-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PcA4zRlDR7/5MU3fUIv67bxkPApGuXjv+Zblfe/nl8MIgAqtojWikbHRN3HfgH12 243f/PxG3b9qS6EJgjyM4Q== 0001084067-02-000030.txt : 20020610 0001084067-02-000030.hdr.sgml : 20020610 20020607144942 ACCESSION NUMBER: 0001084067-02-000030 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020607 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WNC HOUSING TAX CREDIT FUND IV L P SERIES 1 CENTRAL INDEX KEY: 0000913496 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 330563307 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26048 FILM NUMBER: 02673536 BUSINESS ADDRESS: STREET 1: 3158 REDHILL AVE STE 120 CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7146625565 MAIL ADDRESS: STREET 1: 3158 REDHILL AVE SUITE 120 CITY: COSTA MESA STATE: CA ZIP: 92626 10-K 1 n4-12002.txt ANNUAL REPORT FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2002 OR o 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 CREDITS FUND IV, L.P.Series 1 California 33-0563307 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626 (714) 662-5565 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to section 12(g) of the Act: UNITS OF LIMITED PARTNERSHIP INTEREST Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes__X_ No ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 1 aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant. INAPPLICABLE DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). NONE 2 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. The Partnership was formed to acquire limited partnership interests in limited partnerships or limited liability companies ("Local Limited Partnerships") which own multifamily housing complexes that are eligible for low-income housing federal and, in certain cases, California income tax credits ("Low Income Housing Credits"). The general partner of the Partnership is WNC Tax Credit Partners IV, L.P. ("TCP IV"). The general partner of TCP IV is WNC & Associates, Inc. ("Associates"). Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 93.65% of the outstanding stock of Associates. Wilfred N. Cooper, Jr., President of Associates, owns 3.01% of the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates as neither TCP IV nor the Partnership have employees of their own. Pursuant to a registration statement filed with the Securities and Exchange Commission, on October 20, 1993, the Partnership commenced a public offering of 10,000 Units of Limited Partnership Interest ("Units"), at a price of $1,000 per Unit. 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." Description of Business The Partnership's principal business objective is to provide its Limited Partners with Low Income Housing Credits. The Partnership's principal business therefore consists of investing as a limited partner or non-managing member in Local Limited Partnerships each of which will own and operate a multi-family housing complex (the"Housing Complex") which will qualify for the Low Income Housing Credit. In general, under Section 42 of the Internal Revenue Code, an owner of low-income housing can receive the Low Income Housing Credit to be used to reduce Federal taxes otherwise due in each year of a ten-year period. In general, under Section 17058 of the California Revenue and Taxation Code, an owner of low-income housing can receive the Low Income Housing Credit to be used against California taxes otherwise due in each year of a four-year period. The Housing Complex is subject to a fifteen-year compliance period (the"Compliance Period"), and under state law may have to be maintained as low income housing for 30 or more years. In general, in order to avoid recapture of Low Income Housing Credits, the Partnership does not expect that it will dispose of its interests in Local Limited Partnerships ("Local Limited Partnership Interests") or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. Because of (i) the nature of the Housing Complexes, (ii) the difficulty of predicting the resale market for low-income housing 15 or more years in the future, and (iii) the ability of government lenders to disapprove of transfer, it is not possible at this time to predict whether the liquidation of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the Partnership's Agreement of Limited Partnership, as amended by Supplements thereto (the "Partnership Agreement"), will be able to be accomplished promptly at the end of the 15-year period. If a Local Limited Partnership is unable to sell its Housing Complex, it is anticipated that the local general partner ("Local General Partner") will either continue to operate such Housing Complex or take such other actions as the Local General Partner believes to be in the best interest of the Local Limited Partnership. Notwithstanding the preceding, circumstances beyond the control of the General Partner or the Local General Partners may occur during the Compliance Period, which would require the Partnership to approve the disposition of a Housing Complex prior to the end thereof, possibly resulting in recapture of Low Income Housing Credits. 3 As of March 31, 2002, the Partnership had invested in twenty-one Local Limited Partnerships. Each of these Local Limited Partnerships owns a Housing Complex that is eligible for the federal Low Income Housing Credit. Certain Local Limited Partnerships may also benefit from government programs promoting low- or moderate-income housing. The Partnership's investments in Local Limited Partnerships are subject to the risks incident to the management and ownership of low-income housing and to the management and ownership of multi-unit residential real estate. Some of these risks are that the Low Income Housing Credit could be recaptured and that neither the Partnership's investments nor the Housing Complexes owned by the Local Limited Partnerships will be readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of Local Limited Partnership Interests; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. The Housing Complexes are subject to mortgage indebtedness. If a Local Limited Partnership does not make its mortgage payments, the lender could foreclose resulting in a loss of the Housing Complex and Low Income Housing Credits. As a limited partner or non-managing member of the Local Limited Partnerships, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships, and will rely totally on the general partners or managing members of the Local Limited Partnerships for management of the Local Limited Partnerships. The value of the Partnership's investments will be subject to changes in national and local economic conditions, including unemployment conditions, which could adversely impact vacancy levels, rental payment defaults and operating expenses. This, in turn, could substantially increase the risk of operating losses for the Housing Complexes and the Partnership. In addition, each Local Limited Partnership is subject to risks relating to environmental hazards and natural disasters, which might be uninsurable. Because the Partnership's operations will depend on these and other factors beyond the control of the General Partner and the Local General Partners, there can be no assurance that the anticipated Low Income Housing Credits will be available to Limited Partners. In addition, Limited Partners are subject to risks in that the rules governing the Low Income Housing Credit are complicated, and the use of credits can be limited. The only material benefit from an investment in Units may be the Low Income Housing Credits. There are limits on the transferability of Units, and it is unlikely that a market for Units will develop. All Partnership management decisions are made by the General Partner. As a limited partner or non-managing member, the Partnership's liability for obligations of each Local Limited Partnership is limited to its investment. The Local General Partners of each Local Limited Partnership retain responsibility for developing, constructing, maintaining, operating and managing the Housing Complexes. Item 2. Properties Through its investments in Local Limited Partnerships, the Partnership holds limited partnership interests in the Housing Complexes. The following table reflects the status of the twenty-one Housing Complexes as the dates and for the periods indicated: 4 PAGE>
------------------------- ------------------------ As of March 31, 2002 As of December 31, 2001 ------------------------- ------------------------ Partnership's Estimated Encumbrances Total Investment Amount of Low Income of Local In Local Limited Investment Number Housing Limited Partnership Name Location General Partner Name Partnerships Paid to Date Of Units Occupancy Credits Partnerships - ------------------------------------------------------------------------------------------------------------------------------------ Alpine Manor, Alpine, 1600 Capital Company, L.P. Texas Inc. $ 195,000 $ 195,000 36 100% $ 394,000 $ 909,000 Baycity Village Green Companies Apartments, Limited Baytown, Development Partnership Texas Group, Inc. 301,000 301,000 62 97% 629,000 1,455,000 Beckwood Manor Seven Marianna, Phillips Development Limited Partnership Arkansas Corporation 307,000 307,000 42 98% 636,000 1,383,000 Briscoe Manor Limited Galena, McKnight & Partnership Maryland Decoster, Inc. 308,000 308,000 31 100% 648,000 1,481,000 Evergreen Four Limited Maynard, Phillips Development Partnership Arkansas Corporation 195,000 195,000 24 88% 402,000 865,000 Fawn Haven Limited Manchester, Georg E. Maharg and Partnership Ohio Maharg Realty, Inc. 167,000 167,000 28 96% 376,000 851,000 Fort Stockton Ft.Stockton, 1600 Capital Manor, L.P. Texas Company,Inc. 224,000 224,000 36 100% 453,000 1,046,000 Hidden Valley Limited Gallup, New Alan Deke Partnership Mexico Noftsker 412,000 412,000 40 100% 801,000 1,477,000 HOI Limited North Partnership Of Lenoir, Housing Opportunities, Lenoir Carolina Inc. 198,000 198,000 34 100% 400,000 539,000 Indian Creek Limited Bucyrus, Georg E. Partnership Ohio Maharg 306,000 306,000 48 85% 637,000 1,462,000 Laurel San Luis San Luis Obispo Creek Obispo, Non-Profit Apartments California Housing Corp. 1,030,000 1,030,000 24 100% 2,103,000 611,000 Madisonville Manor Senior Citizens Madisonville, Complex, Ltd. Texas Jean Johnson 174,000 174,000 32 91% 375,000 898,000
5
------------------------- ------------------------ As of March 31, 2002 As of December 31, 2001 ------------------------- ------------------------ Partnership's Estimated Encumbrances Total Investment Amount of Low Income of Local In Local Limited Investment Number Housing Limited Partnership Name Location General Partner Name Partnerships Paid to Date Of Units Occupancy Credits Partnerships - ------------------------------------------------------------------------------------------------------------------------------------ Mt. Graham Safford, Rural Housing, Housing, Ltd. Arizona Inc. 410,000 410,000 40 93% 788,000 1,400,000 Northside Plaza Angleton, Jean Apartments, Ltd. Texas Johnson 282,000 282,000 48 96% 607,000 1,354,000 Pampa Manor, Pampa, 1600 Capital L.P. Texas Company,Inc. 180,000 180,000 32 91% 363,000 841,000 Community Housing Assistance Program, Regency Inc., a California Court Monrovia, Nonprofit Partners California Corporation 1,692,000 1,690,000 115 100% 3,293,000 5,088,000 Sandpiper Square, a Limited North Aulander, I. Norwood Partnership Carolina Stone 219,000 219,000 24 92% 433,000 942,000 Seneca Falls East Seneca David R. Bacon Apartments Falls, New and Frank Company II, L.P. York Salvatore 270,000 270,000 32 100% 360,000 888,000 Vernon Manor, Vernon, 1600 Capital Company, L.P. Texas Inc. 177,000 177,000 28 96% 325,000 748,000 Thomas E. Connelly, Jr., Calhoun TEC Rental Properties Waterford Place, Falls, Inc., Warren H. a Limited South Abernathy, II and Solid Partnership Carolina South, Inc. 272,000 272,000 32 100% 549,000 1,174,000 Yantis Housing, Yantis, Charles Ltd. Texas Cannon Jr. 145,000 145,000 24 92% 287,000 625,000 ----------- ------------ ---- ----- ------------ ------------ $ 7,464,000 $ 7,462,000 812 96% $ 14,859,000 $ 26,037,000 =========== ============ === ===== =========== ============
6
----------------------------------------------------------------------- For the year ended December 31, 2001 ----------------------------------------------------------------------- Low Income Housing Credits Allocated Partnership Name Rental Income Net Loss to Partnership - -------------------------------------------------------------------------------------------------------------------- Alpine Manor, L.P. $ 113,000 $ (19,000) 99% Baycity Village Apartments, Limited Partnership 248,000 (51,000) 99% Beckwood Manor Seven Limited Partnership 148,000 (75,000) 95% Briscoe Manor Limited Partnership 174,000 (64,000) 99% Evergreen Four Limited Partnership 89,000 (37,000) 95% Fawn Haven Limited Partnership 84,000 (24,000) 99% Fort Stockton Manor, L.P. 123,000 (14,000) 99% Hidden Valley Limited Partnership 176,000 (18,000) 99% HOI Limited Partnership Of Lenoir 142,000 (26,000) 99% Indian Creek Limited Partnership 145,000 (33,000) 99% Laurel Creek Apartments 180,000 (4,000) 99% Madisonville Manor Senior Citizens Complex, Ltd. 104,000 (12,000) 99% Mt. Graham Housing, Ltd. 138,000 (69,000) 99% Northside Plaza Apartments, Ltd. 151,000 (30,000) 99% Pampa Manor, L.P. 94,000 (27,000) 99% Regency Court Partners 657,000 (162,000) 99% Sandpiper Square, a Limited Partnership 99,000 (17,000) 99% Seneca Falls East Apartments Company II, L.P. 144,000 (27,000) 99.98% Vernon Manor, L.P. 92,000 (4,000) 99% Waterford Place, a Limited Partnership 125,000 (50,000) 99% Yantis Housing, Ltd. 73,000 (26,000) 99% ----------- ------------ $ 3,299,000 $ (789,000) =========== ============
