FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended: December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-26048
WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1
(Exact name of registrant as specified in its charter)
California 33-0563307
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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:
UNITS OF LIMITED PARTNERSHIP INTEREST
<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 [ ] No [X]
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
List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
NONE
2
<PAGE>
PART I.
ITEM 1. BUSINESS:
Organization
- ------------
WNC Housing Tax Credit Fund IV, L.P., Series 1 (the "Partnership") is a
California Limited Partnership formed under the laws of the State of California
on May 4, 1993 to acquire limited partnership interests in local limited
partnerships ("Local Limited 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 Partnership is conducted primarily through Associates as
neither TCP IV nor the Partnership has employees of their own.
On October 20, 1993, the Partnership commenced a public offering ("Offering") of
10,000 Units of Limited Partnership Interest ("Limited Partnership Interest"),
at a price of $1,000 per Limited Partnership Interest. The Partnership's
offering terminated on July 19, 1994. A total of 10,000 Limited Partnership
Interests representing $10,000,000 had been sold.
Holders of Limited Partnership Interests are referred to herein as "Limited
Partners."
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 provide its Limited Partners with Low
Income Housing Credits. The Partnership's principal business therefore consists
of investing as a limited partner in Local Limited Partnerships each of which
will own and operate an apartment complex ("Apartment Complex") which will
qualify for the federal low-income housing tax credit (the "Low Income Housing
Credit In general, under Section 42, an owner of a low-income housing project is
entitled to receive the Low Income Housing 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").
In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by a Local Limited Partnership of any Apartment Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Apartment
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the inability of the
Partnership to directly cause the sale of Apartment
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<PAGE>
Complexes by the general partners of the respective Local Limited Partnerships (
the "Local General Partners"), but generally only to require such Local General
Partners to use their respective best efforts to find a purchaser for the
Apartment Complexes, it is not possible at this time to predict whether the
liquidation of substantially all of the Partnership's assets and the disposition
of the proceeds, if any, in accordance with the Partnership's Agreement of
Limited Partnership ("Partnership Agreement") will be able to be accomplished
promptly at the end of the 15-year period. If a Local Limited Partnership is
unable to sell an Apartment Complex, it is anticipated that the Local General
Partner will either continue to operate such Apartment Complex or take such
other actions as the Local General Partner believes to be in the best interest
of the Local Limited Partnership. In addition, circumstances beyond the control
of the General Partner may occur during the Compliance Period which would
require the Partnership to approve the disposition of an Apartment Complex prior
to the end thereof.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership multifamily residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and neither the
Partnership's investments nor the Apartment Complexes owned by Local Limited
Partnerships will be readily marketable. Additionally, there can be no assurance
that the Partnership will be able to dispose of its interests in the Local
Limited 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 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 TCP IV and the Local General Partners,
there can be no assurance that Partnership operations will be profitable or that
the anticipated Low Income Housing Credits will be available to Limited
Partners.
The Apartment Complexes owned by the Local Limited Partnerships in which the
Partnership has invested or is expected to invest were or are being developed by
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 Limited 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 Limited Partnership is
limited to its investment. The Local General Partners retain responsibility for
developing, constructing, maintaining, operating and managing the Apartment
Complex.
As of December 31, 1996 and 1995, the Partnership had invested in twenty Local
Limited Partnerships. Each of these Local Limited Partnerships owns an Apartment
Complex that is or is expected to be eligible for the Housing Tax Credit. All of
the Local Limited Partnerships also benefit from government programs promoting
low or moderate income housing. As of December 31, 1996, construction or
rehabilitation of the underlying Apartment Complexes was completed on all twenty
Apartment Complexes.
4
<PAGE>
The following is a schedule of the status as of December 31, 1996, of the
Apartment Complexes owned by Local Limited Partnerships in which the Partnership
was a limited partner as of December 31, 1996.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH THE PARTNERSHIP HAS AN INVESTMENT
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
No. of Units Units Percentage of Total
Name & Location Apts. Completed Occupied Units Occupied
- --------------- ----- --------- -------- --------------
<S> <C> <C> <C> <C>
ALPINE 36 36 36 100%
Alpine, (Brewster Co.) Texas
BAYCITY 62 62 60 97%
Baytown (Harris Co.) Texas
BECKWOOD MANOR 42 42 38 90%
Marianna (Lee Co.), Arkansas
BRISCOE MANOR 31 31 31 100%
Galena (Kent Co.), Maryland
EVERGREEN 24 24 22 92%
Maynard (Randolph Co.), Arkansas
FAWN HAVEN 28 28 27 96%
Manchester (Adams Co.), Ohio
FORT STOCKTON 36 36 32 89%
Ft Stockton (Pecos Co.), Texas
HIDDEN VALLEY 40 40 39 98%
Gallup (McKinley Co.), New Mexico
HOI LENOIR 34 34 34 100%
Lenoir (Caldwell Co. ), North
Carolina
INDIAN CREEK 48 48 43 90%
Bucyrus (Crawford Co.) Ohio
LAUREL CREEK 24 24 24 100%
San Luis Obispo (San Luis Obispo) CA
MADISONVILLE 32 32 28 88%
Madisonville (Madison Co.) Texas
MOUNTAIN GRAHAM 40 40 38 96%
Safford (Graham Co.) Arizona
5
<PAGE>
<CAPTION>
No. of Units Units Percentage of Total
Name & Location Apts. Completed Occupied Units Occupied
- --------------- ----- --------- -------- --------------
<S> <C> <C> <C> <C>
NORTHSIDE PLAZA 48 48 48 100%
Angleton (Brazoria Co.) Texas
PAMPA MANOR 32 32 26 81%
Pampa (Gray Co) Texas
REGENCY COURT 115 115 101 88%
Monrovia (Los Angeles Co.), CA
SANDPIPER 24 24 24 100%
Aulander,(Bertie Co.), N.C.
VERNON MANOR 28 28 28 100%
Vernon (Wilbarger Co.), Texas
WATERFORD PLACE 32 32 30 94%
Calhoun Falls (Abbeville Co.) S.C.
YANTIS SENIORS 24 24 24 100%
Yantis (Wood Co) Texas
780 780 733 94%
=== === === ===
</TABLE>
Description of Local Limited Partnerships
- -----------------------------------------
The Partnership has become a limited partner in the Local Limited Partnerships
listed below. Each Local Limited Partnership owns an apartment complex located
per the above chart.
The following tables contain information concerning the Local Limited
Partnerships acquired by the Partnership.
<TABLE>
<CAPTION>
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
Local Project Name Construction Estimated Number of Basic Permanent Local Limited
Limited Completion Development Apartment Units Monthly Mortgage Loan Partnership's
Partnership Cost With Rents Amount Anticipated Tax
Land Credits (1)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALPINE Alpine Manor April 1994 $1,167,000 36 1BR $243 $931,000 $394,000
Apartments 674 sq. ft. (3)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
BAYCITY Baycity April 1994 $1,826,000 18 1BR units $200 $791,000 $626,000
Village 710 sq. ft. (acquisition)
Apartments (3)
(4) 30 2BR units $225
799 sq. ft. $738,000
(rehab)
14 3BR units $310 (3)
1,190 sq. ft.
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
6
<PAGE>
<CAPTION>
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
Local Project Name Construction Estimated Number of Basic Permanent Local Limited
Limited Completion Development Apartment Units Monthly Mortgage Loan Partnership's
Partnership Cost With Rents Amount Anticipated Tax
Land Credits (1)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
BECKWOOD Riverview August 1994 $1,779,000 40 1BR units $250 $1,401,000 $609,000
Apartments 563 sq. ft. (3)
(2)
2 2BR units $290
764 sq. ft.
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
BRISCOE Briscoe January 1995 $1,546,000 31 1BR units $345 $1,500,000 $648,000
Manor 624 sq. ft. (3)
Apartments
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
EVERGREEN Broadway Cove September 1994 $1,123,000 24 1BR units $265 880,000 $386,000
Apartments 624 sq. ft. (3)
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
FAWN HAVEN Fawn Haven December 1993 $1,069,000 28 1BR units $220 $873,000 (3) $376,000
Village 579 sq. ft.
Apartments
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
FORT Fort Stockton October 1994 $1,248,000 36 1BR units $255 1,024,000 $453,000
STOCKTON Manor 674 sq. ft. (3)
Apartments
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
HIDDEN Hidden August 1994 $1,912,000 10 1BR units $270 $1,500,000 $801,000
VALLEY Valley 645 sq. ft. (3)
Apartments
20 2BR units $320
827 sq. ft.
10 3BR units $370
946 sq. ft.
