The following items were the
subject of a Form 12b-25
and are included here in:
Items 6, 7, and 8
FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1995
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 33-64452
WNCHOUSING TAX CREDIT FUND IV, L.P., Series 2 (Exact name of
registrant as specified in its charter)
California 33-0596399
(State or other jurisdiction of (I.R.S. Employer Identification
of incorporation or organization) No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(Address of principal executive offices)
(714) 662-5565
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
<PAGE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
[X]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of filing. (See definition of affiliate in Rule 405.)
- - Inapplicable.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I.
ITEM 1. BUSINESS:
Organization
WNC Housing Tax Credit Fund IV, L.P., Series 2 (the "Partnership") is a
California limited partnership formed under the laws of the State of California
on September 27, 1993 to acquire limited partnership interests in local limited
partnerships ("Local Partnerships") which own multifamily apartment complexes
that are eligible for low-income housing federal income tax credits (the
"Housing Tax Credit").
The general partner of the Partnership is WNC Tax Credits Partner IV, L.P. ("TCP
IV"). The general partner of TCP IV is WNC & Associates, Inc. ("Associates").
The business of the Partnerships is conducted primarily through Associates as
neither TCP IV nor of the Partnerships have employees of their own.
Holders of Limited Partnership Interests are referred to herein as "Limited
Partners."
The Partnership conducted its public offering ("Offering") from July 1994 to
July 1995. 20,000 Units of Limited Partnership Interests ("Limited Partnership
Interest"), at a price of $1,000 per Limited Partnership Interest were offered..
Since inception a total of 15,600 Limited Partnership Interests representing
approximately $15,241,000 were sold throughout the offering. Enova Financial,
Inc. a California corporation, which is not an affiliate of the Partnership or
General Partner, has purchased 4,000 Units, which represents 25.6% of the Units
outstanding for the Partnership. Enova Financial, Inc. invested $3,641,000. A
discounts of $359,000 was allowed due to a volume discount. See Item 12(a) in
this 10-K.
The Partnership has applied and will apply funds raised through its public
offerings, including the installment payments of the Limited Partners'
promissory notes as received, to the purchase price and acquisition fees and
costs of Local Limited Partnership Interests, reserves, and expenses of this
Offering.
Description of Business
The Partnership's principal business is to invest as a limited partner in Local
Partnerships each of which will own and operate an apartment complex ("Apartment
Complex") which will qualify for the federal low-income housing tax credit (the
3
<PAGE>
"Housing Tax Credit"). The Tax Reform Act of 1986 (the "1986 Act") replaced most
existing federal tax incentives for low-income housing with Section 42 of the
Internal Revenue Code, which provides for the Housing Tax Credit. In general,
under Section 42, an owner of a low-income housing project is entitled to
receive the Housing Tax Credit in each year of a ten-year period (the "Credit
Period"). The Apartment Complex is subject to a fifteen-year compliance period
(the "Compliance Period").
The Partnership's investments in Local Partnerships are subject to the risks
incident to the management and ownership of low income housing and to the
management and ownership multifamily residential real estate. Some of these
risks are that the Housing Tax Credit could be recaptured and neither the
Partnership's investments nor the Apartment Complexes owned by Local
Partnerships will be readily marketable. Additionally, there can be no assurance
that the Partnership will be able to dispose of its interest in Local
Partnerships at the end of the Compliance Period. The value of the Partnership's
investments could be subject to changes in national and local economic
conditions, including unemployment conditions, which could adversely impact
vacancy levels, rental payment defaults and operating expenses. This, in turn,
could substantially increase the risk of operating losses for the Apartment
Complexes and the Partnership. The Apartment Complexes will be subject to loss
through foreclosure. In addition, each Local Partnership is subject to risks
relating to environmental hazards which might be uninsurable. Because the
Partnership's ability to control its operations will depend on these and other
factors beyond the control of the General Partner and the general partners of
the Local Partnerships, there can be no assurance that Partnership operations
will be profitable or that the anticipated Housing Tax Credits will be available
to Limited Partners.
The Apartment Complexes owned by the Local Partnerships in which the Partnership
has invested or is expected to invest were or are being developed by the general
partners of the respective Local Partnerships ("Local General Partners") who
acquired the sites and applied for applicable mortgages and subsidies. The
Partnership became or will become the principal limited partner in these Local
Partnerships pursuant to arm's-length negotiations with the Local General
Partners. As a limited partner, the Partnership's liability for obligations of
the Local Partnership is limited to its investment. The Local General Partner of
the Local Partnership retains responsibility for developing, constructing,
maintaining, operating and managing the Apartment Complex.
As of December 31, 1995, the Partnership had invested in seventeen Local
Partnerships. Subsequently, the Partnership has identified 4 Local Partnerships.
Each of these Local Partnerships owns an Apartment Complex that is or is
expected to be eligible for the Housing Tax Credit. All of the Local
Partnerships also benefit from government programs promoting low or moderate
income housing.
Following is recap of the status of the nineteen Apartment Complexes owned by
the nineteen Limited Partnerships invested in or identified by the Partnership:
<TABLE>
<CAPTION>
Under
Construction Construction
or Rehabilitation or
Construction
Completed Rehabilitation
Not Started
<S> <C> <C>
<C>
Properties acquired by 12/31/95 17 0
0
Properties acquired subsequent to
12/31/95 0 0
1
Properties identified for investment 0 0
3
</TABLE>
The following is a schedule of the status as of December 31, 1995, of the
Apartment Complexes owned by Local Partnerships in which the Partnership was a
limited partner as of December 31, 1995:
4
<PAGE>
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH THE PARTNERSHIP HAS AN INVESTMENT
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
Number
Percentage
of Units Units
of Total
NAME & Location Apts. Completed Occupied
Units Occupied
<S> <C> <C> <C>
<C>
AUTUMN TRACE 58 58 52
91%
Silsbee (Hardin Co.) Texas
CHADWICK 48 48 47
98%
Eden, (Rockingham Co.) N.C.
COMANCHE 22 22 22
100%
Comanche (Comanche Co.) Texas
E. W. 16 16 14
88%
Evansville (Rock Co.) Wisconsin
GARLAND 18 18 16
94%
Malvern (Hot Spring Co.)Arkansas
HEREFORD 28 0 0
0%
Hereford, (Deaf Smith Co.) Texas
HICKORY LANE 23 0 0
0%
Newton (Newton Co.) Texas
HONEYSUCKLE 47 0 0
0%
Vidor (Orange Co.) Texas
KLIMPEL MANOR 59 59 56
95%
Fullerton (Orange Co.) CA
LA MESA 24 24 24
100%
Lamesa (Dawson Co.), Texas
MOUNTAINVIEW 24 24 24
100%
North Wilkesboro (Wilkes Co.) N.C.
PALESTINE 42 42 42
100%
Palestine (Anderson Co.) Texas
PECAN 32 32 31
97%
Forrest City (St. Francis Co.),
Arkansas
PIONEER 112 112 112
100%
Bakersfield (Kern Co.) California
5
<PAGE>
SOUTHCOVE 54 54 51
96%
Orange Cove (Fresno Co.) CA
WALNUT BEND 23 23 0
0%
Buna (Jasper Co.) Texas
WAUKEE II 23 23 23
100%
Waukee (Dallas Co.) Iowa
============ ============= ============
653 555 514
92%
============ ============= ============
</TABLE>
6
<PAGE>
===============================================================================
Description of Local Partnerships
===============================================================================
The Partnership has become a limited partner in AUTUMN TRACE ASSOCIATES, LTD., a
Texas limited partnership ("AUTUMN"); in CHADWICK LIMITED PARTNERSHIP, a North
Carolina limited partnership ("CHADWICK"); COMANCHE RETIREMENT VILLAGE, LTD., a
Texas limited partnership ("COMANCHE"); EW, a Wisconsin limited partnership
("EW"); GARLAND STREET LIMITED PARTNERSHIP, an Arkansas limited partnership
("GARLAND"); HEREFORD SENIORS COMMUNITY, LTD., a Texas limited partnership
("HEREFORD"); HICKORY LANE ASSOCIATES, LIMITED, a Texas limited partnership
("HICKORY"); HONEYSUCKLE COURT ASSOCIATES, LIMITED, a Texas limited partnership
("HONEYSUCKLE"); KLIMPEL MANOR, LTD., a California limited partnership
("KLIMPEL"), LAMESA SENIORS COMMUNITY, LTD., a Texas limited partnership
("LAMESA"); MOUNTAINVIEW APARTMENTS LIMITED PARTNERSHIP, a North Carolina
limited partnership ("MOUNTAINVIEW"); PALESTINE SENIORS COMMUNITY, LTD., a Texas
limited partnership ("PALESTINE"); PECAN GROVE LIMITED PARTNERSHIP, an Arkansas
limited partnership ("PECAN"), PIONEER STREET ASSOCIATES, L.P., a California
limited partnership ("PIONEER"); SOUTHCOVE ASSOCIATES, a California limited
partnership ("SOUTHCOVE"), WALNUT TURN ASSOCIATES, LIMITED, a Texas limited
partnership ("WALNUT"), and CANDLERIDGE APARTMENTS OF WAUKEE L.P. II, an Iowa
limited partnership ("WAUKEE-II").