7 Item 3. Legal Proceedings NONE. Item 4. Submission of Matters to a Vote of Security Holders NONE. PART II. - -------- Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Item 5a. (a) The Units are not traded on a public exchange but were sold through a public offering. It is not anticipated that any public market will develop for the purchase and sale of any Unit and none exists. Units can be assigned only if certain requirements in the Partnership Agreement are satisfied. (b) At March 31, 2002, there were 732 Limited Partners. (c) The Partnership was not designed to provide cash distributions to Limited Partners in circumstances other than refinancing or disposition of its investments in Local Limited Partnerships. (d) No unregistered securities were sold by the Partnership during the year ended March 31, 2002. Item 5b. NOT APPLICABLE Item 6. Selected Financial Data Selected balance sheet information for the Partnership is as follows:
March 31 December 31 -------------------------------------------------- ------------------------ 2002 2001 2000 1999 1998 1997 ----------- ----------- ----------- ----------- ----------- ----------- ASSETS Cash and cash equivalents $ 277,292 $ 312,214 $ 310,214 $ 341,350 $ 389,536 $ 778,448 Investments in limited partnerships, net 2,234,002 2,823,846 3,538,899 4,298,485 4,495,621 4,976,247 Due from affiliate - 18,407 - - - Other assets - - - - 3,000 ----------- ----------- ----------- ----------- ----------- ----------- $ 2,511,294 $ 3,136,060 $ 3,867,520 $ 4,639,835 $ 4,885,157 $ 5,757,695 =========== =========== =========== =========== =========== =========== LIABILITIES Payables to limited $ partnerships $ 2,303 2,303 $ 2,303 $ 25,301 $ 25,301 $ 84,303 Accrued fees and expenses due to general partner and affiliates 134,569 115,667 104,593 80,940 106,500 65,235 PARTNERS' EQUITY 2,374,422 3,018,090 3,760,624 4,533,594 4,753,356 5,608,157 ----------- ----------- ----------- ----------- ----------- ----------- $ 2,511,294 $ 3,136,060 $ 3,867,520 $ 4,639,835 $ 4,885,157 $ 5,757,695 =========== =========== =========== =========== =========== ===========
8
Selected results of operations, cash flows and other information for the Partnership are as follows: For the Years Ended For the Three Months For the Years Ended March 31 Ended March 31 December 31 ------------------------------------- ----------------------- ------------------------ 2002 2001 2000 1999 1998 1998 1997 ----------- ----------- ----------- ---------- ---------- ---------- ----------- (Unaudited Loss from operations $ (78,700) $ (76,146)$ (79,134)$ (33,750)$ (17,496)$ (126,723)$ (62,968) Equity in losses of limited partnerships (564,968) (666,388) (693,836) (186,012) (185,500) (728,078) (764,430) ----------- ----------- ----------- ---------- ---------- ---------- ----------- Net loss $ (643,668) $ (742,534)$ (772,970)$ (219,762)$ (202,996)$ (854,801)$ (827,398) =========== =========== =========== ========== ========== ========== =========== Net loss allocated to: General Partner $ (6,437) $ (7,425)$ (7,730)$ (2,198)$ (2,030)$ (8,548)$ (8,274) =========== =========== =========== ========== ========== ========== =========== Limited Partners $ (637,231) $ (735,109)$ (765,240)$ (217,564)$ (200,966)$ (846,253)$ (819,124) =========== =========== =========== ========== ========== ========== =========== Net loss per limited partner unit $ (63.72) $ (73.51)$ (76.52)$ (21.76)$ (20.10)$ (84.63)$ (81.91) =========== =========== =========== ========== ========== ========== =========== Outstanding weighted limited partner units 10,000 10,000 10,000 10,000 10,000 10,000 10,000 =========== =========== =========== ========== ========== ========== ===========
For the Years Ended For the Three Months For the Years Ended March 31 Ended March 31 December 31 ------------------------------------- ----------------------- ------------------------ 2002 2001 2000 1999 1998 1998 1997 ----------- ----------- ----------- ---------- ---------- ---------- ----------- Net cash provided by (used in): Operating activities $ (35,847)$ (18,169)$ (45,392)$ (52,186)$ (5,082)$ (54,089)$ (51,546) Investing activities 925 20,169 14,256 4,000 5,225 (334,823) (170,284) Financing activities - - - - - - 3,253 ----------- ----------- ----------- ---------- ---------- ---------- ----------- Net change in cash and cash equivalents (34,922) 2,000 (31,136) (48,186) 143 (388,912) (218,577) Cash and cash equivalents, beginning of period 312,214 310,214 341,350 389,536 778,448 778,448 997,025 ----------- ----------- ----------- ---------- ---------- ---------- ----------- Cash and cash equivalents, end of period $ 277,292 $ 312,214 $ 310,214 $ 341,350 $ 778,591 $ 389,536 $ 778,448 =========== =========== =========== ========== ========== ========== ===========
Low Income Housing Credit per Unit was as follows for the years ended December 31: 2001 2000 1999 1998 1997 ------------- -------------- ------------- ------------- ------------- Federal $ 145 $ 149 $ 146 $ 142 $ 143 State - - - - - ------------- -------------- ------------- ------------- ------------- Total $ 145 $ 149 $ 146 $ 142 $ 143 ============= ============== ============= ============= =============
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward Looking Statements With the exception of the discussion regarding historical information, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other discussions elsewhere in this Form 10-K contain forward looking statements. Such statements are based on current expectations subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied. Further, certain forward-looking statements are based upon assumptions about future events which may not prove to be accurate. 9 Risks and uncertainties inherent in forward looking statements include, but are not limited to, our future cash flows and ability to obtain sufficient financing, level of operating expenses, conditions in the low income housing tax credit property market and the economy in general, as well as legal proceedings. Historical results are not necessarily indicative of the operating results for any future period. Subsequent written and oral forward looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by cautionary statements in this Form 10-K and in other reports we filed with the Securities and Exchange Commission. The following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included elsewhere in this filing. Financial Condition The Partnership's assets at March 31, 2002 consisted primarily of $277,000 in cash and aggregate investments in the twenty-one Local Limited Partnerships of $2,234,000. Liabilities at March 31, 2002 were $137,000, of which $133,000 was accrued annual management fees, and $2,000 was payables to limited partnerships. Results of Operations Year Ended March 31, 2002 Compared to Year Ended March 31, 2001. The Partnership's net loss for the year ended March 31, 2002 was $(644,000), reflecting a decrease of $99,000 from the net loss experienced for the year ended March 31, 2001. The decline in net loss is primarily due to equity in losses of limited partnerships which declined by $101,000 to $(565,000) for the year ended March 31, 2002 from $(666,000) for the year ended March 31, 2001. Equity in losses of limited partnerships decreased from prior year due to a reduction of the write-off of acquisition fees and costs in the current year related to the investments that have gone below zero. Year Ended March 31, 2001 Compared to Year Ended March 31, 2000 The Partnership's net loss for the year ended March 31, 2001 was $(743,000), reflecting a decrease of $30,000 from the net loss experienced for the year ended March 31, 2000. The decline in net loss is primarily due to equity in losses of limited partnerships which declined by $28,000 to $(666,000) for the year ended March 31, 2001 from $(694,000) for the year ended March 31, 2000. Equity in losses of limited partnerships increased due to the reduction of the cooperative net acquisition fee component of investments in Local Limited Partnerships to zero for those Local Limited Partnerships which would otherwise be below a zero balance. This decrease was a result of the Partnership not recognizing certain losses of the Local Limited Partnerships. The investments in such Local Limited Partnerships had reached $0 at March 31, 2000. Since the Partnership's liability with respect to its investments is limited, losses in excess of investments are not recognized. Cash Flows Year Ended March 31, 2002 Compared to Year Ended March 31, 2001. Net cash used during the year ended March 31, 2002 was $(35,000), compared to net cash provided for the year ended March 31, 2001 of $2,000. The change was primarily due to a $18,000 increase of cash used for operating expenses of which $10,000 resulted from a decrease in interest income, and an increase of $16,000 in capital contributions paid to the Local Limited Partnerships. Year Ended March 31, 2001 Compared to Year Ended March 31, 2000. Net cash provided during the year ended March 31, 2001 was $2,000, compared to net cash used for the year ended March 31, 2000 of $(31,000). The change was primarily due to the collection of $18,000 of amounts due from an affiliate and due to a $13,000 decrease in amounts reimbursed to the General Partner or affiliates. This was offset by a $17,000 decrease of cash used for investments in limited partnerships and by a $11,000 decrease in distributions received from Local Limited Partnerships. 10 The Partnership expects its future cash flows, together with its net available assets at March 31, 2002, to be sufficient to meet all currently foreseeable future cash requirements. Item 7A. Quantitative and Qualitative Disclosures About Market Risk NOT APPLICABLE Item 8. Financial Statements and Supplementary Data 11 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 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 March 31, 2002 and 2001, and the related statements of operations, partners' equity (deficit) and cash flows for the years ended March 31, 2002, 2001 and 2000. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. A significant portion of the financial statements of the limited partnerships in which the Partnership is a limited partner were audited by other auditors whose reports have been furnished to us. As discussed in Note 2 to the financial statements, the Partnership accounts for its investments in limited partnerships using the equity method. The portion of the Partnership's investment in limited partnerships audited by other auditors represented 72% and 69% of the total assets of the Partnership at March 31, 2002 and 2001, respectively. Our opinion, insofar as it relates to the amounts included in the financial statements for the limited partnerships which were audited by others, is based solely on the reports of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 March 31, 2002 and 2001, and the results of its operations and its cash flows for the years ended March 31, 2002, 2001 and 2000, in conformity with accounting principles generally accepted in the United States of America. /S/BDO SEIDMAN, LLP BDO SEIDMAN, LLP Orange County, California May 16, 2002 12 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) BALANCE SHEETS
March 31 ------------------------------- 2002 2001 -------------- -------------- ASSETS Cash and cash equivalents $ 277,292 $ 312,214 Investments in limited partnerships (Notes 2 and 3) 2,234,002 2,823,846 -------------- -------------- $ 2,511,294 $ 3,136,060 ============== ============== LIABILITIES AND PARTNERS' EQUITY (DEFICIT) Liabilities: Payables to limited partnerships (Note 4) $ 2,303 $ 2,303 Accrued fees and advances due to General Partner and affiliate (Note 3) 134,569 115,667 -------------- -------------- Total liabilities 136,872 117,970 -------------- -------------- Commitments and contingencies Partners' equity (deficit): General partner (76,157) (69,720) Limited partners (10,000 units authorized, 10,000 units issued and outstanding) 2,450,579 3,087,810 -------------- -------------- Total partners' equity 2,374,422 3,018,090 -------------- -------------- $ 2,511,294 $ 3,136,060 ============== ==============
See accompanying notes to financial statements 13 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) STATEMENTS OF OPERATIONS
For the Years Ended March 31 ------------------------------------------- 2002 2001 2000 ------------ ------------- ------------ Interest income $ 7,808 $ 18,304 $ 15,541 Other income 9,798 4,200 - ------------ ------------- ------------ Total income 17,606 22,504 15,541 ------------ ------------- ------------ Operating expenses: Amortization (Notes 2 and 3) 23,951 28,496 28,496 Asset management fees (Note 3) 42,000 42,000 42,105 Other 30,355 28,154 24,074 ------------ ------------- ------------ Total operating expenses 96,306 98,650 94,675 ------------ ------------- ------------ Loss from operations (78,700) (76,146) (79,134) Equity in losses of limited partnerships (Note 2) (564,968) (666,388) (693,836) ------------ ------------- ------------ Net loss $ (643,668) $ (742,534) $ (772,970) ============ ============= ============ Net loss allocated to: General partner $ (6,437) $ (7,425) $ (7,730) ============ ============= ============ Limited partners $ (637,231) $ (735,109) $ (765,240) ============ ============= ============ Net loss per limited partner unit $ (63.72) $ (73.51) $ (76.52) ============ ============= ============ Outstanding weighted limited partner units 10,000 10,000 10,000 ============ ============= ============
See accompanying notes to financial statements 14 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) STATEMENTS OF PARTNERS' EQUITY (DEFICIT) For The Years Ended March 31, 2002, 2001 and 2000
General Limited Total Partner Partners --------------- --------------- --------------- Partners' equity (deficit) at March 31, 1999 $ (54,565) $ 4,588,159 $ 4,533,594 Net loss (7,730) (765,240) (772,970) --------------- --------------- --------------- Partners' equity (deficit) at March 31, 2000 (62,295) 3,822,919 3,760,624 Net loss (7,425) (735,109) (742,534) --------------- --------------- --------------- Partners' equity (deficit) at March 31, 2001 (69,720) 3,087,810 3,018,090 Net loss (6,437) (637,231) (643,668) --------------- --------------- --------------- Partners' equity (deficit) at March 31, 2002 $ (76,157) $ 2,450,579 $ 2,374,422 =============== =============== ===============