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
HOI OF Skyland February 1994 $1,162,000 8 1BR units $214 $650,000 $399,500
LENOIR Apartments 623 sq. ft. (acquisition)
(4) (3)
22 2BR units $234
823 sq. ft. $190,000
(rehab)
4 3BR units $249 (3)
950 sq. ft.
$378,000 (5)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
INDIAN Indian Creek November 1994 $1,780,000 16 1BR units $205 $1,497,000 $637,000
CREEK Apartments 664 sq. ft. (3)
32 2BR units $250
751 sq. ft.
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
LAUREL Laurel June 1994 $2,165,000 19 1BR units $337-413 $750,000 $2,313,000
Creek 620 sq. ft. (CCRC) (6)
Apartments
5 2BR units $498
(2) 840 sq. ft.
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
MADISON- Madisonville September 1994 $1,0250,000 28 1BR units $296 $992,000 (3) $445,000
VILLE Manor 656 sq. ft.
Senior
Citizens 4 2BR units $351
Apartments 776 sq. ft.
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
7
<PAGE>
<CAPTION>
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
Local Project Name Construction Estimated Number of Basic Permanent Local Limited
Limited Completion Development Apartment Units Monthly Mortgage Loan Partnership's
Partnership Cost With Rents Amount Anticipated Tax
Land Credits (1)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C>
MT. Mt. Graham November 1994 $1,876,000 8 1BR units $232 $1,500,000 $788,000
GRAHAM Apartments 592 sq. ft. (3)
24 2BR units $282
734 sq. ft.
8 3BR units $329
897 sq. ft.
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
NORTHSIDE Northside December 1994 $1,758,000 44 1BR units $259 $1,384,000 $613,000
Plaza 654 sq. ft. (3)
Apartments
(2) 4 2BR units $306
774 sq. ft.
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
PAMPA Pampa June 1994 $1,029,000 32 1BR units $275 $854,000 (3) $363,000
Manor 650 sq. ft.
Apartments
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
REGENCY Regency June 1995 $9,050,000 107 1BR units $445-527 $4,400,000 $3,417,000
Court 550 sq. ft. (CHFA) (7)
Apartments
8 2BR units $150,000
30 1&2-story 740 sq. ft. $528-633 (HOME) (8)
Buildings
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
SANDPIPER Sandpiper April 1995 $1,100,000 22 1BR units $315 $960,000 $433,000
Square 650 sq. ft. (FmHA) (3)
Apartments
2 2BR units $335
(2) 800 sq. ft.
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
VERNON Vernon May 1994 $905,000 28 1BR units $260 $744,000 (3) $325,000
Manor 674 sq. ft.
Apartments
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
WATER- Waterford April 1994 $1,514,000 32 1BR units $289 $1,201,000 $549,000
FORD Place 649 sq. ft. (3)
Apartments
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
YANTIS Yantis February $842,000 24 1BR units $265 $641,000 (3) $287,000
Seniors 1994 674 sq. ft.
Apartments
(2)
- -------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
</TABLE>
(1) Low Income Housing Credits are available over a ten-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) Senior citizen housing.
(3) The Rural Economic and Community Development Services (formerly the
Farmers Home Administration) of the United States Department of
Agriculture ("RECDS") provided the mortgage loans under the RECDS
Section 515 Mortgage Loan Program. Each of these mortgage loans has a
50-year term and bears 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.
8
<PAGE>
(4) Rehabilitation property.
(5) The loan was provided by Housing Opportunities, Inc. ("HOI"), the Local
General Partner, is unsecured, and bears interest at the rate of 7% per
annum payable annually, with all principal payable on the earlier of
March 30, 2008 or the sale or refinancing of the Apartment Complex.
(6) The California Community Reinvestment Corporation ("CCRC") provided the
mortgage loan at an interest rate of 8.5% per annum (equal to the U.S.
Treasury Index plus 1.25% per annum),with principal and interest
payable monthly based on a 30-year amortization schedule.
(7) California Housing Finance Agency ("CHFA") makes below-market mortgages
available for those projects where at least 20% of the apartment units
are set aside for very low income tenants at affordable rents. The CHFA
loan will be a 30-year loan and is expected to bear interest at the
rate of 6.85% per annum, with principal and interest payable monthly
based on a 30-year amortization schedule.
(8) The HOME Program was created under the National Affordable Housing Act
of 1990. States, metropolitan cities, urban counties and consortia
(contiguous units of local government) are eligible to become
participating jurisdictions in the HOME Program. The HOME funds are
allocated by formula, with 60% of these funds available for
metropolitan cities, urban counties and consortia and 40% for states.
HOME funds may be used for tenant-based rental assistance, assistance
to home-buyers and homeowners, property acquisition, new construction,
moderate or substantial rehabilitation, site improvements, demolition,
relocation expenses and other reasonable and necessary expenses related
to development of non-luxury housing. The HOME loan will be provided
through CDCLA, will be a 15-year loan and is expected to bear interest
at the rate of 3% per annum, with principal and interest payable as set
forth below under "Other Terms of Investments." All unpaid amounts will
be due and payable on maturity of the loan.
Alpine (ALPINE) Alpine is in Brewster County, Texas at the intersection
of U.S. Highways 67/90 and State Highway 118, 152 miles southwest of Odessa, 26
miles north of Big Bend National Park, and 89 miles north of the Mexican Border.
The population of Alpine is approximately 5,600. The city's major employers are
the Alpine Independent School district and Sul Ross State University.
Baytown (BAYCITY) Baytown is in Harris County, Texas, along Galveston
Bay. Interstate Highway 10 connects Baytown with Houston, 30 miles to the west.
Baytown's population is approximately 66,000. It's major employers are the
Goosecreek School District and Exxon.
Marianna (BECKWOOD) Marianna, the county seat of Lee County, Arkansas,
is 60 miles southwest of Memphis and 100 miles east of Little Rock. In 1990, the
population of Marianna was approximately 6,000. The city is located at the
intersection of U.S. Highway 79 and State Highway 1, which connects to
Interstate Highway 40 approximately 17 miles to the north. Major employers in
the city include Douglas & Lomason (auto stamping), Doors of Arkansas (metal
doors), and Markland Labs (ethnic hair products).
Galena (BRISCOE) Galena is in Kent County, Maryland, 40 miles southwest
of Wilmington, Delaware and 40 miles northwest of Dover, Delaware. In 1990, the
population of Galena was approximately 325. Access to the city is provided by
State Highway 213 and U.S. Highway 301. The economy of Kent County is based
largely in agriculture. The largest employer in Galena is Galena Middle School.
Maynard (EVERGREEN) Maynard is in Randolph County, Arkansas along State
Highways 115 and 166, seven miles south of the Missouri border in the
northeastern section of the state. The population of Maynard is approximately
330. The largest employer in Maynard is Hill Sawmill.
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Manchester (FAWN HAVEN) Manchester is in Adams County, Ohio, along the
Ohio River. U.S. Highway 52 connects Manchester with Cincinnati, 60 miles west,
and Portsmouth, 50 miles east. The population of Manchester in 1990 was
approximately 2,300. The city's two major employers are Manchester Manufacturing
(men's apparel) and Welded Wire (manufacturer of products for refrigeration
industry).
Fort Stockton (FORT STOCKTON) Fort Stockton is the county seat of Pecos
County, Texas. The city is located in the southwestern section of Texas at the
intersection of Interstate Highway 10, U.S. Highways 67, 285 and 385, and State
Highway 18. The population of Fort Stockton is approximately 8,500. The economy
of Pecos County is based primarily in oil, gas and ranching. Fort Stockton's
largest employer is Northern Natural Gas.
Gallup (HIDDEN VALLEY) Gallup is the county seat of McKinley County,
New Mexico. The city is located in the western section of the state 20 miles
east of the Arizona border and 135 miles northwest of Albuquerque, at the
intersection of Interstate Highway 40 and U.S. Highway 666. The population of
Gallup is approximately 19,000. The economy is based primarily in retail and
services; approximately 15 Federal and state agencies have offices in Gallup.
Tourism also contributes to Gallup's economy. The largest employer for the
city's residents is the U.S. government.
Lenoir (HOI OF LENOIR) Lenoir is the county seat of Caldwell County,
North Carolina. The city is in the western section of the state along State
Highway 321, at the edge of the Pisgah National Forest and the Blue Ridge
Mountains. Charlotte is 85 miles southeast and Winston-Salem is 85 miles
northeast of Lenoir. The city's
population is approximately 14,200. Furniture manufacturing is the main industry
in Lenoir. Included among the city's major employers are Broyhill Furniture,
Bernhardt Furniture and Singer Furniture.