AUTUMN owns the Autumn Trace Apartments in Silsbee, Texas; CHADWICK own the
Chadwick Apartments in Eden, North Carolina; COMANCHE owns the Comanche
Retirement Village Apartments in Comanche, Texas; EW owns the Evansville Town
Homes in Evansville, Wisconsin, GARLAND owns the Garland Street Apartments in
Malvern, Arkansas; HEREFORD owns the Hereford Seniors Community in Hereford,
Texas; HICKORY owns the Hickory Lane Apartments in Newton, Texas; HONEYSUCKLE
owns the Honeysuckle Court Apartments in Vidor, Texas; KLIMPEL owns the Klimpel
Manor Apartments in Fullerton, California, LAMESA owns the Lamesa Seniors
Community in Lamesa, Texas; MOUNTAINVIEW owns the Mountainview Apartments in
North Wilkesboro, North Carolina; PALESTINE owns the Palestine Seniors Community
in Palestine, Texas; and PECAN owns the Pecan Grove Apartments in Forrest City,
Arkansas, PIONEER owns the Pioneer Street Apartments in Bakersfield, California;
SOUTHCOVE own the Southcove Apartments in Orange Cove, California, WALNUT owns
the Walnut Turn Apartments in Buna, Texas. WAUKEE-II owns the Candleridge of
Waukee Apartments II in Waukee, Iowa.
The following tables contain information concerning the Local Limited
Partnerships acquired by the Partnership.
<TABLE>
<CAPTION>
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
Local Project Name Estimated Estimated Number of Basic
Permanent Local
Limited Construction Development Apartment Monthly
Mortgage Limited
Partnership Completion Cost With Units Rents
Loan Amount Partnership's
Land
Anticipated
Tax Credits
(1)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
<S> <C> <C> <C> <C>
<C> <C>
AUTUMN Autumn May 1994 $2,030,727 26 1BR units $210
$1,256,680 $768,000
Trace 32 2BR units $265
RECDS (3)
Apartments
(2)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
CHADWICK Chadwick October $2,024,524 8 1BR units $285
$898,311 $735,000
Apartments 1994 36 2BR units $307
RECDS (3)
(2) 4 3BR units $333
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
7
<PAGE>
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
COMANCHE Comanche January $616,000 20 1BR units $235
$597,520 $290,000
Retirement 1995 2 2BR units $275
RECDS (3)
Village
Apartments
(4)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
EW Evansville September $868,552 4 2BR units $493
$660,000 $306,000
Town Homes 1994 12 3BR units $599
WHEDA (5)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
GARLAND Garland September $898,780 18 2BR units $270
$702,332 $319,000
Street 1994
RECDS (3)
Apartments 1 3BR unit Mgr.'s
unit
(2)
------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
HEREFORD Hereford December $854,000 28 1BR units $260
$809,750 $355,000
Seniors 1995
RECDS (3)
Community
Apartments
(4)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
------------- ------------- ------------ -------------
- ------------- ------------- -------------
HICKORY Hickory December $920,000 16 1BR units $185
$598,900 $322,000
Lane 1995 8 2BR units $233
RECDS (3)
Apartments
(2)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
HONEY- Honeysuckle December $1,701,691 24 1BR units $283
$1,172,600 $622,000
SUCKLE Court 1995 24 2BR units $333
RECDS (3)
Apartments
(2)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
KLIMPEL Klimpel November $3,618,242 58 1BR units $340-445
$1,320,000 $3,360,000
Manor 1994 1 2BR unit $497
CHFA (6)
Apartments
(5)
$625,000
LGP (7)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
LAMESA Lamesa June $826,426 24 1BR units $265
$679,000 $302,000
Seniors 1994
RECDS (3)
Community
Apartments
(4)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
MOUNTAIN-VIEW Mountain-view December $1,206,604 22 1BR units $292
$1,025,482 $387,000
Apartments 1993 2 2BR units $340
RECDS (3)
(4)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
PALESTINE Palestine June $1,180,000 40 1BR units $264
$1,144,600 $446,000 1995
Seniors 1995 2 2BR units $318
RECDS (3)
Community
Apartments
(4)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
PECAN Pecan July $1,454,000 32 2BR units $245
$1,194,732 $464,000
Grove 1994
RECDS (3)
Apartments
(2)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
PIONEER Pioneer October $3,903,000 78 2BR units $341-4222
$1,960,000 $4,156,000
Street 1995 32 3BR units $488
CCRC (8)
Apartments 2 4BR units $437-542
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- --------------- ------------ ------------- ------------ -------------
- ------------- ------------- -------------
SOUTHCOVE Southcove July $3,750,000 20 2BR units $226-407
$1,051,050 $3,783,000
Apartments 1995 34 3BR units $249-471
RHCP (9)
$525,000
CCRC (8)
- --------------- ------------ ------------- ------------ -------------
- ------------- ------------- -------------
8
<PAGE>
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
WALNUT Walnut Turn December $981,000 24 2BR units $218
$716,000 $347,000
Apartments 1995
RECDS (3)
(2)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
WAUKEE-II Candleridge December $736,000 23 1BR units $285
$694,148 $230,000
(12) Apartments 1994
RECDS (3)
of Waukee II
(3)
- -------------- ------------- ------------- ------------ -------------
- ------------- ------------- -------------
</TABLE>
(1) Low income Housing Credits are available over a 10-year period. For the
year in which the credit first becomes available with respect to an
Apartment Complex, The Partnership will receive only that percentage of the
annual credit which corresponds to the number of months during which The
Partnership was a limited partner of the Local Limited Partnership, and
during which the Apartment Complex was completed and in service. See the
discussion under "The Low Income Housing Credit" in the Prospectus.
(2) Rehabilitation property.
(3) The Rural Economic and Community Development Services (formerly the Farmers
Home Administration) of the United States Department of Agriculture
("RECDS") provides mortgage loans under the RECDS Section 515 Mortgage Loan
Program. Each of these mortgage loans is or will be a 50-year loan and
bears or will bear annual interest at a market rate prior to reduction of
the interest rate by a mortgage interest subsidy to an annual rate of 1%,
with principal and interest payable monthly based on a 50-year amortization
schedule.
(4) Senior citizen housing.
(5) The Wisconsin Housing & Economic Development Authority ("WHEDA") will
provide the mortgage loan for a term of 30 years at an interest rate of
6.65% per annum, with principal and interest payable monthly based on a
30-year amortization schedule.
(6) The California Housing and Finance Agency ("CHFA") will provide the
mortgage loan for a term of 40 years at an interest rate of 9% per annum,
with principal and interest payable monthly based on a 40-year amortization
schedule.
(7) Margaret N. Chaffee, one of the Local General Partners, will provide a
second loan for a term of 40 years at an interest rate of 9.25% per annum,
with principal and interest payable monthly based on a 40-year amortization
schedule.
(8) The California Community Reinvestment Corporation ("CCRC") is providing the
mortgage loan at an annual interest rate of 8.75%, with principal and
interest payable monthly based on a 30-year amortization schedule.
(9) California has established the Rental Housing Construction Program ("RHCP")
to provide low interest loans directly to project sponsors for the
construction of new rental housing for occupancy by very low-income
households, lower-income households and other households. RHCP funding is
9
<PAGE>
provided through a combination of interim construction and permanent loans
or through permanent loans only. The standard interest rate is 3% per
annum, calculated on a simple (non-compounded) basis. The minimum term to
maturity is 40 years, with longer original terms and 10-year extensions
available. The repayment schedule is based on a formula generally related
to the project's ability to pay. During the first 30 years of the loan
term, no principal payments are required. Interest is payable from, and
only to the extent of, net cash flow. Accrued interest for any year which
cannot be paid is deferred until such time as net cash flow is sufficient
for payment thereof. Commencing with the 30th year of the loan term,
principal and interest are payable out of net cash flow. The amount of the
required payments depends, in part, on the remaining duration of the loan
term. In each project, 30% or more of all units must be assisted units, and
at least 2/3 of all assisted units must be very low-income units.
(10) California Community Reinvestment Corp. will provide the mortgage loan at a
fixed interest rate of 9% per annum. The loan will be for a 30-year term,
with principal and interest payable monthly based on a 30-year amortization
schedule.
Silsbee (AUTUMN): Silsbee is in Hardin County, Texas near the intersections of
U.S. Highways 69 and 96, and State Highway 92. Houston lies 120 miles southwest.
The population of Silsbee is approximately 6,400. The major employers for
Silsbee residents are Temple-Inland Forest Products Corp., Kirby Forest
Industries/Louisiana Pacific, and the Silsbee Independent School District.
Eden (CHADWICK): Eden is in Rockingham County, North Carolina at the
intersection of State Highways 87 and 770. Greensboro is 30 miles to the south
and Winston-Salem is 60 miles to the southwest. The population of Eden is
approximately 16,000. The city's largest employers are Miller Brewing Company,
Billcrest Canon, and Sara Lee.
Comanche (COMANCHE): Comanche is the county seat of Comanche County, located in
west-central Texas along U.S. Highway 377. Fort Worth is 108 miles to the
northeast. The population of Comanche is approximately 4,000. It's major
employers are Gore Bros., Inc., Western Hills Nursing Home, Comanche
Manufacturing, and the Comanche Independent School District.
Evansville (EW): Evansville is in Rock County, Wisconsin at the intersection of
U.S. Highway 14 and State Highway 213. The state capitol of Madison is 35 miles
northeast of Orange Cove. The population of Evansville is approximately 3,300.
Three of the area's largest employers are Varco-Pruden, a division of AMCA
International, Baker Manufacturing, and the Harvard Corporation.
Malvern (GARLAND): Malvern is the county seat of Hot Spring County, located in
south-central Arkansas near Interstate Highway 30. Little Rock is 45 miles to
the northeast and Hot Springs National Park is 20 miles to the northwest. The
population of Malvern is approximately 9,200. The city's major employers include
Amoco Foam (meat packing trays), Acme Brick (brick manufacturer) and Willamette
(fiberboard).