See accompanying notes to financial statements 15 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) STATEMENTS OF CASH FLOWS
For the Years Ended March 31 ------------------------------------------------ 2002 2001 2000 ----------- -------------- ---------------- Cash flows from operating activities: Net loss $ (643,668) $ (742,534) $ (772,970) Adjustments to reconcile net loss to net cash used in operating activities: Amortization 23,951 28,496 28,496 Equity in losses of limited partnerships 564,968 666,388 693,836 Change in accrued fees and expenses due to General Partner and affiliates 18,902 11,074 23,653 Change in other assets - 18,407 (18,407) ----------- -------------- ---------------- Net cash used in operating activities (35,847) (18,169) (45,392) ----------- -------------- ---------------- Cash flows from investing activities: Investments in limited partnerships, net (16,028) 28 (17,134) Distributions from limited partnerships 16,953 20,141 31,390 ----------- -------------- ---------------- Net cash provided by investing activities 925 20,169 14,256 ----------- -------------- ---------------- Net increase (decrease) in cash and cash equivalents (34,922) 2,000 (31,136) Cash and cash equivalents, beginning of period 312,214 310,214 341,350 ----------- -------------- ---------------- Cash and cash equivalents, end of period $ 277,292 $ 312,214 $ 310,214 =========== ============== ================ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Taxes paid $ 800 $ 800 $ 800 =========== ============== ================
See accompanying notes to financial statements 16 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS For The Years Ended March 31, 2002, 2001 and 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - ------------ WNC Housing Tax Credit Fund IV, L.P., Series 1, a California Limited Partnership (the "Partnership"), was formed on May 4, 1993 under the laws of the state of California, and commenced operations on October 20, 1993. F The Partnership was formed to invest primarily in other limited partnerships (the"Local Limited Partnerships") which own and operate multi-family housing complexes (the "Housing Complex") that are eligible for low income housing credits. The local general partners (the "Local General Partners") of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complex. The general partner is WNC Tax Credit Partners, IV, L.P. (the "General Partner"), a California limited partnership. WNC & Associates, Inc. ("WNC") is the general partner of the General Partner. Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 93.65% of the outstanding stock of WNC. Wilfred N. Cooper, Jr., President of WNC, owns 3.01% of the outstanding stock of WNC. The financial statements include only activity relating to the business of the Partnership, and do not give effect to any assets that the partners may have outside of their interests in the Partnership, or to any obligations, including income taxes, of the partners. The Partnership Agreement authorized the sale of up to 10,000 units 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 losses, cash available for distribution from the Partnership and tax credits. 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 sale or refinancing equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and the General Partner has received proceeds equal to its capital contribution and subordinated disposition fee (as described in Note 3) from the remainder, any additional sale or refinancing proceeds will be distributed 90% to the limited partners (in proportion to their respective investments) and 10% to the General Partner. 17 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2002, 2001 and 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Risks and Uncertainties - ----------------------- The Partnership's investments in Local Limited Partnerships are subject to the risks incident to the management and ownership of low-income housing and to the management and ownership of multi-unit residential real estate. Some of these risks are that the low income housing credit could be recaptured and that neither the Partnership's investments nor the Housing Complexes owned by the Local Limited Partnerships will be readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of Local Limited Partnership Interests; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. The Housing Complexes are or will be subject to mortgage indebtedness. If a Local Limited Partnership does not make its mortgage payments, the lender could foreclose resulting in a loss of the Housing Complex and low-income housing credits. As a limited partner of the Local Limited Partnerships, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships, and will rely totally on the Local General Partners of the Local Limited Partnerships for management of the Local Limited Partnerships. The value of the Partnership's investments will be subject to changes in national and local economic conditions, including unemployment conditions, which could adversely impact vacancy levels, rental payment defaults and operating expenses. This, in turn, could substantially increase the risk of operating losses for the Housing Complexes and the Partnership. In addition, each Local Limited Partnership is subject to risks relating to environmental hazards and natural disasters, which might be uninsurable. Because the Partnership's operations will depend on these and other factors beyond the control of the General Partner and the Local General Partners, there can be no assurance that the anticipated low income housing credits will be available to Limited Partners. In addition, Limited Partners are subject to risks in that the rules governing the low income housing credit are complicated, and the use of credits can be limited. The only material benefit from an investment in Units may be the low income housing credits. There are limits on the transferability of Units, and it is unlikely that a market for Units will develop. All management decisions will be made by the General Partner. Method of Accounting for Investments in Limited Partnerships - ------------------------------------------------------------ The Partnership accounts for its investments in limited partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnership's results of operations and for any distributions received. The accounting policies of the Local Limited Partnerships are consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and are being amortized over 30 years (see Note 2). Equity in losses of Local Limited Partnerships for the years ended March 31, 2002, 2001 and 2000 have been recorded by the Partnership based on nine months of reported results provided by the Local Limited Partnerships and on three months of results estimated by management of the Partnership. Equity in losses of limited partnerships allocated to the Partnership will not be recognized to the extent that the investment balance would be adjusted below zero. As soon as the investment balance reaches zero, the related costs of acquiring the investment are accelerated to the extent of losses available (see Note 2). Offering Expenses - ----------------- Offering expenses consist of underwriting commissions, legal fees, printing, filing and recordation fees, and other costs incurred with selling limited partnership interests in the Partnership. The General Partner is obligated to pay all offering and organization costs in excess of 15% (including sales commissions) of the total offering proceeds. Offering expenses are reflected as a reduction of limited partners' capital and amounted to $1,356,705 at the end of all periods presented. 18 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2002, 2001 and 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued Use of Estimates - ---------------- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Cash and Cash Equivalents - ------------------------- The Partnership considers all highly liquid investments with remaining maturities of three months or less when purchased to be cash equivalents. There were no cash equivalents as of March 31, 2002 and 2001. Concentration of Credit Risk - ---------------------------- At March 31, 2002, the Partnership maintained a cash balance at a certain financial institution in excess of the maximum federally insured amounts. Net Loss Per Limited Partner Unit - --------------------------------- Net loss per limited partner unit is calculated pursuant to Statement of Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit includes no dilution and is computed by dividing loss available to limited partners by the weighted average number of units outstanding during the period. Calculation of diluted net loss per unit is not required. Reporting Comprehensive Income - ------------------------------ The Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income established standards for the reporting and display of comprehensive income (loss) and its components in a full set of general-purpose financial statements. The Partnership had no items of other comprehensive income during the years ended March 31, 2002, 2001 and 2000, as defined by SFAS No. 130. New Accounting Pronouncement - ---------------------------- In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which requires that long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. SFAS 144 is effective for fiscal years beginning after December 15, 2001, and generally, is to be applied prospectively. The Partnership has not yet completed its evaluation of the impact of SFAS 144 on its financial position or results of operations. 19 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2002, 2001 and 2000 NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS As of the periods presented, the Partnership had acquired limited partnership interests in twenty-one Local Limited Partnerships, each of which owns one housing complex consisting of an aggregate of 812 apartment units. As of December 31, 1998, construction on all multifamily complexes was complete. The respective general partners of the Local Limited Partnerships manage the day to day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership. The Partnership, as a limited partner, is generally entitled to 99%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses and tax credits of the Local Limited Partnerships. The Partnership's investments in Local Limited Partnerships as shown in the balance sheets at March 31, 2002 and 2001, are approximately $867,000 and $692,000, respectively, greater than the Partnership's equity at the preceding December 31 as shown in the Local Limited Partnerships' combined financial statements presented below. This difference is primarily due to unrecorded losses, as discussed below, acquisition, selection and other costs related to the acquisition of the investments which have been capitalized in the Partnership's investment account and to capital contributions payable to the limited partnerships which were netted against partner capital in the Local Limited Partnership's financial statements. The Partnership's investment is also lower than the Partnership's equity as shown in the Local Limited Partnership's combined financial statements due to the estimated losses recorded by the Partnership for the three month period ended March 31. Equity in losses of Local Limited Partnerships is recognized in the financial statements until the related investment account is reduced to a zero balance. Losses incurred after the investment account is reduced to zero are not recognized. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended. Distributions received by limited partners are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as income. At March 31, 2002 and 2001, the investment accounts in certain Local Limited Partnerships have reached a zero balance. Consequently, a portion of the Partnership's estimate of its share of losses for the years ended March 31, 2002, 2001 and 2000 amounting to approximately $212,000, $97,000 and $75,000, respectively, have not been recognized. As of March 31, 2002, the aggregate share of net losses not recognized by the Partnership amounted to $461,000. Following is a summary of the equity method activity of the investments in Local Limited Partnerships for the periods presented:
For the Years Ended March 31 ---------------------------------------------------- 2002 2001 2000 ---------------- --------------- -------------- Investments per balance sheet, beginning of period $ 2,823,846 $ 3,538,899 $ 4,298,485 Capital contributions paid, net 16,028 (28) (5,864) Distributions received (16,953) (20,141) (31,390) Equity in losses of limited partnerships (564,968) (666,388) (693,836) Amortization of paid acquisition fees and costs (23,951) (28,496) (28,496) ---------------- --------------- -------------- Investments per balance sheet, end of period $ 2,234,002 $ 2,823,846 $ 3,538,899 ================ =============== ==============
20 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2002, 2001 and 2000 NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued The financial information from the individual financial statements of the Local Limited Partnerships include rental and interest subsidies. Rental subsidies are included in total revenues and interest subsidies are generally netted against interest expense. Approximate combined condensed financial information from the individual financial statements of the Local Limited Partnerships as of December 31 and for the years then ended is as follows: COMBINED CONDENSED BALANCE SHEETS