Bucyrus (INDIAN CREEK) Bucyrus is the county seat of Crawford County,
Ohio, and is located in the north central section of the state at the
intersection of Interstate Highway 30 and State Highways 100, 98 and 4. Toledo
is 65 miles northwest and Cleveland is 75 miles northeast. The population of
Bucyrus is approximately 13,500. Manufacturing is the largest source of
employment in Crawford County, followed by services and retail trade. The major
employers in the Bucyrus area are Anchor/Swan (automobile hose manufacturing),
Baja Boat (fiberglass boats), and General Electric (fluorescent lamps).
San Luis Obispo (LAUREL) San Luis Obispo is the county seat of San Luis
Obispo County, California. The city is approximately 100 miles north of Santa
Barbara, 225 miles north of Los Angeles, and 230 miles south of San Francisco,
along U.S. Highway 101. The population of San Luis Obispo is approximately
43,000. The city's major employers are California Polytechnic University, San
Luis Obispo County government and Diablo Canyon Power Plant.
Madisonville (MADISONVILLE) Madisonville is the county seat of Madison
County, Texas, and is located in the eastern section of the state along
Interstate Highway 45 and U.S. Highway 75. Dallas is 45 miles northwest and
Austin is 45 miles southwest of Madisonville. The population of the city is
approximately 3,500. While the economy is based in oil and cattle, the major
employers in the Madisonville area are Monterey Mushroom Plant, Madisonville
School District, and Accura Fiberglass.
Safford (MT. GRAHAM) Safford is the county seat of Graham County,
Arizona, located at the intersection of U.S. Highways 70 and 666 in the
southeastern section of the state on the south bank of the Gila River. Tucson is
125 miles southwest and Phoenix is 165 miles northwest of Safford. The
population of Safford is approximately 7,500. Agriculture is the mainstay of the
Safford and Graham County economy, with cotton being the principal commodity.
The major employers are the school system and the Federal and state prison
systems.
Angleton (NORTHSIDE) Angleton is the county seat of Brazoria County,
Texas, and is located in the southwestern section of the state, approximately 15
miles northwest of the Gulf of Mexico and 55 miles south of Houston. State
Highways 288 and 35 intersect at Angleton providing access to Interstate Highway
45 and State Highway 59. The population of Angleton is approximately 17,000. The
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<PAGE>
local economy is based in chemical manufacturing, petroleum processing, offshore
maintenance services, diversified manufacturing, biomedical, electronics,
commercial fishing, and agriculture. County government is one of the largest
employers, along with Intermedics (manufacturer of pacemakers) and Texas
Department of Corrections (prison facility).
Pampa (PAMPA) Pampa is the county seat of Gray County, Texas, and is
located in the northwestern section of the state at the intersection of U.S.
Highway 60 and State Highways 70 and 152. Amarillo is 40 miles southwest of
Pampa. The city's population is approximately 20,000. The economy of this
section of Texas is based primarily in farming and oil. The major employers in
Pampa are Hoechst-Celanese (chemical plant), IRI International (drilling rigs &
steel forging) and Pampa School District.
Monrovia (REGENCY) is located in Los Angeles County, California, near
the city of Pasadena and the San Gabriel Mountains. The population of Monrovia
is approximately 36,000.
Aulander (SANDPIPER) Aulander is in Bertie County, in northeastern
North Carolina along U.S. Highway 13. Greenville is 45 miles southwest and
Raleigh is 70 miles southwest. Aulander's population is approximately 1,300. The
economy of the city is based primarily in agriculture, and the largest employer
for Aulander residents is Golden Peanut (peanut shelling plant).
Vernon (VERNON) Vernon is the county seat of Wilbarger County, Texas,
and is located 50 miles west of Wichita Falls, 180 miles northwest of
Dallas/Fort Worth, and 180 miles south of Oklahoma City, Oklahoma. Vernon is at
the intersection of U.S. Highway 287 and State Highway 283. The city's
population is approximately 12,000. Agriculture and oil are the main industries,
and major employers include two state hospitals, a meat packing company, and a
junior college.
Calhoun Falls (WATERFORD) Calhoun Falls is located in Abbeville County,
in the western section of South Carolina, along the Georgia border. Greenville
is 55 miles north, and Columbia is 100 miles east. State Highway 72 connects the
city with Greenwood (25 miles east) and U.S. Highway 178. The population of
Calhoun Falls is approximately 2,300. Major employers in the area include the
West Point-Pepperell-Calhoun Falls Plant (sheeting) and the
Fieldcrest-Cannon-Rocky River Plant (carpeting).
Yantis (YANTIS) Yantis is in Wood County, Texas in the northeastern
section of the state along State Highway 154. The city is 90 miles east of
Dallas, 30 miles north of Tyler and 14 miles north of Quitman, the county seat.
The population of Yantis is approximately 250. The county's economy is based in
mineral and agricultural business and tourism. The largest employer in Yantis is
the 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>
ALPINE 1600 Capital Company, Inc. M-DC Group, Inc. WNC: 1st $600 99/1 $243,000
dba Alpha LGP: 2nd $1,150
Management Co., Balance: 99/1 51/49
Inc.
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
BAYCITY Green Companies Development Green Realty Co., WNC: 1st $750 99/1 $301,000
Group, Inc. Inc. LGP: 2nd
$1,075 51/49
Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
BECKWOOD Phillips Development Phillips WNC: 1st 95/5 $307,000
Corporation Development $1,000
Corporation LGP: 2nd 51/49
$2,860
Balance: 95/5
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
11
<PAGE>
<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>
BRISCOE McKnight & DeCoster, Inc. Insignia WNC: 1st 99/1 $308,000
Management Group $1,500
LGP: 2nd 51/49
$2,210
Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
EVERGREEN Phillips Phillips 1st $3,375 - $725 to 95/5 $195,000
Development Development Partnership, $2,560 to
Corporation Corporation LGP, then 95/5 51/49
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
FAWN HAVEN George E. Maharg Maharg WNC: 1st $700 99/1 $167,000
Management, LGP: 2nd
Maharg Realty, Inc. Inc. $1,450 51/49
Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
FORT 1600 Capital Company, Inc. M-DC Group, WNC: 1st $900 99/1 $224,000
STOCKTON Inc. dba Alpha LGP: 2nd
Management $1,700 51/49
Co., Inc. Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
HIDDEN Alan Deke Noftsker M-DC Group, WNC: 1st 99/1 $413,000
VALLEY Inc. dba Alpha $1,000
Management LGP: 2nd 51/49
Co., Inc. $2,700
Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
HOI OF Housing Weaver Realty WNC: 1st 99/1 $198,000
LENOIR Opportunities, Inc. Company $1,000
Balance: 85/10 85/10
(5% to Class B (5% to
Limited Class B
Partner) (6) Limited
Partner)
(6)
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
INDIAN Georg E. Maharg Maharg WNC: 1st 99/1 $306,000
CREEK Management, $1,200
Inc. LGP: 2nd 51/49
$2,500
Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
LAUREL San Luis Obispo Non-Profit Housing Authority WNC: 25% 99/1 $1,079,000
Housing Corporation of the City of San LGP: 75%
Luis Obispo 51/49
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
MADISON- Jean Johnson Johnson WNC: 1st $725 99/1 $207,000
VILLE Enterprises LGP: 2nd
Management Co. $1,700 51/49
(J.E.M.C.O.) Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
MT. Rural Housing, Inc. Landmark WNC: 1st 99/1 $410,000
GRAHAM Management $1,000
Group, Inc. LGP: 2nd 51/49
$5,300
Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
NORTHSIDE Jean Johnson Johnsom WNC: 1st 99/1 $302,000
Enterprises $1,000
Management Co. LGP: 2nd 51/49
(J.E.M.C.O.) $2,490
Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
12
<PAGE>
<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>
PAMPA 1600 Capital Company, Inc. M-DC Group, WNC: 1st $750 99/1 $180,000
Inc. dba LGP: 2nd
Alpha $1,500 51/49
Management Balance: 99/1
Co., Inc.
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
REGENCY Ralph F. ALM Management, "Residual Rental 99/1 $1,692,000
Alfieri Inc. Receipts" will
distributed annually 51/49
Dennis V. as follows:
Alfieri 3.4$ to CDCLA in
repayment of HOME loan;
Timothy J. 30% to CDCLA as a
Smith lease payment;
33% to the
Glenn W. Partnership; and
Togawa 33% to LGP
Dennis H.
Costanzo
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
SANDPIPER Norwood Stone Wynnefield WNC: 1st 99/1 $219,000
(8) Properties, Inc. $800
LGP: 2nd $1,550 51/49
Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
VERNON 1600 Capital Company, Inc. M-DC Group, WNC: 1st $700 99/1 $161,000
Inc. dba Alpha LGP: 2nd
Management $1,600 51/49
Co., Inc. Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
WATER- Thomas E. Connelly, Jr. Douglas WNC: 1st $500 99/1 $272,000
FORD Management LGP: 2nd
TEC Rental Properties, Inc. Company of $2,970 51/49
Greenville, Inc. Balance: 99/1
Warren H. Abernathy, II
Solid South, Inc.