Hereford (HEREFORD): Hereford is the county seat of Deaf Smith County, located
in northwest Texas at the intersection of U.S. Highways 60 and 385. Amarillo is
50 miles to the northeast and Lubbock is 90 miles to the southeast. The
population of Hereford is approximately 14,700. Major employers in the Hereford
area are Holly Sugar, Hereford Bi-Products, and the Hereford School System.
10
<PAGE>
Newton (HICKORY): Newton (population 1900) is the county seat of Newton County,
and is located in east-central Texas near the Louisiana border at the
intersection of State Highways 63 and 87 approximately 125 miles northeast of
Houston and 225 miles southeast of Dallas. The major employers for Newton
residents are Shady Acre Shelter (nursing home), Brookshier Brothers (grocery
store) and Kirby Lumber Company.
Vidor (HONEYSUCKLE): Vidor (population 11,000) is in Orange County in
east-central Texas near the Louisiana border at the intersection of Interstate
Highway 10 and State Highway 12 approximately 90 miles northeast of Houston and
250 miles southeast of Dallas. The largest employers for the city's residents
are Vidor School District, North Store Steel, Trinity Industry (car repair) and
Wal-Mart.
Fullerton (KLIMPEL): Fullerton is in Orange County, California, near Interstate
Highway 5 and State Highway 57, approximately 25 miles from downtown Los
Angeles. The economy in the area is based primarily in retail sales, and
secondarily in manufacturing. The largest employers for Fullerton residents are
Hughes Aircraft, Beckman Instruments, and Hunt Wesson.
Lamesa (LAMESA): Lamesa is the county seat of Dawson County, located in
west-central Texas at the intersection of U.S. Highways 180 and 87. Lubbock is
60 miles to the north and Odessa is 63 miles to the southwest. The population of
Lamesa is approximately 10,800. The city's major employers are Lamesa
Independent School District, Britt Oil Service Co. (oil drilling), and Lamesa
Apparel, Inc. (clothing manufacturer).
North Wilkesboro (MOUNTAINVIEW): North Wilkesboro is in Wilkes County in western
North Carolina, at the intersection of U.S. Highway 421 and State Highway 18.
Charlotte is 80 miles to the southeast and Winston-Salem is 45 miles to the
east. The population of North Wilkesboro is approximately 3,400. The city's main
employers are Tyson Foods, Lowes Company (hardware), and Thaca Co. (textiles).
Palestine (PALESTINE): Palestine is the county seat of Anderson County, located
in east-central Texas at the intersection of U.S. Highways 79 and 287. Dallas is
60 miles to the northwest and Houston is 125 miles to the southeast. The
population of Palestine is approximately 18,000. The city's major employers are
the Texas Department of Criminal Justice (prison system), Wal-Mart Distribution
Center, and Memorial Hospital.
Forrest City (PECAN): Forrest City is the county seat of St. Francis County,
located in eastern Arkansas at the intersection of Interstate Highway 40 and
State Highway 1. Little Rock is 90 miles to the west. The population of Forrest
City is approximately 13,000. The city's major employers are Sanyo Manufacturing
Corp. (color television sets), Yale Hoists (hoisting equipment) and Airtherm
Products (heating/air conditioning equipment).
Bakersfield (PIONEER): Bakersfield (population 202,000) is the county seat of
Kern County, California, and is located at the southern end of the San Joaquin
Valley on State Highway 99, approximately 110 miles north of Los Angeles. In
1993, Kern County was the largest oil producing county and third most productive
agricultural county in the country. The largest employers in Bakersfield are
Giumarra Vineyards, Sun World/Superior Farms, and Grimmway Farms.
Orange Cove (SOUTHCOVE): Orange Cove is in Fresno County, California on State
Highway 63. The county seat of Fresno is 35 miles northeast of Orange Cove. The
population of Orange Cove is approximately 6,500. A majority of the employed
persons in Orange Cove are employed in agriculture, particularly in the citrus
packing business.
Buna (WALNUT): Buna (population 2,100) is in Jasper County , in east-central
Texas near the Louisiana border at the intersection of Interstate Highway 96 and
State Highway 62 approximately 100 miles northeast of Houston and 225 miles
southeast of Dallas. The largest employers for the city's residents are Temple
Inland Sawmill, Buna School District and Buna Nursing Home.
Waukee (WAUKEE-II): Waukee (population 2,500) is in Dallas County, Iowa, on U.S.
Highway 6, approximately 14 miles northwest of Des Moines. The largest category
of employment for Dallas County is wholesale and retail trade (34%). The
services category accounts for 27% of employment. Some of the larger employers
in the Waukee area are Downey Printing (telephone directory printing),
Selectivend (vending machine manufacturing) and Waukee Community School
District.
<TABLE>
<CAPTION>
- --------------- ---------------------- ----------------
- --------------------------------- ---------------
Sharing Ratio:
Allocations(4)Approximate
Local Local and
Sale or Partnership's
Limited General Property
Refinancing Capital
Partnership Partners Manager (1) Cash Flow (2)
Proceeds(5) Contributions
(3)
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
<S> <C> <C> <C> <C>
<C>
AUTUMN Clifford E. Olsen (5) Management & Partnership: 10%
99/1 $412,000
Systems LGP: 90%
51/49
Corporation (7)
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
CHADWICK MBG Investment MBG Partnership: 1st
99/1 $378,000
Corpora-tion Management, $2,950
51/49
Inc. LGP: 2nd $5,980
Gordon L. Balance: 99/1
Blackwell
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
COMANCHE Max L. M-DC Group, Partnership: 1st
99/1 $149,000
Rightmer Inc. dba Alpha $490
51/49
Management LGP: 2nd $985
Co., Inc. Balance: 99/1
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
EW Philip C. T & C 1995-2000:
99/1 $164,000
Wallis Services Partnership:
50/50
$1,500
James L. Balance to
Poehlman payment of
development
Cynthia L. fee, LGP, and
Solfest- replacement
Wallis reserve.
Anita B.
Poehlman 2001-there-after:
Partnership:
$5,000
Balance to
payment of
development
fee, LGP, and
replacement
reserve.
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
12
<PAGE>
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
GARLAND Conrad L. Sunbelt 99/1
99/1 $191,000
Beggs Property
60/40
Managers
Audrey D. Corp.
Beggs
Russell J.
Altizer
Marjorie L.
Beggs
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
HEREFORD Winston MJS Manage- 50/50
99/1 $179,000
Sullivan ment, Inc.
51/49
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
HICKORY Olsen Olsen Partnership: 10%
99/1 $172,000
Securities Securities LGP: 90%
49/51
Corporation Corporation
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
HONEY- Olsen Olsen Partnership: 10%
99/1 $333,000
SUCKLE Securities Securities LGP: 90%
49/51
Corporation Corporation
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
KLIMPEL Douglas B. National Partnership: 1/3
96/4 $1,774,000
Chaffee Housing LGP: 2/3
50/50
Ministries
Margaret N.
Chaffee
- ---------------
---------------------- ---------------- -------------------
- ------------- ---------------
LAMESA Winston MJS 50/50
99/1 $153,000
Sullivan Management,
51/49
Inc.
---------------------- ---------------- -------------------
- ------------- ---------------
- ---------------
MOUNTAIN-VIEW John C. Loving MBG Partnership:
99/1 $195,000
Management, 1st $850
51/49
Gordon D. Brown, Inc. LGP: 2nd
Jr. 1,650
Balance: 99/1
- ---------------
---------------------- ---------------- -------------------
- ------------- ---------------
PALESTINE Winston MJS 50/50
99/1 $225,000
Sullivan Management,
51/49
Inc.
---------------------- ---------------- -------------------
- ------------- ---------------
- ---------------
PECAN Conrad L. Sunbelt 99/1
99/1 $239,000
Beggs Property
60/40
Managers
Audrey D. Corp.
Beggs
Russell J.
Altizer
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
PIONEER Philip R. The 1st $4,000:
99/1 $2,222,000
Hammond, Jr. Management WNC: $2,000
50/50
Company LGP: $2,000
LGP: the
Walter Dwelle balance
13
<PAGE>
- ---------------------- ---------------- ------------------- -------------
- ---------------
- ---------------
SOUTHCOVE Philip R. Buckingham 1996-1998:
99/1 $2,022,000
Hammond, Jr. Property WNC & LGP:
51/49
Management $1,500 each
Diane M. Company with balance
Hammond to LGP
1999-
thereafter:
WNC & LGP:
$2,250 each
with balance
to LGP
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
WALNUT Olsen Olsen WNC: 10%
99/1 $185,000
Securities Securities LGP: 90%
49/51
Corporation Corporation
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
WAUKEE-II Eric A. Sheldahl WNC: 1st $100
99/1 $125,000
Sheldahl Development LGP: the
51/49
Corporation balance
- --------------- ---------------------- ---------------- -------------------
- ------------- ---------------
</TABLE>
(1) The maximum annual management fee payable to the property manager generally
is determined pursuant to lender regulations. The Local General Partners are
authorized to employ either themselves or one of their Affiliates, or a third
party, as a property manager for leasing and management of the Apartment Complex
so long as the management fee does not exceed the amount authorized and approved
by the lender for the Apartment Complex.
(2) Reflects the amount of the net cash flow from operations, if any, to be
distributed to the Partnership and the Local General Partners ("LGP") of the
Local Limited Partnership for each year of operations. To the extent that the
specific dollar amounts which are to be paid are not paid annually, they will
accrue and be paid from sale or refinancing proceeds as an obligation of the
Local Limited Partnership.
(3) The Partnership will make its capital contributions to the Local Limited
Partnership in stages, with each contribution due when certain conditions
regarding construction or operations of the Apartment Complex have been
fulfilled. See "Investment Policies" and "Terms of the Local Limited Partnership
Agreements" under "Investment Objectives and Policies" in the Prospectus.