2001 2000 --------------- --------------- ASSETS Buildings and improvements, net of accumulated depreciation of $7,809,000 and $6,724,000 for 2001 and 2000, respectively $ 26,880,000 $ 27,914,000 Land 1,668,000 1,657,000 Due from related parties 14,000 16,000 Other assets 2,080,000 2,090,000 --------------- --------------- $ 30,642,000 $ 31,677,000 =============== =============== LIABILITIES Mortgage and construction loans payable $ 26,037,000 $ 26,222,000 Due to related parties 912,000 693,000 Other liabilities 1,003,000 1,286,000 --------------- --------------- 27,952,000 28,201,000 --------------- --------------- PARTNERS' CAPITAL WNC Housing Tax Credits Fund IV, L.P., Series 1 1,367,000 2,132,000 Other partners 1,323,000 1,344,000 --------------- --------------- 2,690,000 3,476,000 --------------- --------------- $ 30,642,000 $ 31,677,000 =============== ===============
21 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2002, 2001 and 2000 NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued COMBINED CONDENSED STATEMENTS OF OPERATIONS
2001 2000 1999 --------------- --------------- --------------- Revenues $ 3,400,000 $ 3,397,000 $ 3,342,000 --------------- --------------- --------------- Expenses: Operating expenses 2,250,000 2,198,000 2,196,000 Interest expense 841,000 841,000 905,000 Depreciation and amortization 1,098,000 1,142,000 1,058,000 --------------- --------------- --------------- Total expenses 4,189,000 4,181,000 4,159,000 --------------- --------------- --------------- Net loss $ (789,000) $ (784,000) $ (817,000) =============== =============== =============== Net loss allocable to the Partnership $ (777,000) $ (772,000) $ (806,000) =============== =============== =============== Net loss recorded by the Partnership $ (565,000) $ (666,000) $ (694,000) =============== =============== ===============
Certain Local Limited Partnerships have incurred significant operating losses and have working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partners may be required to sustain the operations of such Local Limited Partnerships. If additional capital contributions are not made when they are required, the Partnership's investment in certain of such Local Limited Partnerships could be impaired, and the loss and recapture of the related tax credits could occur. The financial statements of one Local Limited Partnership were prepared assuming the limited partnership will continue as a going concern. The Partnership had a $256,705 and $441,770, remaining investment in such Local Limited Partnership at March 31, 2002 and 2001, respectively. The Partnership's original investment in the Local Limited Partnership approximated $1,691,585. Through December 31, 2001, the Local Limited Partnership has had recurring losses, working capital deficiencies and has not been billed for certain property tax expenses due since 1994. The Local Limited Partnership is seeking abatement or an extended payment plan to pay down certain of these liabilities; however, if the Local Limited Partnership is unsuccessful, additional funding may be requested from the Partnership. In the event the Local 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, 2001 and 2000, the carrying value of such property on the books and records of the Local Limited Partnership totaled $6,507,470 and $6,703,761. The auditor for this entity has expressed substantial doubt as to this entity's ability to continue as a going concern as a result of the property tax issue. 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. 22 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2002, 2001 and 2000 NOTE 3 - RELATED PARTY TRANSACTIONS Under the terms of the Partnership Agreement, the Partnership is obligated to the General Partner or its affiliates for the following items: Acquisition fees of up to 8% of the gross proceeds from the sale of Partnership units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships. At the end of all periods presented, the Partnership incurred acquisition fees of $800,000. Accumulated amortization of these capitalized costs was $384,251 and $243,289 as of March 31, 2002 and 2001, respectively. Of the accumulated amortization recorded on the balance sheet at March 31, 2001 $59,327 of the related expense was reflected as equity in losses of limited partnerships on the statement of operations during the fourth quarter of the year ended March 31, 2001 to reduce the respective net acquisition fee component of investments in local limited partnerships to zero for those Local Limited Partnerships which would otherwise be below a zero balance. During the year ended March 31, 2002, an additional $117,011 was recognized under the same methodology. Reimbursement of costs incurred by the General Partner in connection with the acquisition of Local Limited Partnerships. These reimbursements have not exceeded 1.2% of the gross proceeds. At the end of all periods presented, the Partnership had incurred acquisition costs of $54,949, which have been included in investments in limited partnerships. At the end of all years presented accumulated amortization amounted to $54,949. Of the accumulated amortization recorded on the balance sheet at March 31, 2001, $44,256 of the related expense was reflected as equity in losses of limited partnerships on the statement of operations during the fourth quarter of the year ended March 31, 2001 to reduce the respective net acquisition cost component of investments in local limited partnerships to zero for those Local Limited Partnerships which would otherwise be below a zero balance. 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 of the Local Limited Partnerships, including the Partnership's allocable share of the mortgages. Management fees of $42,000 were incurred during the years ended March 31, 2002, 2001 and 2000, of which $24,500, $30,000 and $16,310 was paid, respectively. 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 preferred return of 16% through December 31, 2003 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort. An affiliate of the General Partner provides management services for one of the properties in the limited partnerships. Management fees were earned by the affiliate in the amount of $55,040, $53,276 and $50,259 for the years ended March 31, 2002, 2001 and 2000. The accrued fees and advances due to General Partner and affiliates consist of the following:
March 31 ------------------------------------------------- 2002 2001 2000 -------------- ------------ --------------- Reimbursement for expenses paid by the General Partner or an affiliate $ 1,402 $ - $ 926 Asset management fee payable 133,167 115,667 103,667 -------------- ------------ --------------- Total $ 134,569 $ 115,667 $ 104,593 ============== ============ ===============
23 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1 (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS - CONTINUED For The Years Ended March 31, 2002, 2001 and 2000 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 payable in installments and are due upon the limited partnership achieving certain operating and development benchmarks (generally within two years of the Partnership's initial investment).
NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The following is a summary of the quarterly operations for the years ended March 31, 2002 and 2001. June 30 September 30 December 31 March 31 --------------- --------------- --------------- --------------- 2002 Income $ 3,000 $ 2,000 $ 1,000 $ 11,000 Operating expenses (21,000) (30,000) (22,000) (23,000) Equity in losses of limited partnerships (121,000) (175,000) (87,000) (182,000) Net loss (139,000) (203,000) (108,000) (194,000) Loss available to limited partners (137,000) (201,000) (107,000) (192,000) Loss per limited partner unit (14) (20) (11) (19) 2001 Income $ 5,000 $ 9,000 $ 5,000 $ 3,000 Operating expenses (22,000) (34,000) (20,000) (23,000) Equity in losses of limited partnerships (180,000) (180,000) (179,000) (127,000) Net loss (197,000) (205,000) (194,000) (147,000) Loss available to limited partners (195,000) (203,000) (193,000) (144,000) Loss per limited partner unit (20) (20) (19) (14)
NOTE 6 - INCOME TAXES No provision for income taxes has been recorded in the financial statements as any liability for income taxes is the obligation of the partners of the Partnership. 24 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure NOT APPLICABLE PART III Item 10. Directors and Executive Officers of the Registrant The Partnership has no directors or executive officers of its own. The following biographical information is presented for the directors and executive officers of Associates which has principal responsibility for the Partnership's affairs. Directors and Executive Officers of WNC & Associates, Inc. The directors of WNC & Associates, Inc. are Wilfred N. Cooper, Sr., who serves as Chairman of the Board, David N. Shafer, Wilfred N. Cooper, Jr. and Kay L. Cooper. The principal shareholder of WNC & Associates, Inc. is a trust established by Wilfred N. Cooper, Sr. Wilfred N. Cooper, Sr., age 71, is the founder, Chairman, Chief Executive Officer, and a Director of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a general partner in some of the programs previously sponsored by the Sponsor. Mr. Cooper has been involved in real estate investment and acquisition activities since 1968. Previously, during 1970 and 1971, he was founder and principal of Creative Equity Development Corporation, a predecessor of WNC & Associates, Inc., and of Creative Equity Corporation, a real estate investment firm. For 12 years prior to that, Mr. Cooper was employed by Rockwell International Corporation, last serving as its manager of housing and urban developments where he had responsibility for factory-built housing evaluation and project management in urban planning and development. Mr. Cooper is a Director of the National Association of Home Builders (NAHB) and a National Trustee for NAHB's Political Action Committee, a Director of the National Housing Conference (NHC) and a member of NHC's Executive Committee and a Director of the National Multi-Housing Council (NMHC). Mr. Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree. Wilfred N. Cooper, Jr., age 39, is President, Chief Operating Officer, a Director and a member of the Acquisition Committee of WNC & Associates, Inc. He is President of, and a registered principal with, WNC Capital Corporation, a member firm of the NASD, and is a Director of WNC Management, Inc. He has been involved in investment and acquisition activities with respect to real estate since he joined the Sponsor in 1988. Prior to this, he served as Government Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of the Advisory Board for LIHC Monthly Report, a Director of NMHC and an Alternate Director of NAHB. He graduated from The American University in 1985 with a Bachelor of Arts degree. David N. Shafer, age 50, is Executive Vice President, a Director, General Counsel, and a member of the Acquisition Committee of WNC & Associates, Inc., and a Director and Secretary of WNC Management, Inc. Mr. Shafer has been involved in real estate investment and acquisition activities since 1984. Prior to joining the Sponsor in 1990, he was practicing law with a specialty in real estate and taxation. Mr. Shafer is a Director and President of the California Council of Affordable Housing and a member of the State Bar of California. Mr. Shafer graduated from the University of California at Santa Barbara in 1978 with a Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris Doctor degree (cum laude) and from the University of San Diego in 1986 with a Master of Law degree in Taxation. Thomas J. Riha, age 47, became Chief Financial Officer effective January 2001. Prior to his appointment as Chief Financial Officer he was Vice President - Asset Management and a member of the Acquisition Committee of WNC & Associates, Inc. and a Director and Chief Executive Officer of WNC Management, Inc. Mr. Riha has been involved in acquisition and investment activities with respect to real estate since 1979. Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty Advisor, a real estate acquisition and management company, last serving as Vice President - Operations. Mr. Riha graduated from the California State University, Fullerton in 1977 with a Bachelor of Arts degree (cum laude) in Business Administration with a concentration in Accounting and is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. 25 Sy P. Garban, age 56, is Vice President - National Sales of WNC & Associates, Inc. and has been employed by the Sponsor since 1989. Mr. Garban has been involved in real estate investment activities since 1978. Prior to joining the Sponsor he served as Executive Vice President of MRW, Inc., a real estate development and management firm. Mr. Garban is a member of the International Association of Financial Planners. He graduated from Michigan State University in 1967 with a Bachelor of Science degree in Business Administration. Michael J. Gaber, age 36, is Vice President - Acquisitions and a member of the Acquisitions Committee of WNC & Associates, Inc. Mr. Gaber has been involved in real estate acquisition, valuation and investment activities since 1989 and has been employed with WNC since 1997. Prior to joining WNC & Associates, Inc., he was involved in the valuation and classification of major assets, restructuring of debt and analysis of real estate taxes with the H.F. Ahmanson company, parent to Home Savings of America. Mr. Gaber graduated from the California State University, Fullerton in 1991 with a Bachelor of Science degree in Business Administration - Finance. David Turek, age 47, is Vice President - Originations of WNC & Associates, Inc. He has been involved with real estate investment and finance activities since 1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to 1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where he was responsible for on-site feasibility studies and due diligence analyses of Tax Credit properties. From 1990 to 1995, he was involved in the development of conventional and tax credit multi-family housing. He is a Director with the Texas Council for Affordable Rural Housing and graduated from Southern Methodist University in 1976 with a Bachelor of Business Administration degree. Kay L. Cooper, age 65, is a Director of WNC & Associates, Inc. Mrs. Cooper was the founder and sole proprietor of Agate 108, a manufacturer and retailer of home accessory products, from 1975 until 1998. She is the wife of Wilfred N. Cooper, Sr., and the mother of Wilfred N. Cooper, Jr. Ms. Cooper graduated from the University of Southern California in 1958 with a Bachelor of Science degree. Item 11. Executive Compensation: The Partnership has no officers, employees, or directors. However, under the terms of the Partnership Agreement the Partnership is obligated to TCP IV or Associates during the current or future years for the following fees: (a) Annual Asset Management Fee. An annual asset management fee the greater of (i) $2,000 per multi-family housing complex, or (ii) 0.275% of Gross Proceeds. The base fee amount will be adjusted annually based on the change in the Consumer Price Index. However, in no event will the annual asset management fee exceed 0.2% of Invested Assets. "Invested Assets" means the sum of the Partnership's investment in Local Limited Partnerships and the Partnership's allocable share of the amount of the indebtedness related to the Housing Complexes. Fees of $42,000 were incurred during the years ended March 31, 2002, 2001 and 2000, respectively. The Partnership paid the General Partner or its affiliates $24,500, $30,000 and $16,310 of those fees during the years ended March 31, 2002, 2001 and 2000, respectively. (b) Subordinated Disposition Fee. A subordinated disposition fee in an amount equal to 1% of the sale price received in connection with the sale or disposition of a Housing Complex. 