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
YANTIS Charles Cannon, Jr. M-DC Group, WNC: 1st $500 99/1 $145,000
Inc. dba Alpha LGP: 2nd
Management $1,000 51/49
Co., Inc. Balance: 99/1
- -------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
</TABLE>
1) The maximum annual management fee payable to the property manager generally
is determined pursuant to FmHA or other lender regulations. Each Local General
Partner is authorized to employ either itself or one of its Affiliates, or a
third party, as a property manager for leasing and management of the Apartment
Complex so long as the fee therefor does not exceed the amount authorized and
approved by FmHA or other lender for the Apartment Complex.
(3) Reflects the amount of the net cash flow from operations, if any, to be
distributed to the Partnership ("WNC") and the Local General Partner(s) ("LGP")
of each Local Limited Partnership for each year of operations. In most but not
all instances, to the extent that the specific dollar amounts which are to be
paid to the Partnership are not paid annually, they will accrue and be paid from
sale or refinancing proceeds as an obligation of the Local Limited Partnership.
13
<PAGE>
(4) Subject to certain special allocations, reflects the respective percentage
interests of the Partnership and the Local General Partner(s) in profits, losses
and Low Income Housing Credits of each Local Limited Partnership commencing with
entry of the Partnership as a limited partner.
(5) Reflects the respective percentage interests of the Partnership and the
Local General Partner(s) in any net cash proceeds from sale or refinancing of
the Apartment Complexes, 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:
ALPINE: The capital contribution of the Partnership (less previous
distributions) and the Local General Partner's sales preparation fee.
BAYCITY: The capital contribution of the Partnership, an amount equal to 5%
of net proceeds to the Local General Partner, and the Local General Partner's
sales preparation fee.
BECKWOOD: An amount equal to 5% of net proceeds to the Local General
Partner, the capital contribution of the Partnership, and the Local General
Partner's sales preparation fee.
BRISCOE: The capital contribution of the Partnership, and the Local General
Partner's sales preparation fee.
EVERGREEN: An amount equal to 5% of net proceeds to the Local General
Partner, the capital contribution of the Partnership and the Local General
Partner's sales preparation fee.
FAWN HAVEN: The Local General Partners' sales preparation fee, the capital
contribution of the Partnership, and the Local General Partner's capital
contribution.
FORT STOCKTON: The capital contribution of the Partnership (less previous
distributions), and the Local General Partner's sales preparation fee.
HIDDEN VALLEY: An amount equal to 5% of net proceeds to the Local General
Partner, the capital contribution of the Partnership, and the Local General
Partner's sales preparation fee.
HOI OF LENOIR: The Local General Partner's sales preparation fee, the
capital contribution of the Partnership, and the Class B Limited Partner's
capital contribution ($10).
INDIAN CREEK: The Local General Partner's sales preparation fee, the
capital contribution of the Partnership, and the Local General Partner's capital
contribution.
LAUREL: The capital contribution of the Partnership, the capital
contribution of the Local General Partner and the Local General Partner's sales
preparation fee.
MADISONVILLE: An amount equal to 5% of net proceeds to the Local General
Partner, the capital contribution of the Partnership, and the Local General
Partner's sales preparation fee.
MT. GRAHAM: The capital contribution of the Partnership, and the Local
General Partner's capital contribution, pro rata.
NORTHSIDE: An amount equal to 5% of net proceeds to the Local General
Partner, the capital contribution of the Partnership, and the Local General
Partner's sales preparation fee.
PAMPA: The capital contribution of the Partnership, and the Local General
Partner's sales preparation fee. REGENCY: The capital contribution of the
Partnership, and the Local General Partner's sales preparation fee.
SANDPIPER: The capital contribution of the Partnership and the Local
General Partner's sales preparation fee.
VERNON: The capital contribution of the Partnership, and the
Local General Partner's sales preparation fee.
WATERFORD: The capital contribution of the Partnership, and the Local
General Partners' sales preparation fee.
YANTIS: The capital contribution of the Partnership, and the Local General
Partner's sales preparation fee.
As used above, the term "sales preparation fee" means a fee in the amount of 3%
of sale or refinancing proceeds, except that with respect to HOI OF LENOIR, the
"sales preparation fee" is equal to 6% of sale or refinancing proceeds.
(6) The Class B Limited Partner is Information Conservation, Inc., a North
Carolina corporation.
14
<PAGE>
ITEM 2. PROPERTIES:
Through its investment in Local Limited Partnerships the Partnership holds
interests in Apartment Complexes. See Item 1 for information pertaining to the
Apartment Complexes.
ITEM 3. LEGAL PROCEEDINGS:
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None.
15
<PAGE>
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND RELATED
SECURITY HOLDER MATTERS:
The Units are not traded on a public exchange but were sold through a public
offering. It is not anticipated that any public market will develop for the
purchase and sale of any Unit. Units can be assigned only if certain
requirements in the Partnership's Agreement are satisfied.
At December 31, 1996, there were 734 registered holders of Units. The
Partnership was not designed to provide cash distributions to Limited Partners
in circumstances other than refinancing or disposition of its investments in
Local Limited Partnerships. The Low Income Housing Credits for 1996, 1995 and
1994 were $136, $101 and $32, respectively, per Unit.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
May 4, 1993
(Inception) to
Years Ended December 31, December 31,
------------------------------------------------ ------------
1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue $ 51,654 $ 68,682 $ 85,261 $ 0
Partnership operating
expenses 82,499 86,499 67,946 11,634
Equity in loss of
Local Limited
Partnerships (1,023,557) (727,986) (413,316) (0)
----------- ----------- ----------- -----------
Net loss $ (1,054,402) $ (745,803) $ (396,001) $ (11,634)
=========== =========== =========== ===========
Net loss per Limited
Partnership Interest $ (104.39) $ (73.83) $ (50.35) $ (23.55)
=========== =========== =========== ===========
Total assets $ 6,784,147 $ 8,355,140 $ 10,391,250 $ 2,389,712
=========== =========== =========== ===========
Net investment in
Local Limited
Partnerships $ 5,771,116 $ 6,928,034 $ 7,852,303 $ 355,087
=========== =========== =========== ===========
Capital contributions
payable to
Local Limited
Partnerships $ 256,610 $ 799,745 $ 2,289,218 $ 125,263
=========== =========== =========== ===========
Accrued fees and expenses
due to affiliates $ 91,982 $ 65,438 $ 75,820 $ 1,229,220
=========== =========== =========== ===========
</TABLE>
16
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
Liquidity and Capital Resources
- -------------------------------
Since inception the Partnership has received $10,000,000 in cash from the sale
of Units. Substantially all of the $10,000,000 has been committed to the
purchase price and acquisition fees and cost of investments in Local Limited
Partnerships, reserves and expenses of the offering. Although not presently the
case, the Partnership previously had identified its investments in advance of
receipt of sufficient cash capital to fund the investments. As of December 31,
1996, the Partnership had made capital contributions to Limited Partnerships in
the amount of approximately $6,921,000 and had further obligations of
approximately $257,000.
As of December 31, 1996, the Partnership was indebted to Associates in the
amount of approximately $92,000. The components of such indebtedness were as
follows: advances for operating expenses of approximately $300 and assets
management fees of approximately, $91,700.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $414,000 for the year
ended December 31, 1996. This decrease in cash consisted of cash used in
investing activities of approximately $437,800, offset by cash provided by
financing activities and operating activities of the Partnership of
approximately $2,000 and $22,000, respectively. Cash used in investing
activities consisted of capital contributions made to Local Limited Partnerships
and acquisition costs of approximately $442,400 and $5,500, respectively, offset
by distributions of approximately $10,100. Cash provided by financing activities
consisted of advances from TCP IV or its affiliates. Cash provided by operating
activities consisted primarily of interest income. Cash used in operating
activities consisted primarily of payments for operating fees and expenses. The
major components of all these activities are discussed in greater detail below.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $697,000 for the period
ended December 31, 1995. This decrease consists of cash used by the Partnerships
investing activities of approximately $915,000, offset by cash provided by the
Partnerships financing activities and opertating activities of approximately
$163,000 and $55,000, respectively. Cash used in investing activities consisted
of capital contributions to Limited Partnerships and payments of acquisition
fees of approximately $1,318,000 and $7,000, respectively, offset by changes in
advances and distributions of approximately $409,000 and $1,000, respectively.
