462
Accrued expense 800 800
Accrued property taxes - -
Developer fees payable 25,500 24,500
Advances from general partner, without
interest, due date, or collateral 7,355 8,251
Accrued interest - 13,604
---------- ----------
Total current liabilities $ 68,996 $ 83,926
---------- ----------
DEPOSIT AND PREPAYMENT LIABILITIES
Tenants' security deposits $ 23,964 $ 19,239
Prepaid rents - -
---------- ----------
$ 23,964 $ 19,239
---------- ----------
LONG-TERM DEBT
Mortgage payable, less current maturities $ 2,073,512 $ 2,103,030
Developer fees payable 381,553 407,053
---------- ----------
$ 2,455,065 $ 2,510,083
---------- ----------
COMMITMENT
PARTNERS' EQUITY $ 2,055,818 $ 2,085,835
---------- ----------
$ 4,603,843 $ 4,699,083
=========== ==========
</TABLE>
See Notes to Financial Statements.
48
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF INCOME
Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
RENTAL INCOME
Apartments $ 402,297 $ 380,368
Tenant assistance payments - -
Furniture and equipment - -
Commercial - -
Parking spaces - -
Subsidy income - -
Miscellaneous - -
---------- ----------
Net rental revenue $ 402,297 $ 380,368
---------- ----------
FINANCIAL REVENUE
Interest Income - project operations $ 2,032 $ 1,990
Income from investments - replacement reserve 1,954 1,020
Income from investments - operating reserve 570 138
Income from investments - miscellaneous - -
---------- ----------
Sub-total financial revenue $ 4,556 $ 3,148
---------- ----------
OTHER REVENUE
Laundry and vending $ 6,958 $ 6,260
NSF and late charges 1,707 1,050
Damage and cleaning fees 5,001 6,335
Forfeited tenant security deposits - -
Other revenue 59,379 1,384
---------- ----------
Sub-total other revenue $ 73,045 $ 15,029
---------- ----------
Total revenues $ 479,898 $ 398,545
---------- ----------
</TABLE>
See Notes to Financial Statements.
49
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF INCOME (CONTINUED)
Years Ended December 31, 1999 and 1998
1999 1998
----- ----
OPERATING EXPENSES
Renting expenses
Advertising $ 50 $ 7,111
Miscellaneous renting expenses 5,592 2,798
-------- --------
Sub-total renting expenses $ 5,642 $ 9,909
-------- --------
Administrative expenses
Office salaries $ 467 $ 792
Office supplies 1,926 4,835
Office rent - -
Management fee 24,192 17,729
Manager's salary 23,589 27,121
Manager rent free unit - -
Legal expense 679 242
Audit expense 4,368 4,168
Bookkeeping / accounting services - -
Telephone and answering service 2,590 2,771
Bad debts - 628
Miscellaneous administrative expenses 3,564 6,896
-------- --------
Sub-total administrative expenses $ 61,375 $ 65,182
-------- --------
Utilities expense
Fuel oil / coal $ - $ -
Electricity 5,932 6,377
Water 3,421 9,668
Gas 2,190 2,359
Sewer 4,968 15,636
-------- --------
Sub-total utilities expense $ 16,511 $ 34,040
-------- --------
See Notes to Financial Statements.
50
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF INCOME (CONTINUED)
Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Operating and maintenance expense
Janitor and cleaning payroll $ - $ -
Janitor and cleaning supplies 1,451 2,594
Janitor and cleaning contract 2,383 2,638
Exterminating payroll / contract 702 1,480
Exterminating supplies - -
Garbage and trash removal 5,545 8,174
Security payroll / contract - -
Grounds payroll - 222
Grounds supplies 866 603
Grounds contract 5,931 5,903
Repairs payroll 10,851 18,758
Repairs material 13,127 4,472
Repairs contract 1,480 8,074
Elevator maintenance / contract - -
Heating / cooling repairs and maintenance - 1,021
Swim pool maintenance / contract - -
Snow removal - -
Decorating payroll / contract 1,922 1,670
Decorating supplies 155 1,552
Vehicle and maintenance equipment o & r 176 153
Miscellaneous operating and maint. expenses 7,447 8,037
--------- ---------
Sub-total operating & maint. expense $ 52,036 $ 65,351
--------- ---------
Taxes and insurance
Real estate taxes $ 1,819 $ 500
Payroll taxes 3,571 4,710
Miscellaneous taxes, licenses, and permits 800 800
Property and liability insurance 3,889 3,632
Fidelity bond insurance - -
Workman's compensation 1,929 1,886
Health insurance and other employee benefits
4,722 2,533
Other insurance - -
--------- ---------
Sub-total taxes & insurance $ 16,730 $ 14,061
--------- ---------
Total operating expenses $ 152,294 $ 188,543
--------- ---------
</TABLE>
See Notes to Financial Statements.