(4) Subject to certain special allocations, reflects the respective percentage
interests of the Partnership and the Local General Partners in profits, losses
and Low Income Housing Credits commencing with entry of the Partnership as a
limited partner.
(5) Reflects the percentage interests of the Partnership and the Local General
Partners in any net cash proceeds from sale or refinancing of the Apartment
Complex, after payment of the mortgage loan and other Local Limited Partnership
obligations (see, e.g., note 3), and the following, in the order set forth. As
used herein, the term "sales preparation fee" means a fee in the amount of 3%
(5% in the case of Garland and Pecan) of sale or refinancing proceeds.
14
<PAGE>
Austin: The Local General Partners' sales preparation fee, $100,004 to the
Local General Partner as a partial return of its capital contribution; the
Partnership's capital contribution and the capital contribution of the
Local General Partner (less previous distributions).
Chadwick: The capital contribution of the Partnership (less previous
distributions) and the Local General Partners' sales preparation fee.
Comanche: The capital contribution of the Partnership (less previous
distributions) and the Local General Partner's sales preparation fee.
EW: The Partnership's capital contribution and the Local General Partners'
sales preparation fee.
Garland: An amount equal to 5% of remaining proceeds to the Local General
Partners, the Local General Partners' sales preparation fee, and the
capital contribution of the Partnership (less previous distributions).
Hereford: The capital contribution of the Partnership (less previous
distributions) and the Local General Partner's sales preparation fee.
Hickory: The Local General Partner's sales preparation fee; the capital
contribution of the Partnership; and the capital contribution of the Local
General Partner.
Honeysuckle: The Local General Partner's sales preparation fee; the capital
contribution of the Partnership; and the capital contribution of the Local
General Partner.
Klimpel: The Partnership's capital contribution and the capital
contribution of the Local General Partners LAMESA: The capital contribution
of the Partnership (less previous distributions) and the Local General
Partner's sales preparation fee.
Mountainview: The capital contribution of the Partnership (less previous
distributions) and the Local General Partners' sales preparation fee.
Palestine: The capital contribution of the Partnership (less previous
distributions) and the Local General Partner's sales preparation fee.
Pecan: An amount equal to 5% of remaining proceeds to the Local General
Partners, the Local General Partners' sales preparation fee, and the
capital contribution of the Partnership (less previous distributions).
Pioneer: The capital contribution of the Partnership; the capital
contribution of the Local General Partners; and the Local General Partners'
sales preparation fee.
Southcove: The Local General Partners' sales preparation fee, the capital
contribution of the Partnership and the capital contribution of the Local
General Partners
Walnut: The Local General Partner's sales preparation fee; the capital
contribution of the Partnership; and the capital contribution of the Local
General Partner.
15
<PAGE>
Waukee II: The capital contribution of the Partnership; the Local General
Partner's sales preparation fee
ITEM 2. PROPERTIES:
Through its investment in Local Partnerships the Partnership holds interests in
Apartment Complexes. See Item 1 for information pertaining to the Apartment
Complexes.
ITEM 3. LEGAL PROCEEDINGS:
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
16
<PAGE>
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND RELATED
SECURITY HOLDER MATTERS:
The Limited Partnership Interests 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 Limited Partnership Interest.
Limited Partnership Interests can be assigned only if certain requirements in
the Partnership's Agreement of Limited Partnership ("Partnership Agreement") are
satisfied. At December 31, 1995, there were 836 registered holders of Limited
Partnership Interests in the Partnership.
The Partnership was not designed to provide cash distributions to Limited
Partners in circumstances other than refinancing or disposition of its
investments in Local Partnerships. The Housing Tax Credits for 1995 and 1994
were $70 and $23, respectively, per Limited Partnership Interest
ITEM 6. SELECTED FINANCIAL DATA
July 18, 1994
(Date Operations
Commenced) through
1995 December 31,1994
Revenue $ 179,927 $ 3,475
Partnership operating expenses (123,321) (28,907)
Equity in loss of
Local Partnerships (623,521) (240,698)
------------ -----------
Net loss $ (571,915) $ (266,130)
============ ===========
Net loss per Limited
Partnership Interest $ (47.90) $ (92.74)
============ ===========
Total assets $ 14,733,042 $ 8,435,704
============ ===========
Net investment in
Local Partnerships $ 9,417,744 $ 6,234,006
============ ===========
Capital contributions payable to
Local Partnerships $ 2,134,797 $ 3,276,750
============ ===========
Accrued fees and expenses due to
affiliates $ 146,685 $ 414,501
============ ===========
17
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
Liquidity and Capital Resources
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
increase in cash and cash equivalents of approximately $4,565,600 for the period
ended December 31, 1995. This increase in cash was provided by the Partnership's
financing activities, including the proceeds from the Offering and short term
indebtedness described below. Cash from financing activities for the period
ended December 31, 1995 of approximately $9,826200 was sufficient to fund the
investing activities of the Partnership in the aggregate amount of approximately
$5,315,600, which consisted primarily of capital contributions to Local Limited
Partnerships and offering expenses of approximately $4,241,400 and $1,217,500,
respectively. Cash provided and used by the operating activities of the
Partnership was minimal compared to its other activities. Cash provided
consisted primarily of interest received on cash deposits, and cash used
consisted primarily of payments for operating fees and expenses. The major
components of all these activities are discussed in greater detail below.
The Partnership is indebted to WNC & Associates, Inc., at December 31, 1995 and
December 31, 1994 in the amount of approximately $146,700 and $414,500,
respectively. The component items of such indebtedness are as follows:
December 31, 1995 December 31, 1994
----------------- -----------------
Advances to make loans and capital
contributions to Local Limited Partnerships $ 237,800
Advances to pay front end fees (2,500) 56,500
Asset management fees payable 58,900 16,000
Accrued acquisition fees 90,300 104,200
Associates obtained the necessary funds for the $238,000 of advances in 1994
from its line of credit. As permitted by the Partnership Agreement, such funds
bear interest at the lender's rate (i.e., the rate paid by Associates pursuant
to its line of credit) which ranged from 9.75% to 10.5% per cent per annum. In
addition, the Partnership obtained a bank loan in October 1994 in the amount of
approximately $870,000. The bank loan was retired in January 1995.
As of December 31, 1995, The Partnership has received and accepted subscriptions
funds in the amount of 15,241,000. The following information pertains to the
Partnership's investments in to Local Limited Partnerships:
18
<PAGE>
<TABLE>
<CAPTION>
March 1, 1996 December 31 1995
December 31 1994
------------- ----------------
- ----------------
<S> <C> <C> <C>
Capital contributions made
to Local Partnerships $8,236,000 $6,984,000
$2,473,000
---------- -------------
- ----------
Commitments for additional
Capital contributions made to
Local Partnerships $1,111,000 $2,135,000
$3,500,000
----- ---------- -------------
- ------------
Loans outstanding to local
Partnerships $0 $0
$881,000
--------------------------------- ---------------- -------------------
- -------------------
</TABLE>
Of the $881,000 loans outstanding at December 31, 1994 approximately $81,000 was
loaned to Hereford and $800,000 was loaned to Pioneer. These amounts were
applied to the Partnership's purchase price upon acquisition of those Local
Limited Partnership Interests in January 1995 and July 1995, respectively.
It is possible that the Partnership ultimately will not receive sufficient
proceeds to meet all of its obligations with respect to its investments. If not
, the Partnership would attempt to sell one or more Local Limited Partnership
Interests for the best price obtainable. The failure of the Partnership to
satisfy its obligations might result in the consequences described under "Risk
Factors" in the Prospectus and Supplements.
Prior to sale of the Apartment Complexes, it is not expected that any of the
Local Partnerships in which the Partnership has invested will generate cash from
operations sufficient to provide distributions to the Limited Partners in any
material amount except possibly in the circumstances discussed in the Prospectus
under "Investment Objectives and Policies - Principal Investment Objectives."
Such cash from operations, if any, would first be used to meet operating
expenses of the Partnership, including payment of the asset management fee to
the TCP IV. See "Management Compensation" in the Prospectus. As a result, it is
not anticipated that the Partnership will provide distributions to the Limited
Partners prior to the sale of the Apartment Complexes.
The Partnership's investments will not be readily marketable and may be affected
by adverse general economic conditions which, in turn, could substantially
increase the risk of operating losses for the Apartment Complexes, the Local
Partnerships and the Partnership. These problems may result from a number of
factors, many of which cannot be controlled by the General Partner. See "Risk
Factors - Investment Risks" in the Prospectus. Nevertheless, the General Partner
anticipates that capital raised from the sale of the Units will be sufficient to
fund the Partnership's investment commitments and proposed operations.
The Partnership has established working capital reserves of at least 3% of
capital contributions, an amount which is anticipated to be sufficient to
satisfy general working capital and administrative expense requirements of the
Partnership excluding payment of the asset management fee as well as expenses
attendant to the preparation of tax returns and reports to the Limited Partners
and other investor servicing obligations of the Partnership. Liquidity would,
19
<PAGE>
however, be adversely affected by unanticipated or greater than anticipated
operating costs. To the extent that working capital reserves are insufficient to
satisfy the cash requirements of the Partnership, it is anticipated that
additional funds would be sought through bank loans or other institutional
financing. The General Partner may also apply any cash distributions received
from the Local Partnerships for such purposes or to replenish or increase
working capital reserves.