Cash provided from financing activities consisted of cash collected from capital
contributions receivable and the net return of offering costs of approximately
$145,000 and 18,000, respectively.
Prior to sale of the Apartment Complexes, it is not expected that any of the
Local Limited Partnerships in which the Partnership has invested or will invest
will generate cash sufficient to provide distributions to The Partnership of any
material amount. Distributions to the Partnership would first by used to meet
operating expenses of the Partnership, including the payment of the Asset
17
<PAGE>
Management Fee to TCP IV. See Item 11 hereof. As a result, it is not anticipated
that the Partnership will provide distributions to the Limited Partners prior to
the same of the Apartment Complexes.
The Partnership's investments are not readily marketable and may be affected by
adverse general economic conditions which, in turn, could substantially increase
the risk of operating losses for the Apartment Complexes, the Local Limited
Partnerships and the Partnership. These problems may result from a number of
factors, many of which cannot be controlled by TCP IV. Nevertheless, TCP IV
anticipates that capital raised from the sale of the Limited Partnership
Interests is sufficient to fund the Partnership's operations.
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
Limited Partnerships and the Partnership. These problems may result from a
number of factors, many of which cannot be controlled by TCP IV. Nevertheless,
TCP IV anticipates that capital raised from the sale of the Limited Partnership
Interests will be sufficient to fund the Partnership's investment commitments
and proposed operations.
The Partnership 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,
however, be adversely affected by unanticipated or greater than anticipated
operating costs. The Partnership's liquidity could also be affected by defaults
or delays in payment of the Limited Partners' promissory notes, from which a
portion of the working capital reserves is expected to be funded. 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. TCP IV may also apply any
cash distributions received from the Local Limited 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 Limited Partnerships. Accordingly,
if circumstances arise that cause the Local Limited Partnerships to require
capital in addition to that contributed by the Partnership and any equity
contributed by the general partners of the Local Limited 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 Limited Partnerships are already substantially
leveraged), (ii) additional equity contributions or advances of the general
partners of the Local Limited 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
18
<PAGE>
effects as discussed in (iii) above). There can be no assurance that funds from
any of such sources would be readily available in sufficient amounts to fund the
capital requirement of the Local Limited Partnerships in question. If such funds
are not available, the Local Limited Partnerships would risk foreclosure on
their Apartment Complexes if they were unable to renegotiate the terms of their
first mortgages and any other debt secured by the Apartment Complexes to the
extent the capital requirements of the Local Limited Partnerships relate to such
debt.
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 its offerings of Units and its 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.
Results of Operations
- ---------------------
As discussed in Item 1 above, as of December 31, 1996, the Partnership had
acquired 20 Local Limited Partnership Interests. Each of the Apartment Complexes
owned by such Local Limited Partnerships has received a reservation or an
allocation for Low Income Housing Credits. All 20 of the Apartment Complexes are
completed and in operation.
Consistent with The Partnership's investment objectives, each Local Limited
Partnership is generating Low Income Housing Credits for a period of
approximately ten years, commencing with completion of construction or
rehabilitation of its Apartment Complex and is generating losses until sale of
the Apartment Complex.
As reflected on its Statements of Operations, the Partnership had a losses of
approximately $1,054,000 and $746,000, respectively, for the periods ended
December 31, 1996 and 1995. The component items of revenue and expense are
discussed below.
Revenue. The Partnership's revenues consist entirely of interest earned on
Promissory Notes and cash deposits held in financial institutions (i) as
Reserves, or (ii) pending investment in Local Limited Partnerships. Interest
revenue in future years will be a function of prevailing interest rates and the
amount of cash balances. 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.
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.
19
<PAGE>
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.
Other expense consists of the Partnership's administrative expenses, such as
accounting and legal fees, bank charges and investor reporting expenses.
Equity in Income from Local Limited Partnerships. The Partnership's equity in
income from Local Limited Partnerships is equal to approximately 99% of the
aggregate net income of the Local Limited Partnerships incurred after admission
of The Partnership as a limited partner thereof.
After rent-up, the Local Limited Partnerships are expected to generate losses
during each year of operations; this is so because, although rental income is
expected to exceed cash operating expenses, depreciation and amortization
deductions claimed by the Local Limited Partnerships are expected to exceed net
rental income.
20
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
WNC HOUSING TAX CREDIT FUND, IV, L.P., SERIES 1
(A California Limited Partnership)
FINANCIAL STATEMENTS
For The Years Ended December 31, 1996, 1995 and 1994
with
INDEPENDENT AUDITORS' REPORT THEREON
21
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC Housing Tax Credit Fund IV, L.P., Series 1
We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund
IV, L.P., Series 1 (a California Limited Partnership) (the "Partnership") as of
December 31, 1996 and 1995 and the related statements of operations, partners'
equity (deficit) and cash flows for each of the years in the three year period
ended December 31, 1996. 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 1 is a limited partner. These investments, as discussed in Note 3
to the financial statements, are accounted for by the equity method. The
financial statements of substantially all of the limited partnerships,
representing 85% and 83% of the total assets of WNC Housing Tax Credit Fund IV,
L.P., Series 1 at December 31, 1996 and 1995, respectively, were audited by
other auditors whose reports have been furnished to us, and our opinion, insofar
as it relates to the amounts included for such limited partnerships, is based
solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of 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 1 (a
California Limited Partnership) as of December 31, 1996 and 1995, and the
results of its operations and its cash flows for each of the years in the three
year period ended December 31, 1996 in conformity with generally accepted
accounting principles.
/s/CORBIN & WERTZ
CORBIN & WERTZ
Irvine, California
April 5, 1997, except for Notes 2 and 6 which are dated as of December 4, 1998
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1996 and 1995
1996 1995
------------- ------------
ASSETS
Cash and cash equivalents $ 997,025 $ 1,410,867
Investments in limited partnerships 5,771,116 6,928,034
Due from affiliate 9,020 -
Other assets 6,986 16,239
------------ ------------
$ 6,784,147 $ 8,355,140
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payable to limited partnerships $ 256,610 $ 799,745
Accrued fees and advances due to General
Partner and affiliate 91,982 65,438
------------ ------------
Total liabilities 348,592 865,183
------------ ------------
Partners' equity (deficit):
General partner (35,545) (25,001)
Limited partners (10,000 units authorized
- 10,000 units outstanding at
December 31, 1996 and 1995) 6,471,100 7,514,958
------------ ------------
Total partners' equity 6,435,555 7,489,957
------------ ------------
$ 6,784,147 $ 8,355,140
============ ============
See accompanying notes to financial statements
FS-2
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ----------------
<S> <C> <C> <C>
Interest income $ 51,654 $ 68,682 $ 85,261
-------------- ------------- --------------
Operating expenses:
Amortization 31,032 30,926 20,797
Asset management fees 40,000 36,667 30,000
Interest expense - - 4,327
Other 11,467 18,906 12,822
-------------- ------------- --------------
Total operating expenses 82,499 86,499 67,946
-------------- ------------- --------------
(Loss) income from operations (30,845) (17,817) 17,315
Equity in losses from limited
partnerships (1,023,557) (727,986) (413,316)
-------------- ------------- --------------
Net loss $ (1,054,402) $ (745,803) $ (396,001)
============== ============= ==============
Net loss allocated to:
General partner $ (10,544) $ (7,458) $ (3,960)
Limited partners (1,043,858) (738,345) (392,041)
-------------- ------------- --------------
Total net loss allocated $ (1,054,402) $ (745,803) $ (396,001)
============== ============= ==============
Net loss per weighted limited
partner units $ (104.39) $ (73.83) $ (50.35)
============= ============= =============
Outstanding weighted limited
partner units 10,000 10,000 7,787
============== ============= ==============
</TABLE>
See accompanying notes to financial statements
FS-3
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
--------------- ---------------- ----------------
<S> <C> <C> <C>
Equity (deficit) - January 1, 1994 $ (1,235) $ 789,781 $ 788,546
Capital contributions - 9,022,000 9,022,000
Offering expenses (12,993) (1,286,340) (1,299,333)
Collection on notes receivable - 56,000 56,000
Capital issued for notes receivable - (145,000) (145,000)
Net loss (3,960) (392,041) (396,001)
-------------- ------------- --------------
Equity (deficit) - December 31, 1994 (18,188) 8,044,400 8,026,212
Collection on notes receivable - 145,000 145,000
Offering expenses 645 63,903 64,548
Net loss (7,458) (738,345) (745,803)
-------------- ------------- --------------
Equity (deficit) - December 31, 1995 (25,001) 7,514,958 7,489,957
Net loss (10,544) (1,043,858) (1,054,402)
-------------- ------------- --------------
Equity (deficit) - December 31, 1996 $ (35,545) $ 6,471,100 $ 6,435,555
============== ============= ==============
</TABLE>
See accompanying notes to financial statements
FS-4
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,054,402) $ (745,803) $ (396,001)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization 31,032 30,926 20,797
Equity in loss of limited partnerships 1,023,557 727,986 413,316
Accrued and unpaid asset management fees
due to affiliate of general partner 25,000 36,667 30,000
Accrued interest payable to affiliate of
general partner - - (10,862)
Change in due from affiliate (9,020) - -
Change in other assets 6,253 5,661 (9,900)
Change in accrued interest payable - - (701)
-------------- ------------- --------------
Net cash provided by operating activities 22,420 55,437 46,649
-------------- ------------- --------------
Cash flows from investing activities:
Investments in limited partnerships, net (442,379) (1,318,394) (4,972,314)
Distributions 10,075 1,350 -
Changes in advances from general partner
and affiliates for acquisition fees - - (8,179)
Change in advances receivable - 409,286 687,310
Acquisition costs and fees (5,502) (7,072) (760,369)
-------------- ------------- --------------
Net cash used in investing activities (437,806) (914,830) (5,053,552)
-------------- ------------- --------------
Cash flows from financing activities:
Capital contributions from partners - 145,000 9,855,000
Changes from advances from general partner
and affiliates for:
Acquisition of limited partnerships - (47,049) (1,039,414)
Offering expenses - - (156,636)
Other 1,544 - -
Offering adjustments (expenses) - 64,548 (1,299,333)
Payments on loan payable - - (245,982)
-------------- ------------- --------------
Net cash provided by financing activities 1,544 162,499 7,113,635
-------------- ------------- --------------
Net change in cash and cash equivalents (413,842) (696,894) 2,106,732
Cash and cash equivalents, beginning of year 1,410,867 2,107,761 1,029
-------------- ------------- --------------
Cash and cash equivalents, end of year $ 997,025 $ 1,410,867 $ 2,107,761
============== ============= ==============
</TABLE>
Continued
FS-5
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
--------------- ---------------- ----------------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
<S> <C> <C> <C>
Interest paid $ - $ - $ 5,028
============== ============= ==============
Income taxes paid $ 800 $ 800 $ 800
============== ============= ==============
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH
FINANCING AND INVESTING ACTIVITIES:
During the years ended December 31, 1996, 1995 and 1994, the Partnership
incurred, but did not pay $25,000, $36,667 and $30,000, respectively, of
management fees due to an affiliate.