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 the Limited Partners (including Low Income Housing Credits) as a class, on their adjusted capital contributions commencing for each Limited Partner on the last day of the calendar quarter during which the Limited Partner's capital contribution is received by the Partnership, calculated at the following rates: (i) 16% through December 31, 2003, and (ii) 6% for the balance of the Partnership's term. No disposition fees have been paid. (c) Operating Expenses. The Partnership reimbursed the General Partner or its affiliates for operating expenses of approximately $28,000, $26,000 and $9,000 during the year ended March 31, 2002, 2001 and 2000, respectively. (d) Interest in Partnership. The General Partner receives 1% of the Partnership's allocated Low Income Housing Credits, which approximated $15,000 for the General Partner for all years presented. The General Partner is also entitled to receive 1% of cash distributions. There were no distributions of cash to the General Partner during the years presented. 26 Item 12. Security Ownership of Certain Beneficial Owners and Management (a) Security Ownership of Certain Beneficial Owners ----------------------------------------------- No person is known to the General Partner to own beneficially in excess of 5% of the outstanding units. (b) Security Ownership of Management -------------------------------- Neither the General Partner, its affiliates, nor any of the officers or directors of the General Partner or its affiliates own directly or beneficially any Units in the Partnership. (c) Changes in Control ------------------ The management and control of the General Partner 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 any time remove the General Partner of the Partnership and elect a successor General Partner. Item 13. Certain Relationships and Related Transactions The General Partner manages all of the Partnership's affairs. The transactions with the General Partner are primarily in the form of fees paid by the Partnership for services rendered to the Partnership and the General Partner's interests in the Partnership, as discussed in Item 11 and in the notes to the Partnership's financial statements. 27 PART IV. Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K Financial Statements (a)(1) Financial statements included in Part II hereof: ------------------------------------------------ Report of Independent Certified Public Accountants Balance Sheets, March 31, 2002 and 2001 Statements of Operations for the years ended March 31, 2002, 2001 and 2000 Statements of Partners' Equity (Deficit) for the years ended March 31, 2002, 2001 and 2000 Statements of Cash Flows for the years ended March 31, 2002, 2001 and 2000 Notes to Financial Statements (a)(2) Financial statement schedule included in Part IV hereof: -------------------------------------------------------- Report of Independent Certified Public Accountants on Financial Statement Schedules Schedule III - Real Estate Owned by Local Limited Partnerships (b) Reports on Form 8-K. -------------------- 1. None (c) Exhibits. --------- 3.1 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. 10.1 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. 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. 28 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 10.13. 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. 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. 21.1 Financial Statements of Laurel Creek Apartments, for the years ended December 31, 1999 and 1998 together with Independent Auditors' Report thereon; filed as exhibit 21.1 on Form 10-K dated March 31, 2000; a significant subsidiary of the Partnership. 29 21.2 Financial Statements of Laurel Creek Apartments, as of and for the years ended December 31, 2000 and 1999 together with Independent Auditors' Report thereon; filed as exhibit 21.2 on Form 10-K dated March 31, 2001; a significant subsidiary of the Partnership. 21.3 Financial Statements of Laurel Creek Apartments, as of and for the years ended December 31, 2001 and 2000 together with Independent Auditors' Report thereon; filed as exhibit 21.3 on Form 10-K dated March 31, 2002; a significant subsidiary of the Partnership. 21.4 Financial Statements of Regency Court, as of and for the years ended December 31, 2001 and 2000 together with Independent Auditors' Report thereon; filed as exhibit 21.4 on Form 10-K dated March 31, 2002; a significant subsidiary of the Partnership. (d) Financial statement schedules follow, as set forth in subsection (a)(2) ------------------------------------ hereof. 30 Report of Independent Certified Public Accounts on Financial Statement Schedules To the Partners WNC Housing Tax Credit Fund IV, L.P. Series 1 The audits referred to in our report dated May 16, 2002, relating to the 2002, 2001 and 2000 financial statements of WNC Housing Tax Credit Fund IV, L.P. Series 1 (the "Partnership"), which is contained in Item 8 of this Form 10-K, included the audit of the accompanying financial statement schedules. The financial statement schedules are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statement schedules based upon our audits. In our opinion, such financial statement schedules presents fairly, in all material respects, the financial information set forth therein. /s/ BDO SEIDMAN, LLP Orange County, California BDO SEIDMAN, LLP May 16, 2002 31 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2002
---------------------------------- --------------------------------- As of March 31, 2001 As of December 31, 2000 ---------------------------------- --------------------------------- Total Investment Amount of Encumbrances in Local Limited Investment of Local Limited Property and Accumulated Net Book Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value - ------------------------------------------------------------------------------------------------------------------------------------ Alpine Manor, Alpine, L.P. Texas $ 195,000 $ 195,000 $ 909,000 $ 1,170.000 $ 221,000 $ 949,000 Baycity Village Apartments, Limited Baytown, Partnership Texas 301,000 301,000 1,455,000 1,829,000 550,000 1,279,000 Beckwood Manor Seven Marianna, Limited Partnership Arkansas 307,000 307,000 1,383,000 1,789,000 527,000 1,262,000 Briscoe Manor Limited Galena, Partnership Maryland 308,000 308,000 1,481,000 1,845,000 505,000 1,340,000 Evergreen Four Limited Maynard, Partnership Arkansas 195,000 195,000 865,000 1,129,000 325,000 804,000 Fawn Haven Limited Manchester, Partnership Ohio 167,000 167,000 851,000 1,072,000 333,000 739,000 Fort Stockton Ft.Stockton, Manor, L.P. Texas 224,000 224,000 1,046,000 1,248,000 216,000 1,032,000 Hidden Valley Limited Gallup, New Partnership Mexico 412,000 412,000 1,477,000 1,981,000 378,000 1,603,000 HOI Limited Partnership Of Lenoir, Lenoir Carolina 198,000 198,000 539,000 1,173,000 238,000 890,000 Indian Creek Limited Bucyrus, Partnership Ohio 306,000 306,000 1,462,000 1,777,000 483,000 1,294,000 Laurel Creek San Luis Obispo, Apartments California 1,030,000 1,030,000 611,000 2,165,000 534,000 1,631,000
32 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2002
---------------------------------- --------------------------------- As of March 31, 2001 As of December 31, 2000 ---------------------------------- --------------------------------- Total Investment Amount of Encumbrances in Local Limited Investment of Local Limited Property and Accumulated Net Book Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value - ------------------------------------------------------------------------------------------------------------------------------------ Madisonville Manor Senior Madisonville, Citizens Complex, Ltd. Texas 174,000 174,000 898,000 1,150,000 140,000 1,010,000 Mt. Graham Safford, Housing, Ltd. Arizona 410,000 410,000 1,400,000 1,883,000 525,000 1,358,000 Northside Plaza Angleton, Apartments, Ltd. Texas 282,000 282,000 1,354,000 1,741,000 244,000 1,497,000 Pampa Manor, L.P. Pampa, Texas 180,000 180,000 841,000 1,032,000 186,000 846,000 Regency Court Monrovia, Partners California 1,692,000 1,690,000 5,088,000 7,708,000 1,200,000 6,508,000 Sandpiper Square, a Limited Aulander,North Partnership Carolina 219,000 219,000 942,000 1,193,000 231,000 962,000 Seneca Falls Seneca East Apartments Falls, New Company II, L.P. York 270,000 270,000 888,000 1,227,000 151,000 1,076,000 Vernon Manor, L.P. Vernon, Texas 177,000 177,000 748,000 905,000 162,000 743,000 Waterford Place, Calhoun a Limited Falls, South Partnership Carolina 272,000 272,000 1,174,000 1,501,000 452,000 1,049,000 Yantis Housing, Ltd. Yantis, Texas 145,000 145,000 625,000 839,000 163,000 676,000 ------------ ---------- ------------ ------------- ----------- ------------ $ 7,464,000 $ 7,462,000 $ 26,037,000 $ 36,357,000 $ 7,809,000 $ 28,548,000 ============ ========== ============ ============ ============ ============
33 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2002
-------------------------------------------------------------------------------------- For the year ended December 31, 2001 -------------------------------------------------------------------------------------- Year Investment Estimated Useful Partnership Name Rental Income Net Loss Acquired Status Life (Years) - -------------------------------------------------------------------------------------------------------------------- Alpine Manor, L.P. $ 113,000 $ (19,000) 1994 Completed 40 Baycity Village Apartments, Limited Partnership 248,000 (51,000) 1994 Completed 30 Beckwood Manor Seven Limited Partnership 148,000 (75,000) 1993 Completed 27.5 Briscoe Manor Limited Partnership 174,000 (64,000) 1994 Completed 27.5 Evergreen Four Limited Partnership 89,000 (37,000) 1994 Completed 27.5 Fawn Haven Limited Partnership 84,000 (24,000) 1994 Completed 27.5 Fort Stockton Manor, L.P. 123,000 (14,000) 1994 Completed 40 Hidden Valley Limited Partnership 176,000 (18,000) 1994 Completed 40 HOI Limited Partnership Of Lenoir 142,000 (26,000) 1993 Completed 40 Indian Creek Limited Partnership 145,000 (33,000) 1994 Completed 27.5 Laurel Creek Apartments 180,000 (4,000) 1994 Completed 27.5 Madisonville Manor Senior Citizens Complex, Ltd. 104,000 (12,000) 1994 Completed 50 Mt. Graham Housing, Ltd. 138,000 (69,000) 1994 Completed 27.5 Northside Plaza Apartments, Ltd. 151,000 (30,000) 1994 Completed 50 Pampa Manor, L.P. 94,000 (27,000) 1994 Completed 40 Regency Court Partners 657,000 (162,000) 1994 Completed 40 Sandpiper Square, a Limited Partnership 99,000 (17,000) 1994 Completed 35 Seneca Falls East Apartments Company II, L.P. 144,000 (27,000) 1998 Completed 40
34 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2002
-------------------------------------------------------------------------------------- For the year ended December 31, 2001 -------------------------------------------------------------------------------------- Year Investment Estimated Useful Partnership Name Rental Income Net Loss Acquired Status Life (Years) - -------------------------------------------------------------------------------------------------------------------- Vernon Manor, L.P. 92,000 (4,000) 1994 Completed 40 Waterford Place, a Limited Partnership 125,000 (50,000) 1994 Completed 40 Yantis Housing, Ltd. 73,000 (26,000) 1994 Completed 40 ----------- ----------- $ 3,299,000 $ (789,000) =========== ===========
35 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
---------------------------------- --------------------------------- As of March 31, 2001 As of December 31, 2000 ---------------------------------- --------------------------------- Total Investment Amount of Encumbrances in Local Limited Investment of Local Limited Property and Accumulated Net Book Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value - ------------------------------------------------------------------------------------------------------------------------------------ Alpine Manor, Alpine, L.P. Texas $ 195,000 $ 195,000 $ 913,000 $ 1,170.000 $ 192,000 $ 978,000 Baycity Village Apartments, Limited Baytown, Partnership Texas 301,000 301,000 1,467,000 1,829,000 486,000 1,343,000 Beckwood Manor Seven Marianna, Limited Partnership Arkansas 307,000 307,000 1,387,000 1,790,000 463,000 1,327,000 Briscoe Manor Limited Galena, Partnership Maryland 308,000 308,000 1,485,000 1,812,000 4415,000 1,371,000 Evergreen Four Limited Maynard, Partnership Arkansas 195,000 195,000 868,000 1,129,000 285,000 844,000 Fawn Haven Limited Manchester, Partnership Ohio 167,000 167,000 855,000 1,069,000 296,000 773,000 Fort Stockton Ft.Stockton, Manor, L.P. Texas 224,000 224,000 1,051,000 1,248,000 186,000 1,062,000 Hidden Valley Limited Gallup, New Partnership Mexico 412,000 412,000 1,482,000 1,979,000 321,000 1,658,000 HOI Limited Partnership Of Lenoir, Lenoir Carolina 198,000 198,000 551,000 1,168,000 250,000 981,000 Indian Creek Limited Bucyrus, Partnership Ohio 306,000 306,000 1,469,000 1,776,000 416,000 1,360,000 Laurel Creek San Luis Obispo, Apartments California 1,030,000 1,030,000 636,000 2,165,000 464,000 1,701,000