Under the Partnership Agreement the Partnership does not have the ability to
assess the Limited Partners for additional capital contributions to provide
capital if needed by the Partnership or Local Partnerships. Accordingly, if
circumstances arise that cause the Local Partnerships to require capital in
addition to that contributed by the Partnership and any equity contributed by
the general partners of the Local Partnerships, the only sources from which such
capital needs will be able to be satisfied (other than the limited reserves
available at the Partnership level) will be (i) third-party debt financing
(which may not be available, if, as expected, the Apartment Complexes owned by
the Local Partnerships are already substantially leveraged), (ii) additional
equity contributions or advances of the general partners of the Local
Partnerships, (iii) other equity sources (which could adversely affect the
Partnership's interest in Housing Tax Credits, cash flow and/or proceeds of sale
or refinancing of the Apartment Complexes and result in adverse tax consequences
to the Limited Partners), or (iv) the sale or disposition of the Apartment
Complexes (which could have the same adverse effects as discussed in (iii)
above). There can be no assurance that funds from any of such sources would be
readily available in sufficient amounts to fund the capital requirement of the
Local Partnerships in question. If such funds are not available, the Local
Partnerships would risk foreclosure on their Apartment Complexes if they were
unable to renegotiate the terms of their first mortgages and any other debt
secured by the Apartment Complexes to the extent the capital requirements of the
Local Partnerships relate to such debt. See "Risk Factors - Investment Risks
Risks Associated With Use of Leverage" and "Investment Objectives and Policies
Use of Leverage" in the Prospectus.
The Partnership's capital needs and resources are expected to undergo major
changes during their first several years of operations as a result of the
completion of their offerings of Units and their acquisition of investments.
Thereafter, the Partnership's capital needs and resources are expected to be
relatively stable over the holding periods of the investments except to the
extent of proceeds received in payment of Promissory Notes and disbursed to fund
the deferred obligations of the Partnerships. See, however, "Risk Factors
Investment Risks - Risks of Real Estate Ownership" in the Prospectus.
Results of Operations
As reflected on its Statements of Operations, the Partnership had a losses of
approximately $572,000 and $264,550 for the year ended December 31, 1995 and
period July 18, 1994 (date operations commenced) to December 31, 1994,
respectively. The component items of revenue and expense are discussed below.
Revenue. The Partnership's revenues consisted entirely of interest earned on
Promissory Notes and cash deposits held in financial institutions (i) as
Reserves, or (ii) pending investment in Local Partnerships. Interest revenue in
future years will be a function of prevailing interest rates and the amount of
cash balances. It is anticipated that the Partnership will maintain cash
Reserves in an amount not materially in excess of the minimum amount required by
its Partnership Agreement, which is 3% of Capital Contributions.
20
<PAGE>
Expenses. The most significant component of operating expenses is expected to be
the Asset Management Fee. The Asset Management Fees is equal to the greater of
(i) $2,000 for each Apartment Complex or (ii) 0.275% of gross proceeds, and will
be decreased or increased annually based on changes to the Consumer Price Index.
The annual management fee incurred was $42,900 and $16,000 for the year ended
December 31, 1995 and period July 18, 1994 (date operations commenced) to
December 31, 1994, respectively.
Amortization expense consist of the amortization over a period of 30 years of
the Acquisition Fee and other expenses attributable to the acquisition of Local
Limited Partnership Interests.
Interest Expense consisted of payments on a loan from a bank paid at the bank's
prime rate plus 1% (10.5% at December 31, 1994) and
Office expense consist of the Partnership's administrative expenses, such as
accounting and legal fees, bank charges and investor reporting expenses.
Equity in losses from Limited Partnerships. The Partnership's equity in losses
from Limited Partnerships is equal to 99% of the aggregate net loss of the
Limited Partnerships. After rent-up, the Limited Partnerships are expected to
generate losses during each year of operations; this is so because, although
rental income is expected to exceed cash operating expenses, depreciation and
amortization deductions claimed by the Limited Partnerships are expected to
exceed net rental income.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The Financial Statements and Supplementary Data are listed under Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE:
Not applicable.
21
<PAGE>
- -------------------------------------------------------------------------------
WNC HOUSING TAX CREDIT FUND, IV, L.P., SERIES 2
(A California Limited Partnership)
FINANCIAL STATEMENTS
For The Year Ended December 31, 1995 and
For The Period July 18, 1994 (Date Operations
Commenced) To December 31, 1994
with
INDEPENDENT AUDITORS' REPORT THEREON
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC Housing Tax Credit Fund IV, L.P., Series 2
We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
IV, L.P., Series 2 (a California Limited Partnership) (the Partnership) as of
December 31, 1995 and 1994, and the related statements of operations, partners'
equity and cash flows for the year ended December 31, 1995 and the period July
18, 1994 (date operations commenced) to December 31, 1994. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of the limited
partnerships in which WNC Housing Tax Credit Fund IV, L.P., Series 2 is a
limited partner. These investments, as discussed in Note 3 to the financial
statements, are accounted for by the equity method. The investments in these
limited partnerships represented 64% and 74% of the total assets of WNC Housing
Tax Credit Fund IV, L.P., Series 2 at December 31, 1995 and 1994, respectively.
The financial statements of the limited partnerships were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for these limited partnerships, is based solely
on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund IV, L.P., Series 2 (a
California Limited Partnership) as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for the year ended December 31,
1995 and for the year ended December 31, 1995 and the period July 18, 1994 (date
operations commenced) to December 31, 1994 in conformity with generally accepted
accounting principles.
CORBIN & WERTZ
Irvine, California
February 29, 1996
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS 1995 1994
---------- -------
Cash and cash equivalents $ 5,285,730 $ 720,130
Subscriptions receivable (Note 8) -- 597,100
Loans receivable (Note 2) -- 880,760
Investments in limited partnerships
(Note 3) 9,417,744 6,235,586
Other assets 29,568 2,128
----------- ----------
$14,733,042 $8,435,704
=========== ==========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Loan payable (Note 5) $ -- $ 280,569
Accrued interest payable -- 404
Payables to limited partnerships (Note 6) 2,134,797 3,276,750
Accrued fees and advances due to
General Partner and affiliate (Note 4) 146,685 414,501
---------- ----------
Total liabilities 2,281,482 3,972,224
---------- ----------
Commitments and contingencies (Note 9)
Partners' equity (deficit) (Note 8):
General partner (27,796) (9,902)
Limited partners (20,000 units authorized,
15,600 and 5,648 units outstanding at
December 31, 1995 and 1994,
respectively) 12,479,356 4,473,382
----------- ----------
Total partners' equity 12,451,560 4,463,480
----------- ----------
$14,733,042 $8,435,704
========== ==========
See accompanying notes to financial statements
FS-3
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
1995 1994
--------- ---------
Interest income $ 179,927 $ 3,475
--------- ---------
Operating expenses:
Amortization 26,208 1,638
Asset management fees (Note 4) 42,900 16,000
Interest expense 39,148 11,173
Other 15,065 96
--------- ---------
Total operating expenses 123,321 28,907
--------- ---------
Income (loss) from operations 56,606 (25,432)
Equity in losses from limited partnerships
(Notes 1 and 3) (628,521) (239,118)
--------- ---------
Net loss $(571,915) $(264,550)
========= =========
Net loss allocated to:
General partner $ (5,719) $ (2,646)
========= =========
Limited partners $(566,196) $(261,904)
========= =========
Net loss per weighted limited partners
units $ (46.90) $ (92.74)
========= =========
Outstanding weighted limited partner
units 12,073 2,824
========= =========
See accompanying notes to financial statements
FS-4
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
General Limited
Partner Partners Total
Capital contributions $ 100 $ 5,648,000 $ 5,648,100
Offering expenses (Note 1) (7,356) (728,214) (735,570)
Partnership units issued for
notes receivable (Note 8) --- (184,500) (184,500)
Net loss (2,646) (261,904) (264,550)
---------- ---------- ----------
Equity (deficit)
December 31, 1994 (9,902) 4,473,382 4,463,480
Capital contributions, net
of discount of $359,000 --- 9,593,000 9,593,000
Offering expenses (Note 1) (12,175) (1,205,330) (1,217,505)
Collection of notes receivable
(Note 8) --- 184,500 184,500
Net loss (5,719) (566,196) (571,915)
---------- ---------- ----------
Equity (deficit)
December 31, 1995 $ (27,796) $12,479,356 $12,451,560
========== ========== ==========
See accompanying notes to financial statements
FS-5
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
STATEMENT OF CASH FLOWS
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
1995 1994
----------- -----------
Cash flows from operating activities:
Net loss $ (571,915) $ (264,550)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Amortization 26,208 1,638
Equity in loss of limited partnerships 628,521 239,118
Change in other assets (27,440) (2,128)
Change in accrued interest payable (404) 404
----------- -----------
Net cash provided by (used in) operating
activities 54,970 (25,518)
----------- -----------
Cash flows from investing activities:
Investments in limited partnerships, net (4,241,376) (2,743,092)
Loans receivable 880,760 (880,760)
Capitalized acquisition costs and fees (737,464) (295,833)
Offering expenses (1,217,505) (735,570)
----------- -----------
Net cash used in investing activities (5,315,585) (4,655,255)
----------- -----------
Cash flows from financing activities:
Capital contributions 9,777,500 4,866,500
Subscriptions receivable collected 597,100 --
Advances from general partner and affiliates (267,816) 253,834
Issuance of loan payable -- 870,000
Repayment of loan payable (280,569) (589,431)
----------- -----------
Net cash provided by financing activities 9,826,215 5,400,903
----------- -----------
Net increase in cash 4,565,600 720,130
Cash, beginning of period 720,130 --
----------- -----------
Cash, end of period $ 5,285,730 $ 720,130
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period
for:
Interest $39,552 $10,769
======= =======
Income taxes $ 800 $ --
======= =======
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
During the period ended December 31, 1994, the Partnership incurred, but did not
pay, $3,276,750 of payables to limited partnerships (in connection with its
investments in limited partnerships).