During the year ended December 31, 1994, the Partnership incurred, but did not
pay $2,163,955 of payables to limited partnerships (in connection with its
investments in limited partnerships).
During the year ended December 31, 1994, the Partnership incurred, but did not
pay acquisition fees of $31,691 payable to an affiliate.
See accompanying notes to financial statements
FS-6
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------
WNC Housing Tax Credit Fund IV, L.P., Series 1 (the "Partnership") was formed
under the California Revised Limited Partnership Act on May 4, 1993, and
commenced operations on October 20, 1993. The Partnership was formed to invest
primarily in other limited partnerships which own and operate multi-family
housing complexes that are intended to qualify for low income housing credits.
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 10,000 units of limited
partnership interests at $1,000 per Unit ("Units"). The offering of Units
concluded in July 1994 at which time 10,000 Units in the amount of $10,000,000
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 3), any additional sale or
refinancing proceeds will be distributed 90% to the limited partners (in
proportion to their respective investments) and 10% to the General Partner.
The Partnership's investments in limited partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate,
and include the risks that neither the Partnership's investments nor the
apartment complexes owned by the limited partnerships will be readily
marketable. Additionally there can be no assurance that the Partnership will be
able to dispose of its interests 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.
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. 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.
FS-7
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
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 reported period. Actual
results could materially differ from those estimates.
Cash and Cash Equivalents
- -------------------------
The Partnership considers all investments with remaining maturities of three
months or less when purchased to be cash equivalents. At December 31, 1996 and
1995, the Partnership had cash equivalents representing U.S. Treasury Bills
totaling $647,124 and $1,190,989, respectively.
Concentration of Credit Risk
- ----------------------------
At December 31, 1996 and 1995, the Partnership maintained cash balances at
certain financial institutions in excess of the federally insured maximum.
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,
1996 and 1995, the Partnership has incurred offering and selling expenses to
date of $606,705 and $750,000, respectively, which are reflected as a reduction
of partners' equity. During 1995, it was determined by management that offering
costs were overstated by $64,548 at December 31, 1994. Accordingly, during 1995,
the correction of such overstatement has been reflected as a reduction to
offering costs and accrued fees and advances due to General Partner and
affiliate.
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.
Reclassifications
- -----------------
Certain prior year balances have been reclassified to conform to the current
year presentation.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of December 31, 1996 and 1995, the Partnership had acquired limited
partnership interests in twenty limited partnerships, each of which owns one
apartment complex. As of December 31, 1996, construction on all apartment
complexes was complete. 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 of the
Partnership. The Partnership, as a limited partner, is entitled to up 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.
FS-8
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
The Partnership's investments in the limited partnerships as shown in the
accompanying balance sheet as of December 31, 1996 and 1995 are approximately
$956,000 and $1,519,000, respectively, greater than the Partnership's equity as
shown in the limited partnership's 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 will be
amortized over 30 years and capital contributions accrued but not paid.
<TABLE>
<CAPTION>
Following is a summary of the components of the Partnership's investments in
limited partnerships as of December 31, 1996 and 1995:
1996 1995
---------------- ------------------
<S> <C> <C>
Investments per balance sheet, beginning of period $ 6,928,034 $ 7,852,303
Tax credit adjustments (100,756) (171,079)
Distributions (10,075) (1,350)
Capitalized acquisition fees and costs 5,502 4,072
Equity in losses of limited partnerships (1,023,557) (727,986)
Amortization of capitalized acquisition fees and costs (28,032) (27,926)
--------------- ----------------
Investments per balance sheet, end of period $ 5,771,116 $ 6,928,034
=============== ================
</TABLE>
The financial information from the individual financial statements of the
limited partnerships include rental and interest subsidies. Rental subsidies are
included in revenues and interest subsidies are generally netted against
interest expense. Approximate selected financial information from the combined
financial statements of the limited partnerships at December 31, 1996 and 1995
and for each of the years in the three year period ended December 31, 1996 is as
follows:
<TABLE>
<CAPTION>
COMBINED CONDENSED BALANCE SHEETS
1996 1995
---------------- -----------------
ASSETS
<S> <C> <C>
Buildings and improvements, net of accumulated depreciation of
$2,410,000 and $1,323,000 for 1996 and 1995, respectively $ 31,310,000 $ 32,285,000
Land 1,217,000 1,217,000
Other assets 1,579,000 1,571,000
--------------- ---------------
$ 34,106,000 $ 35,073,000
=============== ===============
</TABLE>
FS-9
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED CONDENSED BALANCE SHEETS, continued
1996 1995
---------------- ------------------
LIABILITIES AND PARTNERS' CAPITAL
<S> <C> <C>
Construction and mortgage loans payable $ 26,192,000 $ 26,396,000
Other liabilities (including due to related parties of
$921,000 and $1,592,000 as of December 31, 1996
and 1995, respectively) 1,871,000 2,600,000
--------------- ----------------
Total liabilities 28,063,000 28,996,000
--------------- ----------------
Partners' capital:
WNC Housing Tax Credit Fund, L.P. 4,815,000 5,409,000
Other partners 1,228,000 668,000
--------------- ----------------
Total partners' capital 6,043,000 6,077,000
--------------- ----------------
$ 34,106,000 $ 35,073,000
=============== ================
</TABLE>
<TABLE>
<CAPTION>
COMBINED CONDENSED STATEMENTS OF OPERATIONS
1996 1995 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues $ 3,004,000 $ 2,335,000 $ 841,000
--------------- --------------- ---------------
Expenses:
Operating expenses 1,889,000 1,530,000 389,000
Interest expense 1,064,000 641,000 259,000
Depreciation 1,087,000 901,000 592,000
--------------- --------------- ---------------
Total expenses 4,040,000 3,072,000 1,240,000
--------------- --------------- ---------------
Net loss $ (1,036,000) $ (737,000) $ (399,000)
=============== =============== ===============
Net loss allocable to Partnership $ (1,024,000) $ (728,000) $ (413,000)
=============== =============== ===============
</TABLE>
Certain limited partnerships have incurred operating losses and have working
capital deficiencies. In the event these limited partnerships continue to incur
operating losses, additional capital contributions by the Partnership may be
required to sustain the operations of such limited partnerships. If additional
capital contributions are not made when they are required, the Partnership's
investment in certain of such limited partnerships could be impaired.