36 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
---------------------------------- --------------------------------- As of March 31, 2001 As of December 31, 2000 ---------------------------------- --------------------------------- Total Investment Amount of Encumbrances in Local Limited Investment of Local Limited Property and Accumulated Net Book Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value - ------------------------------------------------------------------------------------------------------------------------------------ Madisonville Manor Senior Madisonville, Citizens Complex, Ltd. Texas 174,000 174,000 900,000 1,150,000 118,000 1,032,000 Mt. Graham Safford, Housing, Ltd. Arizona 410,000 410,000 1,406,000 1,878,000 454,000 1,424,000 Northside Plaza Angleton, Apartments, Ltd. Texas 282,000 282,000 1,359,000 1,776,000 208,000 1,528,000 Pampa Manor, L.P. Pampa, Texas 180,000 180,000 844,000 1,032,000 161,000 871,000 Regency Court Monrovia, Partners California 1,692,000 1,690,000 5,156,000 7,708,000 1,004,000 6,704,000 Sandpiper Square, a Limited Aulander,North Partnership Carolina 219,000 219,000 946,000 1,193,000 198,000 995,000 Seneca Falls Seneca East Apartments Falls, New Company II, L.P. York 270,000 270,000 890,000 1,224,000 107,000 1,117,000 Vernon Manor, L.P. Vernon, Texas 161,000 161,000 751,000 905,000 140,000 765,000 Waterford Place, Calhoun a Limited Falls, South Partnership Carolina 272,000 272,000 1,179,000 1,495,000 391,000 1,104,000 Yantis Housing, Ltd. Yantis, Texas 145,000 145,000 627,000 839,000 143,000 696,000 ------------ ---------- ------------ ------------- ----------- ------------ $ 7,448,000 $ 7,446,000 $ 26,222,000 $ 36,295,000 $ 6,724,000 $ 29,571,000 ============ ========== ============ ============ ============ ============
37 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
-------------------------------------------------------------------------------------- For the year ended December 31, 2000 -------------------------------------------------------------------------------------- Year Investment Estimated Useful Partnership Name Rental Income Net Loss Acquired Status Life (Years) - -------------------------------------------------------------------------------------------------------------------- Alpine Manor, L.P. $ 103,000 $ (23,000) 1994 Completed 40 Baycity Village Apartments, Limited Partnership 259,000 (55,000) 1994 Completed 30 Beckwood Manor Seven Limited Partnership 151,000 (59,000) 1993 Completed 27.5 Briscoe Manor Limited Partnership 165,000 (96,000) 1994 Completed 27.5 Evergreen Four Limited Partnership 83,000 (36,000) 1994 Completed 27.5 Fawn Haven Limited Partnership 81,000 (22,000) 1994 Completed 27.5 Fort Stockton Manor, L.P. 116,000 (22,000) 1994 Completed 40 Hidden Valley Limited Partnership 156,000 (30,000) 1994 Completed 40 HOI Limited Partnership Of Lenoir 131,000 (34,000) 1993 Completed 40 Indian Creek Limited Partnership 139,000 (40,000) 1994 Completed 27.5 Laurel Creek Apartments 169,000 (35,000) 1994 Completed 27.5 Madisonville Manor Senior Citizens Complex, Ltd. 111,000 1,000 1994 Completed 50 Mt. Graham Housing, Ltd. 144,000 (67,000) 1994 Completed 27.5 Northside Plaza Apartments, Ltd. 152,000 (17,000) 1994 Completed 50 Pampa Manor, L.P. 98,000 (34,000) 1994 Completed 40 Regency Court Partners 657,000 (62,000) 1994 Completed 40 Sandpiper Square, a Limited Partnership 99,000 (15,000) 1994 Completed 35 Seneca Falls East Apartments Company II, L.P. 143,000 (22,000) 1998 Completed 40
38 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
-------------------------------------------------------------------------------------- For the year ended December 31, 2000 -------------------------------------------------------------------------------------- Year Investment Estimated Useful Partnership Name Rental Income Net Loss Acquired Status Life (Years) - -------------------------------------------------------------------------------------------------------------------- Vernon Manor, L.P. 78,000 (32,000) 1994 Completed 40 Waterford Place, a Limited Partnership 115,000 (55,000) 1994 Completed 40 Yantis Housing, Ltd. 71,000 (29,000) 1994 Completed 40 ----------- ----------- $ 3,221,000 $ (784,000) =========== ===========
39 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2000
---------------------------------- --------------------------------- As of March 31, 2000 As of December 31, 1999 ---------------------------------- --------------------------------- Total Investment Amount of Encumbrances in Local Limited Investment of Local Limited Property and Accumulated Net Book Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value - ------------------------------------------------------------------------------------------------------------------------------------ Alpine Manor, Alpine, L.P. Texas $ 195,000 $ 195,000 $ 916,000 $ 1,170.000 $ 163,000 $ 1,007,000 Baycity Village Apartments, Limited Baytown, Partnership Texas 301,000 301,000 1,478,000 1,829,000 419,000 1,410,000 Beckwood Manor Seven Marianna, Limited Partnership Arkansas 307,000 307,000 1,391,000 1,790,000 395,000 1,395,000 Briscoe Manor Limited Galena, Partnership Maryland 308,000 308,000 1,490,000 1,812,000 343,000 1,469,000 Evergreen Four Limited Maynard, Partnership Arkansas 195,000 195,000 871,000 1,129,000 241,000 888,000 Fawn Haven Limited Manchester, Partnership Ohio 167,000 167,000 859,000 1,069,000 259,000 810,000 Fort Stockton Ft.Stockton, Manor, L.P. Texas 224,000 224,000 1,055,000 1,248,000 156,000 1,092,000 Hidden Valley Limited Gallup, New Partnership Mexico 412,000 412,000 1,487000 1,944,000 269,000 1,675,000 HOI Limited Partnership Of Lenoir, Lenoir Carolina 198,000 198,000 562,000 1,168,000 217,000 951,000 Indian Creek Limited Bucyrus, Partnership Ohio 306,000 306,000 1,475,000 1,776,000 351,000 1,425,000 Laurel Creek San Luis Obispo, Apartments California 1,030,000 1,030,000 660,000 2,165,000 393,000 1,772,000
40 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2000
---------------------------------- --------------------------------- As of March 31, 2000 As of December 31, 1999 ---------------------------------- --------------------------------- Total Investment Amount of Encumbrances in Local Limited Investment of Local Limited Property and Accumulated Net Book Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value - ------------------------------------------------------------------------------------------------------------------------------------ Madisonville Manor Senior Madisonville, Citizens Complex, Ltd. Texas 174,000 174,000 903,000 1,149,000 95,000 1,054,000 Mt. Graham Safford, Housing, Ltd. Arizona 410,000 410,000 1,411,000 1,874,000 382,000 1,492,000 Northside Plaza Angleton, Apartments, Ltd. Texas 282,000 282,000 1,364,000 1,736,000 171,000 1,565,000 Pampa Manor, L.P. Pampa, Texas 180,000 180,000 846,000 1,029,000 135,000 894,000 Regency Court Monrovia, Partners California 1,692,000 1,690,000 4,324,000 7,658,000 809,000 6,849,000 Sandpiper Square, a Limited Aulander,North Partnership Carolina 219,000 219,000 949,000 1,190,000 166,000 1,024,000 Seneca Falls Seneca East Apartments Falls, New Company II, L.P. York 270,000 270,000 893,000 1,220,000 61,000 1,159,000 Vernon Manor, L.P. Vernon, Texas 161,000 161,000 764,000 905,000 118,000 787,000 Waterford Place, Calhoun a Limited Falls, South Partnership Carolina 272,000 272,000 1,184,000 1,518,000 335,000 1,183,000 Yantis Housing, Ltd. Yantis, Texas 145,000 145,000 630,000 838,000 122,000 716,000 ------------ ---------- ------------ ------------- ----------- ------------ $ 7,448,000 $ 7,446,000 $ 25,512,000 $ 36,217,000 $ 5,600,000 $ 30,617,000 ============ ========== ============ ============ ============ ============
41 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2000
-------------------------------------------------------------------------------------- For the year ended December 31, 1999 -------------------------------------------------------------------------------------- Year Investment Estimated Useful Partnership Name Rental Income Net Loss Acquired Status Life (Years) - -------------------------------------------------------------------------------------------------------------------- Alpine Manor, L.P. $ 148,000 $ (26,000) 1994 Completed 40 Baycity Village Apartments, Limited Partnership 234,000 (60,000) 1994 Completed 30 Beckwood Manor Seven Limited Partnership 147,000 (47,000) 1993 Completed 27.5 Briscoe Manor Limited Partnership 161,000 (21,000) 1994 Completed 27.5 Evergreen Four Limited Partnership 78,000 (35,000) 1994 Completed 27.5 Fawn Haven Limited Partnership 87,000 (24,000) 1994 Completed 27.5 Fort Stockton Manor, L.P. 112,000 (22,000) 1994 Completed 40 Hidden Valley Limited Partnership 157,000 (24,000) 1994 Completed 40 HOI Limited Partnership Of Lenoir 121,000 (51,000) 1993 Completed 40 Indian Creek Limited Partnership 145,000 (41,000) 1994 Completed 27.5 Laurel Creek Apartments 166,000 (26,000) 1994 Completed 27.5 Madisonville Manor Senior Citizens Complex, Ltd. 105,000 (9,000) 1994 Completed 50 Mt. Graham Housing, Ltd. 149,000 (64,000) 1994 Completed 27.5 Northside Plaza Apartments, Ltd. 145,000 (20,000) 1994 Completed 50 Pampa Manor, L.P. 99,000 (31,000) 1994 Completed 40 Regency Court Partners 661,000 (220,000) 1994 Completed 40 Sandpiper Square, a Limited Partnership 98,000 (14,000) 1994 Completed 35 Seneca Falls East Apartments Company II, L.P. 141,000 (18,000) 1998 Completed 40
42 WNC Housing Tax Credit Fund IV, L.P., Series 1 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2000
-------------------------------------------------------------------------------------- For the year ended December 31, 1999 -------------------------------------------------------------------------------------- Year Investment Estimated Useful Partnership Name Rental Income Net Loss Acquired Status Life (Years) ------------------------------------------------------------------------------------------------------------------- Vernon Manor, L.P. 86,000 (12,000) 1994 Completed 40 Waterford Place, a Limited Partnership 122,000 (36,000) 1994 Completed 40 Yantis Housing, Ltd. 74,000 (16,000) 1994 Completed 40 ----------- ----------- $ 3,236,000 $ (817,000) =========== ===========
43 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 By: /s/ Wilfred N. Cooper, Jr. -------------------------- Wilfred N. Cooper, Jr., President Chief Operating Officer of WNC & Associates, Inc. Date: JUNE 06, 2002 By: /s/ Thomas J. Riha ------------------ Thomas J. Riha, Vice-President Chief Financial Officer of WNC & Associates, Inc. Date: JUNE 06, 2002 By /s/ Wilfred N. Cooper, Sr. -------------------------- Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc. Date: JUNE 06, 2002 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/ Wilfred N. Cooper, Sr. -------------------------- Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc. Date: JUNE 06, 2002 By: /s/ David N. Shafer - --- ------------------- David N Shafer, Director of WNC & Associates, Inc. Date: JUNE 06, 2002 LAUREL CREEK APARTMENTS (A California Limited Partnership) AUDITED FINANCIAL STATEMENTS DECEMBER 31, 2001 LAUREL CREEK APARTMENTS AUDITED FINANCIAL STATEMENTS DECEMBER 31, 2001 TABLE OF CONTENTS Page Independent Auditors' Report 1 Balance Sheet 2 Statement of Income, Expenses and Changes in Partners' Capital 3 Statement of Cash Flows 4 Notes to Financial Statements 5 INDEPENDENT AUDITORS' REPORT To the Board of Directors Laurel Creek Apartments San Luis Obispo, California We have audited the accompanying balance sheet of Laurel Creek Apartments (A California Limited Partnership) as of December 31, 2001 and December 31, 2000 and the related statements of income, expenses, and changes in partners' capital, and cash flows for the years then ended. These financial statements are the responsibility of the Partnerships' management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Laurel Creek Apartments as of December 31, 2001 and December 31, 2000, and the results of its operations for the years then ended in conformity with generally accepted accounting principles. February 7, 2002 LAUREL CREEK APARTMENTS BALANCE SHEET DECEMBER 31, 2001 AND 2000
2001 2000 ---- ---- ASSETS CURRENT ASSETS Cash (Note 2) $ 48,449 $ 27,206 Accounts receivable 1,050 863 Prepaid expenses 1,173 1,149 ---------------- --------------- TOTAL CURRENT ASSETS 50,672 29,218 Restricted reserves (Note 3) 32,419 27,619 Land, structures and equipment, net of accumulated depreciation of $533,911 and $463,746 (Note 4) 1,631,443 1,701,608 Organizational costs, net of accumulated amortization of $13,993 and $12,325 (Note 5) 12,925 14,593 ----------------- --------------- TOTAL ASSETS $ 1,727,459 $ 1,773,038 ================= =============== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES Accounts payable - other $ 8,614 $ 10,580 Accounts payable - related party (Note 7) 4,159 10,325 Security deposits payable 8,260 7,486 Current portion of long-term debt (Note 6) 28,934 24,717 ----------------- -------------- TOTAL CURRENT LIABILITIES 49,967 53,108 Long-term debt (Note 6) 581,668 611,326 ----------------- -------------- TOTAL LIABILITIES 631,635 664,434 Partners' capital 1,095,824 1,108,604 ------------------ --------------- TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,727,459 $ 1,773,038 ================== ===============