During the period ended December 31, 1994, the Partnership incurred, but did not
pay, $160,667 of payables to an affiliate for offering and acquisition expenses.
See accompanying notes to financial statements
FS-6
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC Housing Tax Credit Fund IV, L.P., Series 2 (the "Partnership") was formed
under the California Revised Limited Partnership Act on September 27, 1993, and
commenced operations on July 18, 1994. Prior to October 1, 1994, the Partnership
was considered a development-stage enterprise. The Partnership was formed to
invest primarily in other limited partnerships which will own and operate
multi-family housing complexes that will qualify for low income housing credits.
As the operations of the Partnership commenced during 1994, balances as of
December 31, 1993 and for the period then ended were insignificant and
accordingly, have not been reflected in the accompanying financial statements.
The general partner is WNC Tax Credit Partners, IV, L.P. (the "General
Partner"), a California limited partnership. WNC & Associates, Inc. is the
general partner of the General Partner. Wilfred N. Cooper, Sr., through the
Cooper Revocable Trust, owns 70% of the outstanding stock of WNC & Associates,
Inc. John B. Lester, Jr. is the original limited partner of the Partnership and
owns, through the Lester Family Trust, 30% of the outstanding stock of WNC &
Associates, Inc.
The Partnership agreement authorized the sale of 20,000 Units at $1,000 per Unit
("Units"). The offering of units concluded July 1995 at which time 15,600 units,
representing subscriptions, net of discounts for volume purchases of more than
100 units, of $15,241,000 had been accepted.
The General Partner has a 1% interest in operating profits and losses, taxable
income and loss and in cash available for distribution from 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 a
subordinated disposition fee (as described in Note 4), any additional sale or
refinancing proceeds will be distributed 90% to the limited partners (in
proportion to their respective investments) and 10% to the General Partner.
The Partnership's investments in limited partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate,
and include the risks that neither the Partnership's investments nor the
apartment complexes owned by the limited partnerships will be readily
marketable. Additionally there can be no assurance that the Partnership will be
able to dispose of its interest in the limited partnerships. The value of the
Partnership's investments will be subject to changes in national and local
economic conditions, including unemployment conditions, which could adversely
impact vacancy levels, rental payment defaults and operating expenses. This, in
turn, could substantially increase the risk of operating losses for the
apartment complexes and the Partnership. The apartment complexes could be
subject to loss through foreclosure. In addition, each limited partnership is
subject to risks relating to environmental hazards which might be uninsurable.
Because the Partnership's ability to control its operations will depend on these
and other factors beyond the control of the General Partner and the general
partners of the limited partnerships, there can be no assurance that Partnership
operations will be profitable or that the anticipated housing tax credits will
be available to limited partners.
Continued
FS-7
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Method of Accounting For Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the limited partnership's results of operations and for
any distributions received. The accounting policies of the limited partnership
are consistent with the Partnership. Costs incurred by the Partnership in
acquiring the investments in limited partnerships are capitalized as part of the
investment and amortized over 30 years (see Note 3).
Losses from limited partnerships allocated to the Partnership will not be
recognized to the extent that the investment balance would be adjusted below
zero.
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred in connection with the
selling of 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. As of December 31,
1995, the Partnership incurred offering expenses and selling expenses of
$1,000,455 and $952,620, respectively, and as of December 31, 1994, the
Partnership incurred offering expenses and selling expenses of $311,969 and
$423,874, respectively.
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 investments with maturities of three months or
less to be cash equivalents.
Concentration of Credit Risk
As of December 31, 1995, the Partnership maintained cash balances at certain
financial institutions in excess of the federally insured maximum.
Net Loss Per Limited Partner Unit
Net loss per limited partner unit is computed by dividing the limited partners'
share of net loss by the weighted number of limited partner units outstanding
during the period.
Continued
FS-8
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
NOTE 2 - LOANS RECEIVABLE
Loans receivable represented amounts loaned by the Partnership to certain
limited partnerships in which the Partnership may invest. Loans receivable are
applied against the first capital contribution due if the Partnership ultimately
acquires a limited partnership interest. Loans receivable with a balance of
$880,760 at December 31, 1994 were collected from a limited partnerships
acquired in 1995.
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of December 31, 1995, the Partnership had acquired limited partnership
interests in seventeen limited partnerships each of which owns one apartment
complex consisting of 657 apartment units. As of December 31, 1995, construction
or rehabilitation of all of the apartment complexes had been completed. The
respective general partners of the limited partnerships manage the day to day
operations of the limited partnerships. Significant limited partnership business
decisions require approval from the Partnership. The Partnership, as a limited
partner, is entitled to 96% to 99%, as specified in the partnership agreements,
of the operating profits and losses of the limited partnerships upon its
acquisition of its limited partnership interests.
The Partnership's investments in limited partnerships as shown in the
accompanying balance sheet as of December 31, 1995 and 1994 are approximately
$2,588,000 and $3,844,000 greater than the Partnership's equity as shown in the
limited partnerships' financial statements. This difference is primarily due to
acquisition costs related to the acquisition of the investments that have been
capitalized in the Partnership's investment account and are being amortized over
30 years and certain capital contributions accrued but not paid (see Note 6).
Following is a summary of the components of investments in limited partnerships
as of December 31, 1995 and 1994:
1995 1994
----------- -----------
Investments per balance sheet, beginning
of period $ 6,235,586 $ --
Capital contributions to limited partnerships,
net 3,099,423 6,019,842
Capitalized acquisition fees and costs, net of
accumulated amortization 737,464 454,862
Equity in losses of limited partnerships (628,521) (239,118)
Amortization of acquisition fees and costs (26,208) --
----------- -----------
Investments per balance sheet, end of period $ 9,417,744 $ 6,235,586
=========== ===========
Continued
FS-9
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
Approximate selected financial information from the combined financial
statements of the limited partnerships at December 31, 1995 and 1994 and for the
periods then ended is as follows:
COMBINED BALANCE SHEETS
ASSETS 1995 1994
----------- -----------
Cash (including restricted cash of $474,848
and $201,448 as of December 31, 1995 and
1994, respectively) $ 961,000 $ 442,000
Land 1,166,000 645,000
Construction in progress -- 3,024,000
Buildings, net 25,966,000 12,110,000
Due from affiliates 701,000 168,000
Other assets 296,000 54,000
----------- -----------
$29,090,000 $16,443,000
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Construction and mortgage loans payable $18,513,000 $11,851,000
Due to related parties 1,326,000 1,299,000
Other liabilities 1,478,000 521,000
----------- -----------
Total liabilities 21,317,000 13,671,000
----------- -----------
Partners' equity:
WNC Housing Tax Credit Fund IV, L.P.,
Series 2 6,829,000 2,392,000
Other partners 944,000 380,000
----------- -----------
Total partners' equity 7,773,000 2,772,000
----------- -----------
$29,090,000 $16,443,000
=========== ===========
Continued
FS-10
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
COMBINED STATEMENTS OF OPERATIONS
1995 1994
----------- ---------
Total revenue $ 1,762,000 $ 532,000
----------- ---------
Expenses:
Operating expenses 943,000 356,000
Interest expense 778,000 203,000
Depreciation 683,000 217,000
----------- ---------
Total expenses 2,404,000 776,000
----------- ---------
Net loss $ (642,000) $(244,000)
=========== =========
Net loss allocable to Partnership $ (629,000) $(239,000)
=========== =========
NOTE 4 - RELATED PARTY TRANSACTIONS
Under the terms of the Partnership Agreement, the Partnership is obligated to
the General Partner or its affiliates for the following items:
Acquisition fees of up to 8% of the gross proceeds from the sale of
Partnership units as compensation for services rendered in connection
with the acquisition of limited partnerships. As of December 31, 1995
and 1994, the Partnership incurred acquisition fees of $1,058,066 and
$438,280, respectively. Accumulated amortization amounted to $25,748 as
of December 31, 1995 and was insignificant at December 31, 1994.
Reimbursement of costs incurred by an affiliate of the General Partner
in connection with the acquisition of limited partnerships. These
reimbursements will not exceed 1.2% of the gross proceeds. As of
December 31, 1995 and 1994, the Partnership incurred acquisition costs
of $135,898 and $18,220, respectively, which have been included in
limited partnership investment. Amortization was insignificant for 1995
and 1994.
An annual asset management fee equal to the greater amount of (i)
$2,000 for each apartment complex, or (ii) 0.275% of gross proceeds. In
either case, the fee will be decreased or increased annually based on
changes to the Consumer Price Index. However, in no event will the
maximum amount exceed 0.2% of the invested assets (defined as the
Partnership's capital contributions plus its allocable percentage of
the mortgage debt encumbering the apartment complexes) of the limited
partnerships. The Partnership incurred asset management fees of $42,900
and $16,000 for the period ended December 31, 1995 and 1994,
respectively.
Continued
FS-11
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
NOTE 4 - 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 is subordinated to the
limited partners receiving a return on investment (as defined in the
Partnership Agreement) and is payable only if services are rendered in
the sales effort.
Accrued fees and advances due the General Partner and affiliate consist of the
following at December 31, 1995 and 1994:
1995 1994
--------- ---------
Acquisition fees $ (90,344) $(104,200)
Advances made for acquisition costs,
organizational, offering and selling
expenses 2,559 (56,467)
Asset management fees (58,900) (16,000)
Advances made to acquire limited
partnerships -- (237,834)
--------- ---------
$(146,685) $(414,501)
========= =========
Amounts advanced to acquire limited partnerships bore interest at the rate
incurred by the affiliate on its line of credit which ranged from 9.75% to 10%
per annum for the year ended December 31, 1994.