FS-10
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
The financial statements of one limited partnership, which represents 21% of the
total combined equity of the investments in limited partnerships were prepared
assuming the limited partnership will continue as a going concern. Through
December 31, 1996, the limited partnership has had recurring losses, working
capital deficiencies and has not been billed for certain expenses due since
1994. The limited partnership is seeking abatement or an extended payment plan
to pay down certain of these liabilities; however, if the limited partnership is
unsuccessful, additional funding may be requested from the Partnership. In the
event the limited partnership is required to liquidate or sell its property, the
net proceeds could be significantly less than the carrying value of such
property. As of December 31, 1996 and 1995, the carrying value of such property
totaled $7,423,972 and $7,615,430.
In September 1996, the original general partners of this limited partnership
were removed. The Los Angeles County Housing Development Corporation ("LACHDC")
was named as the sole general partner. In September 1997, Community Housing
Assistance Program, Inc., a California nonprofit corporation replaced LACHDC as
the sole general partner.
NOTE 3 - RELATED PARTY TRANSACTIONS
- -----------------------------------
As of December 31, 1996, due from affiliate consisted of advances to an
affiliate for acquisition costs. These advances were non-interest bearing, due
on demand and were collected in 1997.
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. Net acquisition fees are
included in investment in limited partnerships. As of December 31, 1996
and 1995, the Partnership had incurred acquisition fees of $800,000.
Accumulated amortization amounted to $70,632 and $43,964 as of December
31, 1996 and 1995, respectively.
Reimbursement of costs incurred by an affiliate of the General Partner
in connection with the acquisition of limited partnerships. These
reimbursements are not to exceed 1.2% of the gross proceeds. As of
December 31, 1996 and 1995, the Partnership incurred acquisition costs
of $43,658 and $38,157, respectively, which have been included in
limited partnership investment. Accumulated amortization was
insignificant for 1996 and 1995.
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
$40,000, $36,667 and $30,000 for the years ended December 31, 1996,
1995 and 1994, respectively. During 1996, the Partnership paid $15,000
of such fees. No management fees were paid during 1995 and 1994.
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.
FS-11
<PAGE>
WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
<TABLE>
<CAPTION>
Accrued fees and advances due (to)/from General Partner and affiliate as of
December 31, 1996 and 1995 consist of the following:
1996 1995
---------------- ------------------
<S> <C> <C>
Advances (due to)/due from an affiliate made for acquisition costs,
organizational, offering and selling expenses $ (315) $ 1,229
Asset management fees (91,667) (66,667)
--------------- ----------------
$ (91,982) $ (65,438)
=============== ================
</TABLE>
NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the limited partnership agreement. These
contributions are non-interest bearing, are payable in installments and are due
upon the limited partnership achieving certain operating benchmarks (generally
within two years of the Partnership's initial investment).
NOTE 5 - INCOME TAXES
- ---------------------
No provision for income taxes has been recorded in the accompanying financial
statements as any liability for income taxes is the obligation of the partners
of the Partnership.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------
In October 1997, the Partnership acquired one additional limited partnership
interest which committed the Partnership to additional contributions of
approximately $276,000.
FS-12
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE:
None.
Part III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
The Partnership has no directors or executive officers of its own. The following
biographical information is presented for the directors and executive officers
of Associates which has principal responsibility for the Partnership's affairs.
WILFRED N. COOPER, SR., age 65, has been the principal shareholder and a
Director of Associates since its organization in 1971 and 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 Office since
1992. He is also a general partner with Associates in WNC Financial Group, L.P.
and WNC Tax Credit Partners, L.P. He currently is the Chairman and Chief
Executive Officer of Associates. 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 and Trustee of the National Association of Home Builders Rural
Housing Council, 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 the
Secretary of Associates since 1986, the Executive Vice President from 1986 to
1992, and the President and Chief Operating Office since 1992. He was a
shareholder, Executive Vice President, Secretary and a Director of WNC
Resources, Inc. from 1988 through its acquisition by Associates in 1991. He
currently is the President, Chief Operating Officer and Secretary of Associates.
From 1973 to 1986 he was Chairman of the Board and 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 office administration. Mr. Lester is the initial limited
partner of the Partnership. Mr. Lester graduated from the University of Southern
California in 1956 with a Bachelor of Science degree in Mechanical Engineering.
22
<PAGE>
DAVID N. SHAFER, age 43, He has been a Senior Vice President of Associates since
1992 and General Counsel since 1990, and served as the Director of Asset
Management form 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 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 and from the University of San Diego in 1986 with a Master
of Law degree in Taxation.
WILFRED N. COOPER, JR., age 34, He 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. Previously, he was employed as a
government affairs assistant by Honda North America from 1987 to 1988, as a
legal assistant with respect to Federal legislative and regulatory matters by
the law firm of Schwartz, Woods and Miller from 1986 to 1987. Mr. Cooper is
responsible for overseeing all marketing activities of WNC'S private and public
offerings. Mr. Cooper has been President and a registered principal with WNC
Capital Corporation since its organization. Mr. Cooper graduated from The
American University in 1985 with a Bachelor of Arts degree.
THEODORE M. PAUL, age 41, has been Vice President - Finance of WNC & ASSOCIATES,
INC. since 1992 and Chief Financial Officer since 1990. Previously, he was a
Vice President and Chief Financial Officer of National Partnership Investments
Corp., a sponsor and general partner of syndicated partnerships investing in
affordable rental housing qualified for tax credits, from 1986 until 1990, and
was employed as an associate by the accounting firms of Laventhol & Horwath,
during 1985, and Mann & Pollack Accountants, from 1979 to 1984. Mr. Paul is a
member of the California Society of Certified Public Accountants and the
American Institute of Certified Public Accountants. His responsibilities at WNC
& ASSOCIATES, INC. include supervision of investor partnership accounting and
tax reporting matters and monitoring the financial condition of the Local
Limited Partnerships in which the Partnership will invest. Mr. Paul graduated
from the University of Illinois in 1978 with a Bachelor of Science degree and is
a Certified Public Accountant in the State of California.
THOMAS J. RIHA, age 42, has been Vice President - Asset Management of WNC &
ASSOCIATES, INC. since 1994. He has more than 17 years' experience in commercial
and multi-family real estate investment and management. Previously, Mr. Riha was
employed by Trust Realty Advisor, a real estate acquisition and management
company, from 1988 to 1994, last serving as Vice President - Operations. His
responsibilities at WNC & ASSOCIATES, INC. include monitoring the operations and
financial performance of, and regulatory compliance by, properties in the WNC
portfolio. Mr. Riha graduated from the California State University, Fullerton in
1977 with a Bachelor of Arts degree (cum laude) in Business Administration with
a concentration in Accounting and is a Certified Public Accountant in the State
of California and a member of the California Society of Certified Public
Accountants and the American Institute of Certified Public Accountants.
23
<PAGE>
SY GARBAN, age 51, has 19 years' experience in the real estate securities and
syndication industry. He has been associated with WNC & ASSOCIATES, INC., since
1989, serving as National Sales Director through 1992 and as Vice President -
National Sales since 1992. Previously, he was employed by MRW, Inc., Newport
Beach, California from 1980 to 1989, a real estate acquisition, development and
management firm. Mr. Garban is a member of the International Association of
Financial Planners. Mr. Garban graduated from Michigan State University in 1967
with a Bachelor of Science degree in Business Administration.
CARL FARRINGTON, age 54, has been associated with WNC & ASSOCIATES, INC. since
1993, currently serving as Director - Originations since 1994. Mr. Farrington
has more than 12 years' experience in finance and real estate acquisitions.
Previously, he served as Acquisitions Director for The Arcand Company from 1991
to 1993, and as Treasurer and Director of Finance and Administrator for Polytron
Corporation from 1988 to 1991. Mr. Farrington is a member and Director of the
Council of Affordable and Rural Housing and Development. Mr. Farrington
graduated from Yale University with a Bachelor of Arts degree in 1966 and from
Dartmouth College with a Master of Business Administration in 1970.
MICHELE M. TAYLOR, age 41, has been employed by WNC & ASSOCIATES, INC. since
1986, serving as a paralegal and office manager, and currently is the Investor
Services Director. Previously she was self-employed between 1982 and 1985 in
non-financial services activities and from 1978 to 1981 she was employed as a
paralegal by a law firm which specialized in real estate limited partnership
transactions. Ms. Taylor graduated from the University of California, Irvine in
1976 with a Bachelor of Arts degree.