51
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF INCOME (CONTINUED)
Years Ended December 31, 1999 and 1998
1999 1998
---- ----
OTHER EXPENSES
Interest expense - mortgage $ 162,204 $ 164,080
Interest expense - notes - -
Miscellaneous financial expense - -
Depreciation and amortization 195,417 200,798
Non project expenses - -
---------- ----------
Sub-total other expenses $ 357,621 $ 364,878
---------- ----------
Total expenses $ 509,915 $ 553,421
---------- ----------
Net income (loss) $ (30,017) $ (154,876)
========== ==========
See Notes to Financial Statements.
52
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
General Limited
Total Partner Partner
----- ------- -------
<S> <C> <C> <C> <C> <C>
Partners' equity
December 31, 1997 $ 2,240,711 $ 47,848 $ 2,192,863
Partners' capital
contributions - - -
Partners' capital
distributions - - -
Net income (loss) (154,876) (1,549) (153,327)
---------- ---------- ----------
Partners' equity
December 31, 1998 $ 2,085,835 $ 46,299 $ 2,039,536
Partners' capital
contributions - - -
Partners' capital
distributions - - -
Net income (loss) (30,017) (300) (29,717)
---------- ---------- ----------
Partners' equity
December 31, 1999 $ 2,055,818 $ 45,999 $ 2,009,819
========== ========== ==========
Percentage at
December 31, 1999 100% 1% 99%
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
53
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (30,017) $ (154,876)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 195,417 200,798
Change in assets and liabilities:
Decrease (increase) in:
Prepaid expenses (30) (247)
Tenants' security deposits (5,474) (494)
Rents receivable (587) 773
Other receivables - -
Increase (decrease) in:
Accounts payable (3,441) 2,890
Accrued expenses - -
Accrued interest (13,604) (149)
Accrued property taxes - -
Prepaid rents - (280)
Tenants' security deposits 4,725 (2,375)
--------- --------
Net cash provided by (used in)
operating activities $ 146,989 $ 46,040
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Funding of replacement reserve escrow $ (19,360) $ (10,354)
Withdrawals from replacement reserve escrow - -
Acquisition of property and equipment (6,693) (7,140)
--------- --------
Net cash provided by (used in)
investing activities $ (26,053) $ (17,494)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Partner contributions $ - $ -
Partner distributions - -
Advances from general partner (896) 8,251
Payment of development fees payable (24,500) (23,500)
Principal payments on long-term debt (27,507) (23,446)
--------- --------
Net cash provided by (used in)
financing activities $ (52,903) $ (38,695)
--------- --------
</TABLE>
See Notes to Financial Statements.
54
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS (CONTINUED)
Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Increase (decrease) in cash and
cash equivalents $ 68,033 $ (10,149)
Cash and cash equivalents
Beginning 10,495 20,644
---------- ----------
Ending $ 78,528 $ 10,495
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for interest $ 175,808 $ 164,229
========== ==========
</TABLE>
See Notes to Financial Statements.
55
<PAGE>
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Partnership's significant accounting policies consistently
applied in the preparation of the accompanying financial statements
follows.
CAPITALIZATION AND DEPRECIATION
Land, buildings and improvements are recorded at cost. Depreciation of
buildings and equipment is computed principally using the Modified
Accelerated Cost Recovery System which approximates straight-line for
buildings and double-declining balance for equipment over the following
estimated useful lives:
Years
Buildings 27.5
Equipment 7
Improvements are capitalized, while expenditures for maintenance and
repairs are charged to expense as incurred. Upon disposal of depreciable
property, the appropriate property accounts are reduced by the related
costs and accumulated depreciation. The resulting gains and losses are
reflected in the statement of operations.
CASH AND CASH EQUIVALENTS
For purposes of reporting the statements of cash flows, the Partnership
includes all cash accounts which are not subject to withdrawal restrictions
or penalties, and all highly liquid debt instruments purchased with a
maturity of three months or less as cash and cash equivalents on the
accompanying balance sheets.
AMORTIZATION
Deferred charges are amortized over the following estimated useful lives
using the straight-line method:
Years
Deferred debt expense 30
Tax credit monitoring fee 15
INCOME TAXES
No provision or benefit for income taxes has been included in these
financial statements since taxable income or loss passes through to, and is
reportable by, the partners individually.