NOTE 5 - LOAN PAYABLE
Loan payable at December 31, 1994 consisted of the balance outstanding under a
loan from a bank with an original balance of $870,000. The agreement specified
principal and interest payments of $75,000 weekly. Interest was paid at the
bank's prime rate plus 1%. The loan matured and was paid January 23, 1995.
NOTE 6 - PAYABLES TO LIMITED PARTNERSHIPS
Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the limited partnership agreements. These
contributions are non-interest bearing, are payable in installments and are due
upon the limited partnerships achieving certain operating benchmarks (generally
within two years of the Partnership's initial investment).
NOTE 7 - 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.
Continued
FS-12
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Year Ended December 31, 1995 and
For The Period From July 18, 1994 (Date Operations
Commenced) To December 31, 1994
NOTE 8 - SUBSCRIPTIONS AND NOTES RECEIVABLE
As of December 31, 1994, the Partnership had received subscriptions for
approximately 782 units consisting of receivables of $597,100 and promissory
notes of $184,500. Since subscription receivables were collected subsequent to
December 31, 1994, the Company reflected such amounts as capital contributions
and an asset in the accompanying financial statements as of December 31, 1994.
Limited partners who subscribed for ten or more units of limited partnership
interest ($10,000) could elect to pay 50% of the purchase price in cash upon
subscription and the remaining 50% by the delivery of a promissory note payable,
together with interest at the rate of 11% per annum, due no later than 13 months
after the subscription date. Since the promissory notes had not been collected
prior to the issuance of the financial statements, the unpaid balance was
reflected as a reduction of partners' equity in the accompanying financial
statements as of December 31, 1994.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Subsequent to December 31, 1995, the Partnership acquired one limited
partnership interest which requires capital contributions totalling
approximately $228,300. In addition, the Partnership is negotiating to acquire
three additional limited partnership interests which would committ the
Partnership to additional capital contributions of approximately $2,276,600.
FS-13
<PAGE>
- -------------------------------------------------------------------------------
Part III.
ITEM 10
WILFRED N. COOPER, SR., age 65, has been the principal shareholder and a
Director of Associates since its organization in 1971, of Shelter Resource
Corporation since its organization in 1981 and of WNC Resources, Inc. from its
organization in 1988 through its acquisition by Associates in 1991, serving as
President of those companies until 1992 and as Chief Executive Officer since
1992, and has been a Director of WNC Capital Corporation since its organization.
He is also a general partner with Associates in WNC Financial Group, L.P. and
WNC Tax Credit Partners, L.P. During 1970 and 1971 he was a principal of
Creative Equity Development Corporation, a predecessor of Associates, and of
Creative Equity Corporation, a real estate investment firm. For 12 years prior
to that, Mr. Cooper was employed by Rockwell International Corporation, last
serving as its manager of housing and urban developments. Previously, he had
responsibility for new business development including factory-built housing
evaluation and project management in urban planning and development. Mr. Cooper
is a Director of the National Association of Home Builders (NAHB) and a Trustee
of the NAHB's Rural Housing Council, a Director of the National Housing
Conference, a member of the Affordable Housing Tax Credit Coalition, a past
President of the Rural Builders Council of California (RBCC) and a past
President of Southern California Chapter II of the Real Estate Syndication and
Securities Institute (RESSI) of the National Association of Realtors (NAR). Mr.
Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree.
JOHN B. LESTER, JR., age 62, has been a shareholder, a Director and
Secretary of Associates since 1986, Executive Vice President from 1986 to 1992,
and President and Chief Operating Officer since 1992, and has been a Director of
WNC Capital Corporation since its organization. He was a shareholder, Executive
Vice President, Secretary and a Director of WNC Resources, Inc. from 1988
through its acquisition by Associates in 1991. From 1973 to 1986 he was the
Chairman of the Board and Vice President or President of E & L Associates, Inc.,
a provider of engineering and construction services to the oil refinery and
petrochemical industries which he co-founded in 1973. Mr. Lester is a former
Director of the Los Angeles Chapter of the Associated General Contractors of
California. His responsibilities at Associates include property acquisitions and
company operations. Mr. Lester graduated from the University of Southern
California in 1956 with a Bachelor of Science degree in Mechanical Engineering.
DAVID N. SHAFER, age 43, has been a Senior Vice President of Associates
since 1992 and General Counsel since 1990, and served as Asset Management
Director from 1990 to 1992. Previously he was employed as an associate attorney
by the law firms of Morinello, Barone, Holden & Nardulli from 1987 until 1990,
Frye, Brandt & Lyster from 1986 to 1987 and Simon and Sheridan from 1984 to
1986. Mr. Shafer is a past President of Southern California Chapter II of RESSI,
a Director and President of RBCC, a past Director of the Council of Rural
Housing and Development and a member of the State Bar of California. Mr. Shafer
graduated from the University of California at Santa Barbara in 1978 with a
Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris
Doctor degree (cum laude) and from the University of San Diego in 1986 with a
Master of Law degree in Taxation.
WILFRED N. COOPER, JR., age 33, has been employed by Associates since
1988, has been Senior Vice President - Marketing since 1994, and served as Vice
President - Marketing from 1992 to 1994. Mr. Cooper oversees all marketing and
22
<PAGE>
sales activities at WNC, and has been President of and a registered principal
with WNC Capital Corporation since its organization. Previously, he was employed
as a government affairs assistant by Honda North America from 1987 to 1988, and
as a legal assistant with respect to Federal legislative and regulatory matters
by the law firm of Schwartz, Woods and Miller from 1986 to 1987. Mr. Cooper
graduated from The American University in 1985 with a Bachelor of Arts degree.
THEODORE M. PAUL, age 39, has been Vice President - Finance of Associates
since 1992 and Chief Financial Officer since 1990. Previously, he was a Vice
President and the Chief Financial Officer of National Partnership Investments
Corp., a sponsor and general partner of syndicated partnerships investing in
affordable rental housing qualified for tax credits, from 1986 until 1990, and
was employed as an associate by the accounting firms of Laventhol & Horwath,
during 1985, and Mann & Pollack Accountants, from 1979 to 1984. Mr. Paul is a
member of the California Society of Certified Public Accountants and the
American Institute of Certified Public Accountants. His responsibilities at
Associates include supervision of investor partnership accounting and tax
reporting matters and monitoring the financial condition of the Local Limited
Partnerships in which the Fund will invest. Mr. Paul graduated from the
University of Illinois in 1978 with a Bachelor of Science degree and is a
Certified Public Accountant in the State of California.
SY GARBAN, age 50, has 18 years' experience in the real estate securities
and syndication industry. He has been associated with Associates since 1989,
serving as National Sales Director through 1992 and as Vice President - National
Sales since 1992. Previously, he was employed by MRW, Inc., Newport Beach,
California from 1980 to 1989, a real estate acquisition, development and
management firm. Mr. Garban is a member of the International Association of
Financial Planners and has been Vice President of and a registered principal
with WNC Capital Corporation since its organization. He graduated from Michigan
State University in 1967 with a Bachelor of Science degree in Business
Administration.
THOMAS J. RIHA, age 40, has been Vice President - Asset Management of
Associates since 1994. He has more than 17 years' experience in commercial and
multi-family real estate investment and management. Previously, Mr. Riha was
employed by Trust Realty Advisor, a real estate acquisition and management
company, from 1988 to 1994, last serving as Vice President - Operations. His
responsibilities at Associates include monitoring the operations and financial
performance of, and regulatory compliance by, properties in the WNC portfolio.
Mr. Riha graduated from the California State University, Fullerton in 1977 with
a Bachelor of Arts degree (cum laude) in Business Administration with a
concentration in Accounting and is a Certified Public Accountant in the State of
California and a member of the American Institute of Certified Public
Accountants.
JANICE S. WONG, age 37, has been Vice President - Marketing of Associates
since 1994. Previously, from 1987 to 1994 Ms. Wong was employed by ATEL
Securities Corporation, a California-based dealer-manager of equipment leasing
limited partnership offerings, where she last served as Executive Vice President
- - Marketing, and from 1986 to 1987 she was employed by Wedbush Securities, Inc.,
a regional brokerage firm in Los Angeles, California, where she served as
coordinator for the marketing of limited partnerships and mutual funds. She has
been a registered principal with WNC Capital Corporation since 1994, and is
responsible for the marketing of WNC's retail investments and overseeing
broker-dealer relations. Ms. Wong graduated from the University of Southern
California in 1980 with a Bachelor of Science degree (magna cum laude) in
Business Administration with dual emphasis in corporate and investment finance.
23
<PAGE>
MICHELE M. TAYLOR, age 41, has been employed by Associates since 1986,
serving as a paralegal and office manager, and currently is the Investor
Services Director. Previously she was self-employed between 1982 and 1985 in
non-financial services activities and from 1978 to 1981 she was employed as a
paralegal by a law firm which specialized in real estate limited partnership
transactions. Ms. Taylor graduated from the University of California at Irvine
in 1976 with a Bachelor of Arts degree.
DONALD S. BELANGER, age 33, has been Acquisitions Director of Associates
since 1994. He has eight years' experience in real estate analysis, finance,
construction and development. Previously, from 1988 to 1991, Mr. Belanger was a
principal in Marchand Development Company, Inc., a real estate development and
construction firm specializing in single-family and multi-family properties, and
from 1985 to 1988 he was employed as an analyst and group manager at Economic
Development Corporation, a regional business consulting firm. Mr. Belanger
graduated from the University of California, Los Angeles in 1985 with a Bachelor
of Arts degree and from London School of Economics in 1992 with a Diploma in
Economics and in 1993 with a Masters of Science Degree in Finance.