THERESA I. CHAMPANY, age 38, has been employed by WNC & ASSOCIATES, INC., since
1989 and currently is the Marketing Services Director and a registered principal
with WNC CAPITAL CORPORATION. Previously, she was employed as Manager of
Marketing Services by August Financial Corporation from 1986 to 1989 and as
office manager and Assistant to the Vice President of Real Estate Syndications
by McCombs Securities Co., Inc. from 1979 to 1986. Ms. Champany attended
Manchester (Conn.) Community College from 1976 to 1978.
KAY L. COOPER, age 60, has been an officer and Director of WNC & ASSOCIATES,
INC. since 1971 and of WNC RESOURCES, INC. from 1988 through its acquisition by
WNC & ASSOCIATES, INC. in 1991. Mrs. Cooper has also been the sole proprietor of
Agate 108, a manufacturer and retailer of home accessory products, since 1975.
She is the wife of Wilfred N. Cooper, Sr., the mother of Wilfred N. Cooper, Jr.
and the sister of John B. Lester, Jr. Mrs. Cooper graduated from the University
of Southern California in 1958 with a Bachelor of Science degree.
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, 1996, $800,000
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, 1996, $200,000 had been incurred by 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. $40,000 and
$36,667 had been incurred for the years ended December 31, 1996 and 1995,
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 Limited Partnership. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital contributions
and payment of the return on investment to the Limited Partners. "Return on
Investment" means an annual, cumulative but not compounded, "return" to
theLimited Partners (including Low Income Housing Credits) as a class, on their
adjusted capital contributions commencing for each Limited Partner on the last
day of the calendar quarter during which the Limited Partner's capital
contribution is received by the Partnership, calculated at the following rates:
(I) 16% through December 31, 2003, and (ii) 6% for the balance of the
Partnership's term. No disposition fees have been paid.
25
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) Security Ownership of Certain Beneficial Owners
No person is known to own beneficially in excess of 5% of the
outstanding Limited Partnership Interests.
(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 a partnership for
Federal income tax purposes. Finally, a majority-in-interest of the
Limited Partners may at anytime remove the General Partner of the
Partnership and elect a successor General Partner
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
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, 1996 and 1995
Statements of Operations for the years ended December 31, 1996, 1995
and 1994. Statement of Partners' Equity (Deficit) for the years ended
December 31, 1996, 1995 and 1994. Statements of Cash Flows for the
years ended December 31, 1996, 1995 and 1994.
Notes to Financial Statements.
Financial Statement Schedules:
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.
(3) Articles of incorporation and by-laws: The registrant is not
incorporated. The Partnership Agreement is included as Exhibit B to the
Prospectus, filed as Exhibit 28.1 to Form 10-K for fiscal year ended
December 31, 1995.
(10) Material contracts:
10.1 Second Amended and Restated Agreement of Limited Partnership of
Beckwood Manor Seven Limited Partnership filed as exhibit 10.1 to Form
8-K dated December 8, 1993 is hereby incorporated herein by reference
as exhibit 10.1.
10.2 Amended and Restated Agreement of Limited Partnership of Alpine Manor
filed as exhibit 10.3 to Post-Effective Amendment No 1 dated February
16, 1994 is hereby incorporated herein by reference as exhibit 10.2.
10.3 Second Amended and Restated Agreement of Limited Partnership of Briscoe
Manor, Limited Partnership filed as exhibit 10.4 to Post-Effective
Amendment No 1 dated February 16, 1994 is hereby incorporated herein by
reference as exhibit 10.3.
10.4 Amended and Restated Agreement and Certificate of Limited Partnership
of Evergreen Four, Limited Partnership filed as exhibit 10.5 to
Post-Effective Amendment No 1 dated February 16, 1994 is hereby
incorporated herein by reference as exhibit 10.4.
27
<PAGE>
10.5 Amended and Restated Agreement and Certificate of Limited Partnership
of Fawn Haven, Limited Partnership filed as exhibit 10.6 to
Post-Effective Amendment No 1 dated February 16, 1994 is hereby
incorporated herein by reference as exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of Fort Stockton,
L. P. filed as exhibit 10.7 to Post-Effective Amendment No 1 dated
February 16, 1994 is hereby incorporated herein by reference as exhibit
10.6.
10.7 Amended and Restated Agreement and Certificate of Limited Partnership
of Madison Manor Senior Citizens Complex, Ltd. filed as exhibit 10.8 to
Post-Effective Amendment No 1 dated February 16, 1994 is hereby
incorporated herein by reference as exhibit 10.7.
10.8 Amended and Restated Agreement and Certificate of Limited Partnership
of Mt. Graham Housing, Ltd. filed as exhibit 10.9 to Post-Effective
Amendment No 1 dated February 16, 1994 is hereby incorporated herein
by reference as exhibit 10.8.
10.9 Amended and Restated Agreement and Certificate of Limited Partnership
of Northside Plaza Apartments, Ltd. filed as exhibit 10.10 to
Post-Effective Amendment No 1 dated February 16, 1994 is hereby
incorporated herein by reference as exhibit 10.9.
10.10 Amended and Restated Agreement of Limited Partnership of Pampa Manor,
L.P. filed as exhibit 10.11 to Post-Effective Amendment No 1 dated
February 16, 1994 is hereby incorporated herein by reference as exhibit
10.10.
10.11 Amended and Restated Agreement of Limited Partnership of Vernon Manor,
L.P. filed as exhibit 10.12 to Post-Effective Amendment No 1 dated
February 16, 1994 is hereby incorporated herein by reference as exhibit
10.11.
10.12 Amended and Restated Agreement of Limited Partnership of Waterford
Place, A Limited Partnership filed as exhibit 10.13 to Post-Effective
Amendment No 1 dated February 16, 1994 is hereby incorporated herein by
reference as exhibit 10.12.
10.13 Amended and Restated Agreement of Limited Partnership of Yantis
Housing, Ltd filed as exhibit 10.13 to Post-Effective Amendment No 1
dated February 16, 1994 is hereby incorporated herein by reference as
exhibit 10.12.
10.14 Third Amended and Restated Agreement of Limited Partnership and
Certificate of Limited Partnership of Indian Creek Limited Partnership
filed as exhibit 10.16 to Post-Effective Amendment No 2 dated March 11,
1994 is hereby incorporated herein by reference as exhibit 10.14.
28
<PAGE>
10.15 Agreement of Limited Partnership of Laurel Creek Apartments filed as
exhibit 10.1 to Form 8-K dated May 25, 1994 is hereby incorporated
herein by reference as exhibit 10.15.
10.16 Second Amended and Restated Agreement of Limited Partnership of
Sandpiper Square, A Limited Partnership filed as exhibit 10.2 to Form
8-K dated May 25, 1994 is hereby incorporated herein by reference as
exhibit 10.16.
10.17 Amended and Restated Agreement of Limited Partnership of Regency Court
Partners filed as exhibit 10.1 to Form 8-K dated June 30, 1994 is
hereby incorporated herein by reference as exhibit 10.17.
10.18 Disposition and Development Agreement By and Between The Community
Development Commission of the County of Los Angeles and Regency Court
Partners (including forum of Ground Lease) filed as exhibit 10.2 to
Form 8-K dated June 30, 1994 is hereby incorporated herein by reference
as exhibit 10.18.
10.19 Amended and Restated Agreement of Limited Partnership of Bay City
Village Apartments, Limited Partnership filed as exhibit 10.19 to
Post-Effective Amendment No 4 dated July 14, 1994 is hereby
incorporated herein by reference as exhibit 10.19.
10.20 Second Amended and Restated Agreement of Limited Partnership of Hidden
Valley Limited Partnership filed as exhibit 10.20 to Post-Effective
Amendment No 4 dated July 14, 1994 is hereby incorporated herein by
reference as exhibit 10.20.
10.21 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Lenoir and Amendments thereto filed as exhibit 10.21 to
Post-Effective Amendment No 4 dated July 14, 1994 is hereby
incorporated herein by reference as exhibit 10.21.
Reports on Form 8-K
No reports on From 8-K were filed during the fourth quarter ended December 31,
1996.
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 1
(Registrant)
By: WNC Tax Credit Partners IV, L.P.,
General Partner
By: WNC & Associates, Inc., General Partner
Date: January 21, 1999 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 & Associates, Inc.
January 21, 1999 /s/ Wilfred N. Cooper, Sr.
--------------------------
Wilfred N. Cooper, Sr.
Director and Principal
Operating Officer and
Secretary of
WNC & Associates, Inc.
January 21, 1999 /s/ John B. Lester, Jr.
------------------------------
John B. Lester, Jr.
Principal Financial
Officer and Principal
Accounting Officer of
WNC & Associates, Inc.
January 21, 1999 /s/ Theodore M. Paul
------------------------------
Theodore M. Paul
30
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