56
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
PERSONAL ASSETS AND LIABILITIES
In accordance with the generally accepted method of presenting partnership
financial statements, the financial statements do not include the personal
assets and liabilities of the partners, including their obligation for
income taxes on their distributive shares of the net income of the
Partnership, nor any provision for income tax expense.
NOTE 2 - ORGANIZATION
Colonial Village Roseville is a California Limited Partnership which was
formed in April 1993, to develop, construct, own, maintain and operate a
56-unit multi-family apartment complex and is located in the city of
Roseville, California. The Partnership Agreement and the loan agreement
with the California Community Reinvestment Corporation (CCRC), a
California nonprofit public benefit corporation governs the major
activities of the Partnership. Under the agreements, the Partnership is
required to provide low cost housing to very low-income or lower-income
households.
The Partnership has one general partners, Project Go Inc., a 501(c)(3) tax
exempt, non-profit community service organization and one investing
limited partner, WNC Housing Tax Credits III, L.P., a California limited
partnership. Partnership transactions with the partners are described in
other notes to these financial statements.
NOTE 3 - DEFERRED CHARGES
Deferred charges as of December 31, 1999 and 1998, consists of the
following:
1999 1998
---- ----
Deferred debt expense $ 110,462 $ 110,462
Tax credit monitoring fee 22,960 22,960
--------- ---------
$ 133,422 $ 133,422
Less accumulated amortization 23,662 18,449
--------- ---------
$ 109,760 $ 114,973
========= =========
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - RESTRICTED DEPOSITS AND FUNDED RESERVES
In accordance with the Partnership Agreement and the Rider to Multifamily
Instrument with CCRC, the Partnership is required to maintain a
replacement reserve account. The replacement reserve account is to be
funded annually in the amount of $16,800.
NOTE 5 - LONG-TERM DEBT
Long-Term debt consisted of a permanent loan with CCRC in face amount of
$2,200,000.
Under the terms of the 30-year Promissory Note with CCRC, the loan
provides for an initial interest rate of 7.67% and monthly payments of
$15,639.62 commencing on September 1, 1995, and continuing through August
2025. The interest rate and monthly payment will be adjusted at year
eleven (11) and year twenty-one (21), at which time the interest rate will
be adjusted based on the Current Index plus 2.75% and the payment will be
adjusted and determined by the amount of the monthly payment that would be
sufficient to repay the note within 360 months of the initial payment
date. As Of December 31, 1999, the current interest rate, and minimum
monthly payment due is 7.67% and $15,639.62, respectively.
The apartment complex is pledged as collateral for the mortgage and is
secured by deeds of trust, assignment of rents, security agreements and
fixture filings against the property.
Aggregate maturities of Long-term debt for the next five years are as
follows:
December 31, 2000 $ 27,320
2001 29,491
2002 31,834
2003 34,364
2004 37,094
Thereafter 1,942,926
-------------
TOTAL $ 2,103,029
=============
NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
DEVELOPER FEES
In accordance with the Partnership Agreement, the Partnership agreed to
pay the general partner a development fee of $648,000 for services
rendered to the Partnership for overseeing the development and
construction of the project. However, during 1995, $3,526, of this amount
was waived by the general partner in accordance with the limitations
imposed by the California Tax Credit Allocation Committee.
Payment of the development fee is to be paid from future operational cash
flows.
58
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NOTES TO FINANCIAL STATEMENTS
The developer fee has been capitalized into the basis of the building.
MANAGEMENT FEE
In accordance with the Management Agreement, the Partnership paid Project
Go, Inc., the general partner, a management fee during 1999 in the amount
of $24,192, for services rendered in connection with the leasing and
operation of the project. The fee for its services is approximately 6% of
the project's rental income.
NOTE 7 - COMMITMENT
The Partnership entered into a Regulatory Agreement with the Tax Credit
Allocation Committee (TCAC), established under Section 50185 of the Health
and Safety Code of the State of California. Under this Agreement, the
Partnership shall maintain the project as a Qualified Low-income Housing
Project for a period of 55 consecutive taxable years beginning with 1995,
the first taxable year of the Credit Period. In exchange for this
agreement, TCAC has authorized an allocation relating to the low-income
housing credit under the provisions of Section 42 of the Internal Revenue
Code.
NOTE 8 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
The Partnership's sole asset is Colonial Village Roseville Apartments. The
Partnership's operations are concentrated in the multifamily real estate
market.
59