See accompanying notes. 2 LAUREL CREEK APARTMENTS STATEMENT OF INCOME, EXPENSES AND CHANGES IN PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
2001 2000 ---- ---- OPERATING INCOME Rental income $ 180,345 $ 165,469 Tenant charges 434 3,874 Other 169 - ----------------- ----------------- TOTAL OPERATING INCOME 180,948 169,343 ----------------- ----------------- OPERATING EXPENSES Administration 18,645 17,996 Insurance and taxes 3,709 4,464 Maintenance 22,867 38,924 Utilities 20,074 19,512 Depreciation and amortization 71,833 72,716 ------------------ ----------------- TOTAL EXPENSES 137,128 153,612 ------------------ ----------------- NET INCOME (LOSS) FROM OPERATIONS 43,820 15,731 ------------------ ----------------- OTHER INCOME AND EXPENSES Interest income 2,612 1,620 Interest expense (50,490) (52,506) ------------------ ----------------- NET OTHER INCOME UNDER EXPENSES (47,878) (50,886) ------------------ ----------------- NET LOSS (4,058) (35,155) BEGINNING PARTNERS' CAPITAL 1,108,604 ,147,135 Partner withdrawals (8,722) (3,376) ------------------ ----------------- ENDING PARTNERS' CAPITAL $ 1,095,824 $ 1,108,604 ================== =================
See accompanying notes. 3 LAUREL CREEK APARTMENTS STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2001 AND 2000
2001 2000 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (4,058) $ (35,155) Adjustments to reconcile net loss to Net cash provided by operating activities Depreciation and amortization 71,833 72,716 (Increase) decrease in: Accounts receivable (187) 368 Prepaid expenses (24) (438) Restricted reserves (4,800) (4,800) Increase (decrease) in: Accounts payable - other (1,966) 2,095 Accounts payable - related parties (6,166) (10,027) Security deposits payable 774 456 ------------------ -------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 55,406 25,215 ------------------ -------------- CASH FLOWS FROM FINANCING ACTIVITIES Capital withdrawals (8,722) (3,376) Payment of debt (25,441) (23,843) ------------------ -------------- NET CASH USED IN FINANCING ACTIVITIES (34,163) (27,219) ------------------ -------------- NET INCREASE (DECREASE) IN CASH 21,243 (2,004) CASH - BEGINNING OF YEAR 27,206 29,210 ------------------ -------------- CASH - END OF YEAR $ 48,449 $ 27,206 ================== ==============
See accompanying notes. 4 LAUREL CREEK APARTMENTS NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2001 Note 1 - DEFINITION OF REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Laurel Creek Apartments is a California Limited Partnership which was formed on May 17, 1994. The partnership was formed to construct, acquire, own, operate, maintain, manage, lease, sell, mortgage or otherwise dispose of a 24 unit apartment complex located in the City of San Luis Obispo, California. As of the report date there are two partners in the partnership, consisting of one general and one limited partner. Summary of Significant Accounting Policies a. Basis of accounting The partnership is accounted for on the accrual basis of accounting. Under this method revenues are recognized when they are earned and expenses are recognized when they are incurred. b. Fixed assets and depreciation Fixed assets are carried at cost. Expenditures for the fixed assets are capitalized. Maintenance and repairs are charged to operations. Depreciation is calculated using the straight-line basis over the estimated useful lives. c. Income taxes Taxable income or expenses and related tax credits are not reflected as expenses or credits of the partnership. These items are the responsibilities of the individual partners. 5 LAUREL CREEK APARTMENTS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 (Continued) Note 2 - CASH Cash consists of $47,658 deposited into savings or checking accounts, and $791 is on deposit with the State of California Local Agency Investment Fund. At December 31, 2001 the amount deposited into the savings accounts and the Local Agency Investment Fund earned interest at rates from 3.30% to 3.52% respectively. Note 3 - RESTRICTED CASH Restricted cash consists of $32,419 maintained in a money market account earning 3.30%. This cash is reserved for the replacement of structures and equipment. Note 4 - LAND, STRUCTURES AND EQUIPMENT Property and equipment and accumulated depreciation consist of the following:
Accumulated Cost Depreciation Land $ 275,000 $ - Building 1,868,634 512,420 Equipment 21,720 21,491 $ 2,165,354 $ 533,911 Note 5 - ORGANIZATION COSTS Organization costs and accumulated amortization consist of the following: Accumulated Cost Amortization Organization costs $ 26,918 $ 13,993
6 LAUREL CREEK APARTMENTS NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 (Continued) Note 6 - NOTE PAYABLE The Agency has a mortgage note payable to the First Bank of San Luis Obispo. The note requires principal and interest payments totaling $6,381 each month until 9/1/2014. The note bears interest at 8% per annum. The following is a schedule of the debt payment requirements to maturity: Year ending December 31 2002 $ 76,569 2003 76,569 2004 76,569 2005 76,569 2006 76,569 Thereafter 587,026 Total 969,871 Less amounts representing interest 359,269 $ 610,602 Note 7 - RELATED PARTIES The accounting and administrative functions of the partnership are performed by employees of the Housing Authority of the City of San Luis Obispo (the Authority). Two members of the general partner's (San Luis Obispo Nonprofit Housing Corporation) board of directors are also members of the board of commissioner's of the Housing Authority of the City of San Luis Obispo. At December 31, 2001 the partnership owed the Authority $4,159. During the year ended December 31, 2001, the partnership paid the Authority $17,337 in maintenance expenses and management fees. 7 Note 8 - LAND DONATION AND LEASE The land upon which the Laurel Creek Apartments were built was originally leased from the City of San Luis Obispo (the City) by the Housing Authority of the City of San Luis Obispo (the Authority). This lease agreement was later assigned from the Authority to the San Luis Obispo Nonprofit Housing Corporation (the Corporation). The lease was later assigned to the Laurel Creek Apartments Partnership. Each of the above mentioned agencies have common board members or in some other manner have oversight responsibilities over the other organizations; which would qualify them as related parties. The lease expires on April 29, 2046. The provisions for extending or renewing the lease term are not specified and are contingent upon the continuation of the project being used to provide affordable housing to lower income families. The annual lease payments are $1 per year. The land was recorded on the Agency's books of accounts at the appraised value on the date the land lease was assigned to the Agency. This appraised value was $275,000. The value of the land was also recorded as a capital contribution from the general partner on that date. Regency Court Partners (A Limited Partnership) Audited Financial Statements December 31, 2001 CONTENTS Page INDEPENDENT AUDITOR'S REPORT 1-2 FINANCIAL STATEMENTS: Balance Sheets 3-4 Statements of Operations and Changes in Partners' Equity 5 Statements of Changes in Partners' Equity 6 Statements of Cash Flows 7-8 Notes to Financial Statements 9-15 SUPPLEMENTARY INFORMATION: Supplemental Schedule of Expenses 16 Supplemental Data Required by CHFA 17-19 INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROLS 20-21 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS 22 CERTIFICATION OF GENERAL PARTNER 23 Partners Regency Court Partners Costa Mesa, California INDEPENDENT AUDITOR'S REPORT I have audited the accompanying balance sheet of Regency Court Partners, a California Limited Partnership (CHFA Project No. 92-002-S) as of December 31, 2000 and 2001, and the related statements of operations and changes in partners' equity, and cash flows for the years then ended. These financial statements are the responsibility of the partnership's management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with auditing standards generally accepted in the United States, Government Auditing Standards issued by the Comptroller General of the United States, and the standards for financial and compliance audits contained in California Housing Finance Agency Audited Financial Statements Handbook (revised December 1991). Those standards require that I plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Regency Court Partners, a California Limited Partnership (RHCP Project No. 92-002-S) as of December 31, 2000 and 2001, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. My audit was conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplementary information shown on pages 16 to 19 is presented for the purpose of additional analysis and is not a required part of the basic financial statements of Regency Court Partners (RHCP Project No. 92-002-S). Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in my opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. Regency Court Partners CHFA Project No. 92-002-S Independent Auditor's Report, December 31, 2001 Page 2 In accordance with Government Auditing Standards, I have also issued a report dated March 4, 2002 on my consideration of Regency Court Partners' internal control structure and a report dated March 4, 2002 on its compliance with laws and regulations. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note 2 to the financial statements, the Partnership has suffered recurring losses and an ongoing need for capital infusion to meet normal financial obligations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/JACK GILK JACK GILK March 4, 2002 33-0724657 See the accompanying notes to financial statements. --------------------------------------------------- 2 REGENCY COURT PARTNERS CHFA Project No. 92-002-S (A California Limited Partnership) - -------------------------------------------------------------------------------- BALANCE SHEETS, DECEMBER 31, 2000 AND 2001 - --------------------------------------------------------------------------------
A S S E T S 2001 2000 ------------- ------------- Current Assets: Operating cash and equivalents $ 4,235 $ 13,111 Tenant security deposit cash 25,643 24,232 Tenant accounts receivable 111 1,032 Other accounts receivable - 330 Prepaid expenses 10,415 9,188 Tax impound account 72,381 69,067 Hazard insurance impound account 9,768 8,982 Earthquake insurance impound account 9,308 16,670 ------------- ------------- Total current assets 131,861 142,612 ------------- ------------- Property, Building and Equipment, At Cost: Building and improvements 7,703,983 7,703,983 Equipment 3,572 3,572 ------------- ------------- 7,707,555 7,707,555 Accumulated depreciation (1,200,085) (1,003,794) ----------- ----------- Property, building, and equipment - net 6,507,470 6,703,761 ------------- ------------- Other Assets: Replacement reserve 105,628 96,452 CHFA partner suspense account 51,191 48,934 Unamortized deferred costs 26,415 33,018 ------------- ------------- Total other assets 183,234 178,404 ------------- ------------- $6,822,565 $7,024,777 ========== ==========
See the accompanying notes to financial statements. --------------------------------------------------- 3 Regency Court Partners CHFA Project No. 92-002-S Balance Sheets, December 31, 2000 and 2001 Page 2
- ------------------------------------------------------------------------------------------------------------------------------------ LIABILITIES AND PARTNERS' EQUITY 2001 2000 ------------- ------------- Current Liabilities: Current portion of mortgage payable $ 71,918 $ 67,170 Accounts payable 7,712 6,708 Tenant security trust liability 24,237 23,597 Accrued interest 23,941 24,325 Accrued other 2,525 - Unearned rental income 242 4,119 ------------- ------------- Total current liabilities 127,900 125,919 Long-term Debt: Accrued property tax 346,612 346,612 Accrued interest 192,828 165,828 Accrued expenses 167,000 167,000 Mortgage payable, less current portion 4,122,179 4,194,098 Other note payable 894,900 894,900 Partners' equity 968,471 1,130,420 ------------- ------------- $ 6,822,565 $ 7,024,777 ============= =============
See the accompanying notes to financial statements. --------------------------------------------------- 4 REGENCY COURT PARTNERS CHFA Project No. 92-002-S (A California Limited Partnership) - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS AND CHANGES IN PARTNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000 AND 2001 - --------------------------------------------------------------------------------
2001 2000 ------------- ------------- Revenue: Tenant gross potential rents $ 568,837 $ 597,724 Rental assistance 92,711 77,168 Excess assistance 5,026 - Less vacancies (9,388) (18,143) ------------ ------------- Net rental income 657,186 656,749 Laundry and vending income 7,000 7,076 Tenant charges income 270 971 Interest income 11,847 12,952 ------------ ------------- Total revenues 676,303 677,748 ------------ ------------- Expenses: Payroll and related costs 83,566 73,267 Administrative 70,223 72,827 Utilities 65,938 57,763 Operating and maintenance 74,435 67,066 Insurance and taxes 24,765 22,781 Interest 316,430 320,891 Depreciation 202,895 201,666 ------------- ------------- Total expenses 838,252 816,261 ------------- ------------- Net loss before extraordinary items (161,949) (138,513) Extraordinary items: Prior years adjustment to CDC note payable - 28,218 Reduction of prior years property tax accrual - 48,000 ------------- ------------- Net Loss (161,949) (62,295) Partners' equity - beginning 1,130,420 1,192,715 ------------- ------------- Partners' equity - ending $ 968,471 $ 1,130,420 ============= =============
See the accompanying notes to financial statements. --------------------------------------------------- 5 REGENCY COURT PARTNERS CHFA Project No. 92-002-S (A California Limited Partnership) - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN PARTNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000 AND 2001 - --------------------------------------------------------------------------------