CARL FARRINGTON, age 53, has been associated with Associates since 1993,
serving as Acquisitions Director until 1994 and Acquisitions - Originator since
1994. Mr. Farrington has more than 11 years' experience in finance and real
estate acquisitions. Previously, he served as Acquisitions Director for The
Arcand Company from 1991 to 1993, and as Treasurer and Director of Finance and
Administrator for Polytron Corporation from 1988 to 1991. Mr. Farrington
graduated from Yale University with a Bachelor of Arts degree in 1966 and from
Dartmouth College with a Masters of Business Administration in 1970.
KAY L. COOPER, age 58, has been an officer and Director of Associates since 1971
and of WNC Resources, Inc. from 1988 through its acquisition by Associates in
1991. Mrs. Cooper has also been the sole proprietor of Agate 108, a manufacturer
and retailer of home accessory products, since 1975. She is the wife of Wilfred
N. Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B.
Lester, Jr. Ms. Cooper graduated from the University of Southern California in
1958 with a Bachelor of Science degree.
24
<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 TCP IV or
Associates for the following fees:
(a) Selection fees in an amount equal to 8% of the gross proceeds of the
Partnerships' Offering ("Gross Proceeds"). Through December 31, 1995,
approximately $986,000 of selection fees had been incurred by the Partnership,
(b) A nonaccountable expense reimbursement in an amount equal to 2% of Gross
Proceeds. Through December 31, 1995, approximately $312,000 of nonaccountable
expense reimbursement has been incurred the Partnership.
(c) An annual asset management fee in an amount equal to the greater of (i)
$2,000 for each Apartment Complex or (ii) 0.275% of gross proceeds. Asset
management fees of $23,000 and $30,000 were incurred during the years ended
December 31, 1995 and December 31, 1994, respectively.
(d) A subordinated disposition fee in an amount equal to 1% of the sale price
received in connection with the sale or disposition of an Apartment Complex or
interest in a Local Partnership. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital contributions
and payment of the return on investment (as defined in Article I of the
Partnership Agreement), which includes Housing Tax Credits, to the Limited
Partners. Through December 31, 1995, no disposition fee had been incurred by the
Partnerships.
(e) The General Partner was allocated Housing Tax Credits of $9,207 and $819 for
the years ended December 31, 1995 and 1994, respectively.
25
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) Security Ownership of Certain Beneficial Owners
The following is only person known to own beneficially in excess of 5%
of the outstanding Limited Partnership Interests:
- ------------------ ------------------------- --------------------- ----
Title of class Name and addresss of Amount and nature of Percent
beneficial owner benefical ownership of class
- ------------------ ------------------------- --------------------- -------
- ------------------ ------------------------- --------------------- --------
Units of Limited Enova Financial, Inc. 4,000 units 25.6%
Partnership P.O. Box 126943
Interests San Diego, CA 92112-6943
- ------------------ -------------------------- ---------------------- ------
(b) Security Ownership of Management
Neither TCP IV, Associates nor any of the officers or directors of
Associates own directly or beneficially any Limited Partnership
Interests in the Partnership.
(c) Changes in Control
The management and control of the General Partners may be changed at any
time in accordance with their respective organizational documents,
without the consent or approval of the Limited Partners. In addition,
the Partnership Agreement provides for the admission of one or more
additional and successor General Partners in certain circumstances.
First, with the consent of any other General Partners and a
majority-in-interest of the Limited Partners, any General Partner may
designate one or more persons to be successor or additional General
Partners. In addition, any General Partner may, without the consent of
any other General Partner or the Limited Partners, (i) substitute in its
stead as General Partner any entity which has, by merger, consolidation
or otherwise, acquired substantially all of its assets, stock or other
evidence of equity interest and continued its business, or (ii) cause to
be admitted to the Partnership an additional General Partner or Partners
if it deems such admission to be necessary or desirable so that the
Partnership will be classified as 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 Series and elect a successor
General Partner.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
All of the Partnerships' affairs are managed by TCP IV, through Associates. The
transactions with TCP IV and Associates are primarily in the form of fees paid
by the Partnership for services rendered to the Partnership and reimbursements
of expenses, as discussed in Item 11 and in the notes to the accompanying
financial statements.
26
<PAGE>
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
Financial Statements
Independent auditor's reports
Balance sheets as of December 31, 1995 and 1994
Statements of Operations for the years ended December 31, 1995 and
December 31, 1994. Statement of Partners' Equity for the years ended
December 31, 1995 and December 31,1994.
Statements of Cash Flows for the years ended December 31, 1995 and
December 31, 1994.
Notes to Financial Statements.
Financial Statement Schedules:
These schedules are omitted because any required information is included in the
financial statements and notes thereto, or they are not applicable, or not
required.
Exhibits
(3) Articles of incorporation and by-laws: The registrant is not incorporated.
The Partnership Agreement is included as Exhibit B to the Prospectus which
is included in Post-Effective No 11 to Registration Statement on Form S-11
dated May 24, 1995 incorporated herein by reference as Exhibit 3.
(10) Material contracts:
10.1 Amended and Restated Agreement of Limited Partnership of Chadwick Limited
Partnership filed as exhibit 10.1 to Form 8-K dated July 22, 1994 is hereby
incorporated herein by reference as exhibit 10.1.
10.2 Second Amended and Restated Agreement of Limited Partnership of Garland
Street Limited Partnership filed as exhibit 10.2 to Form 8-K dated July 22,
1994 is hereby incorporated herein by reference as exhibit 10.2
10.3 Amended and Restated Agreement of Limited Partnership of Lamesa Seniors
Community, Ltd. filed as exhibit 10.3 to Form 8-K dated July 22, 1994 is
hereby incorporated herein by reference as exhibit 10.3.
10.4 Amended and Restated Agreement of Limited Partnership of Palestine Seniors
Community, Ltd. filed as exhibit 10.4 to Form 8-K dated July 22, 1994 is
hereby incorporated herein by reference as exhibit 10.4.
27
<PAGE>
10.5 Second Amended and Restated Agreement of Limited Partnership of Southcove
Associates filed as exhibit 10.1 to Form 8-K dated August 8, 1994 is hereby
incorporated herein by reference as exhibit 10.5.
10.6 Third Amended and Restated Agreement of Limited Partnership of Southcove
Associates d. filed as exhibit 10.2 to Form 8-K dated August 8, 1994 is
hereby incorporated herein by reference as exhibit 10.6.
10.7 Amended and Restated Agreement of Limited Partnership of Comanche
Retirement Village, Ltd. filed as exhibit 10.1 to Form 8-K dated August 31,
1994 is hereby incorporated herein by reference as exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Mountainview
Apartments Limited Partnership filed as exhibit 10.1 to Form 8-K dated
September 21, 1994 is hereby incorporated herein by reference as exhibit
10.8.
10.9 Second Amendment to Amended and Restated Agreement of Limited Partnership
of Mountainview Apartments Limited Partnership filed as exhibit 10.2 to
Form 8-K dated September 21, 1994 is hereby incorporated herein by
reference as exhibit 10.9.
10.10Amended and Restated Agreement of Limited Partnership of Pecan Grove
Limited Partnership filed as exhibit 10.3 to Form 8-K dated September 21,
1994 is hereby incorporated herein by reference as exhibit 10.10.
10.11Second Amendment to Amended and Restated Agreement of Limited Partnership
of Pecan Grove Limited Partnership filed as exhibit 10.4 to Form 8-K dated
September 21, 1994 is hereby incorporated herein by reference as exhibit
10.11.
10.12Second Amendment to and Entire Restatement of the Agreement of Limited
Partnership of Autumn Trace Associates, Ltd. filed as exhibit 10.1 to Form
8-K dated October 31, 1994 is hereby incorporated herein by reference as
exhibit 10.12.
10.13Amended and Restated Agreement of Limited Partnership of EW , a Wisconsin
Limited Partnership filed as exhibit 10.2 to Form 8-K dated October 31,
1994 is hereby incorporated herein by reference as exhibit 10.13.
10.14Agreement of Limited Partnership of Klimpel Manor, Ltd. filed as exhibit
10.3 to Form 8-K dated September 21, 1994 is hereby incorporated herein by
reference as exhibit 10.14.
10.15 Amended and Restated Agreement of Limited Partnership of Hickory
Lane Associates Limited. (1)
10.16Amended and Restated Agreement of Limited Partnership of Honeysuckle Court
Associates, Ltd. (1)
28
<PAGE>
10.17Amended and Restated Agreement of Limited Partnership of Walnut Turn
Associates, Ltd. (1)
- ----------
(1) Previously filed as part of the annual report.
Reports on Form 8-K
No reports on From 8-K were filed during the fourth quarter ended December 31,
1995.
29
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND IV, L.P.,
Series 2 (Registrant))
By: WNC Tax Credit Partners IV, L.P.,
General Partner
By: WNC & Associates, Inc., General Partner
Date: By: /s/John B. Lester, Jr.
- ------------- -----------------------------------------
John B. Lester, Jr.
President
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:
DATE SIGNATURE: TITLE:
Director and Principal
Executive Officer of WNC &
/s/ Wilfred N. Cooper, Sr. Associates, Inc.
-----------------------------------
Wilfred N. Cooper, Sr.
Director and Principal
Operating Officer and
Secretary of WNC &
/s/ John B. Lester, Jr. Associates, Inc.
------------------------------------
John B. Lester, Jr.
Director of WNC &
Associates, Inc.
-------------------------------------
Kay L. Cooper
Principal Financial
Officer and Principal
Accounting Officer of WNC
/s/ Theodore M. Paul & Associates, Inc.
------------------------------------
Theodore M. Paul
30
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0
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