Old New General General Limited Partner Partner Partner Total ------------- -------------- ------------- -------------- Balance - December 31, 1999 $ 729,544 $ (5,816) $ 468,987 $ 1,192,715 Net Loss - 2000 - (623) (61,672) (62,295) ------------- -------------- -------------- --------------- Balance - December 31, 2000 729,544 (6,439) 407,315 1,130,420 Net Loss - 2001 - (1,619) (160,330) (161,949) ------------- -------------- -------------- --------------- Balance - December 31, 2001 $ 729,544 $ (8,058) $ 246,985 $ 968,471 ============= ============== ============== =============== Profit and loss percentage at December 31, 2001 0% 1% 99% 100% ============= =============== ============== ===============
See the accompanying notes to financial statements. --------------------------------------------------- 6 REGENCY COURT PARTNERS CHFA Project No. 92-002-S (A California Limited Partnership) - -------------------------------------------------------------------------------- STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000 AND 2001 - --------------------------------------------------------------------------------
2001 2000 ------------ ----------- Cash flows from operating activities: Rental receipts $ 547,471 $ 568,802 Tenant assistance payments 92,711 77,168 Interest receipts 684 1,084 Other receipts 7,270 8,047 Payments to suppliers and employees: Administrative expenses (21,772) (17,065) Management fees (52,185) (53,606) Utilities (65,938) (64,356) Salaries and wages (53,344) (46,531) Operating and maintenance (68,068) (71,720) Payroll taxes (5,304) (4,382) Property insurance (21,425) (19,446) Miscellaneous taxes and insurance (14,212) (12,402) Interest on mortgage (289,814) (289,199) Tenant security deposits ( 771) (635) ------------- ----------- Net cash provided by operating activities 55,303 75,759 ------------- ----------- Cash flows from investing activities: Deposits to reserve, including interest (37,612) (38,332) Withdrawals from reserve 28,436 63,124 Reserve interest 11,163 5,332 Funding of tax and insurance impound - net 1,005 (5,955) Capital expenditures - (49,224) ------------- ----------- Net cash used in investing activities 2,992 (25,055) ------------- ----------- Cash flow used in financing activities - Mortgage principal payments (67,171) (67,784) ------------- ----------- Net increase (decrease) in cash (8,876) (17,080) Cash at beginning of year 13,111 30,191 ------------- ----------- Cash at end of year $ 4,235 $ 13,111 ============= ===========
See the accompanying notes to financial statements. --------------------------------------------------- 7 Regency Court Partners CHFA Project No. 92-002-S Statements of Cash Flows, December 31, 2000 and 2001 Page 2 - -------------------------------------------------------------------------------- Reconciliation of Net Loss to Net Cash Provided by Operating Activities
2001 2000 ------------- ------------- Net Loss $ (161,949) $ (62,295) Adjustments to reconcile net loss to net cash Provided by operating activities: Depreciation and amortization 202,894 201,665 Decrease (increase) in: Security deposit cash (1,411) (1,098) Receivables 1,251 (1,362) Prepaids (1,227) (2,876) Increase (decrease) in: Payables 1,004 (5,885) Security deposit liability 640 463 Accrued interest 26,616 31,692 Other accruals 2,525 - Unearned income (3,877) 3,541 Reserve and impound interest earned (11,163) (11,868) Extraordinary items - (76,218) ------------ ----------- Net cash provided by operating activities $ 55,303 $ 75,759 ============ ===========
See the accompanying notes to financial statements. --------------------------------------------------- 8 REGENCY COURT PARTNERS CHFA Project No. 92-002-S (A California Limited Partnership) - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 - -------------------------------------------------------------------------------- 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization: Regency Court Partners is a California limited partnership formed in 1992 to acquire an interest in real property located in Monrovia, California and to construct and operate thereon an apartment complex of 115 units for low-income senior citizens. Mortgage financing was provided by the California Housing Finance Agency (CHFA). Such projects are regulated under the terms of a Regulatory Agreement with CHFA, including rent charges, operating methods and other matters. Capitalization and Depreciation: Assets are recorded at cost and depreciated for financial accounting purposes using the straight-line method over their estimated useful lives. The principal estimated useful lives used in computing the depreciation provisions are 40 years for building and 10 years for equipment The policy of the project is to charge amounts expended for maintenance, repairs, and minor replacements to expense, and to capitalize expenditures for major replacements and betterments. Deferred Costs: Deferred costs, comprised substantially of tax credit fees, are amortized over their estimated useful life of ten years. Cash and Cash Equivalents: For purposes of reporting cash flows, cash includes unrestricted cash in bank, cash on hand, savings accounts, and all certificates of deposit with original maturities of three months or less. The Partnership maintains its cash in bank deposit accounts, which at times may exceed federally insured limits. The Partnership has not experienced any losses in such accounts. The Partnership believes it is not exposed to any significant credit risk on cash and cash equivalents. Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect: (1) the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements, and (2) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Rental Income and Unearned Rents: The Partnership rents apartment units on a month to month basis and recognizes revenues when earned. Advance receipts of rents are classified as liabilities until earned. 9 --------------------------------------------------------------------------- Regency Court Partners CHFA Project No. 92-002-S Notes to Financial Statements, December 31, 2001 Page 2 - -------------------------------------------------------------------------------- Income Taxes: No provision is made for income taxes since such taxes, if any, are the liability of the individual partners. Reclassifications: Certain reclassifications have been made to the 1999 financial statements to conform with the 2000 presentation. 2. GOING CONCERN AND PROPERTY TAX LIABILITY The accompanying financial statements have been prepared assuming the Partnership will continue as a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. A number of factors including recurring losses and a working capital deficiency raise substantial doubt about the Partnership's ability to continue as a going concern. The Partnership has not received real property tax bills since the inception of its land lease in 1994, and accordingly, has not paid real property taxes since that date. The Partnership has applied for property tax exemption, under the California welfare organization exemption, for 1999 and 1998 property tax. The Partnership has also requested that property taxes from June 1995 through December 1997, be abated. The Partnership believes that it will receive the abatement for 1999, 1998 and future taxes due to the non-profit status of its general partner. In addition, the Partnership is optimistic about receiving an abatement for the property taxes for the period June 1995 through December 1997, as it had a non-profit general partner during that time period. Communications with governmental authorities indicate application processing is three to five years behind. However, authorities state that tax exemption will likely be granted. In December of 2000 the first applications were returned as accepted for the tax periods 99-00 and 00-01. Accordingly, one-half of the 1999 property tax accrual has been reversed and no accrual has been made for the year 2000. These financial statements reflect a liability of $346,612 as of December 31, 2001 and 2000 for unbilled/unpaid property taxes. The liability will be reduced when future tax exemptions are received. Cash generated from the Partnership's operations has not been sufficient enough to pay such tax liability. 10 --------------------------------------------------------------------------- Regency Court Partners CHFA Project No. 92-002-S Notes to Financial Statements, December 31, 2001 Page 3 - -------------------------------------------------------------------------------- If an abatement for prior years' taxes is not obtained, the Partnership will seek to negotiate a 5 year payment plan during which to pay those taxes. If the Partnership is unsuccessful, it may request additional funds from the limited partner to satisfy this obligation. However, the limited partner is under no obligation to contribute any additional amounts. The Partnership believes the abatement of property taxes, if obtained, will enable the Partnership to fund its on-going operations. The Partnership's continued existence is dependent upon its ability to resolve its liquidity problems, principally by obtaining an abatement of real property taxes and/or obtaining additional equity capital. While pursuing the tax abatement and/or additional equity funding, the Partnership must continue to operate on limited cash flow generated internally. The financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Partnership be unable to continue as a going concern. The Partnership's continuation as a going concern is dependent upon its ability to general sufficient cash flow to meet its obligations on a timely basis, to comply with the terms of its financing agreement, to obtain additional financing or refinancing as may be required, and ultimately to attain profitability. 3. EXTRAORDINARY ITEMS Prior Years Adjustment to CDC Note Payable and Related Accrued Interest: Communication with Community Development Commission, County of Los Angeles (CDC) confirmed that the balance of the note payable at December 31, 2000 was $894,900. Balance in the December 31, 1999 financial statements was $899,950 - a difference of $5050. In addition, accrued interest on the note payable was confirmed as $165,828 at December 31, 2000. Interest expense for the 2000 year on the CDC note payable is appropriately $27,000. Accordingly, the adjustment of $23,168 to prior years accrued interest was treated as an extraordinary item as is the adjustment to the balance of the note payable. Total items related to CDC note payable amount to $28,218. Prior Years Adjustment to Accrued Property Tax: During the year 2000, tax exemptions were received for the 99-00 and 00-01 tax years. Accordingly, one-half of the prior 1999 accrual for property tax was reversed and is being reported as an extraordinary item. 11 --------------------------------------------------------------------------- Regency Court Partners CHFA Project No. 92-002-S Notes to Financial Statements, December 31, 2001 Page 4 - -------------------------------------------------------------------------------- 4. RESTRICTED FUNDS As required by the Regulatory Agreement with CHFA, the Partnership is required to make monthly impound deposits to cover insurance premiums, property taxes and to maintain an operating reserve and a reserve for replacements. These restricted funds are held by, and expenditures are subject to, supervision and approval by CHFA. The operating reserve is funded by a letter of credit. 5. MORTGAGE PAYABLE California Housing Finance Agency 6.85% real estate mortgage payable in monthly installments of $29,749, including interest. Final payment is due in the year 2025. The mortgage may not be paid in advance without approval of CHFA, nor may the building be sold, demolished or alterations made without CHFA's prior approval. $4,194,097 Less current portion (71,918) ---------- $4,122,179 Principal amounts maturing for the next five years are: 2002 $71,918 2003 77,002 2004 82,446 2005 88,274 2006 94,514 12 --------------------------------------------------------------------------- Regency Court Partners CHFA Project No. 92-002-S Notes to Financial Statements, December 31, 2001 Page 5 - -------------------------------------------------------------------------------- 6. OTHER NOTE PAYABLE Community Development Commission, County of Los Angeles (CDC) 3% construction loan secured by second trust deed on buildings and improvements. Payments made to the extent there are residual receipts. In the event that residual rental receipts are available in any year, 70% thereof shall be paid to the holder of the construction loan and the remaining 30% balance will be paid to the CDC as rent on the ground lease. Upon payment of $750,000 of the outstanding balance, 3.4% of the residual rental receipts shall be paid to the CDC as repayment of principal and interest. All unpaid amounts will be due and payable in the year 2025. Accrued interest is $192,828 at December 31, 2001. $894,900 7. RELATED PARTY TRANSACTIONS The Regulatory Agreement with CHFA limits the maximum annual distributions to partners. Such distributions are payable only from surplus cash (as defined), but accumulate and may be distributed to the extent surplus cash is generated from future operations. No surplus cash was available at December 31, 2001 and 2000. Capital Contributions: The limited partner, WNC Housing Tax Credit Fund IV, L.P. Series I, a 99% limited partner, is required to make a capital contribution of $1,691,585, in amounts and at times as stated in the Limited Partnership Agreement. The limited partner's cash contributions may be reduced to account for reduced tax benefits, if any. As of December 31, 2001, the limited partner has contributed $1,641,782. Profit or Loss Allocations: All items included in the calculation of income or loss not arising from a sale or refinancing, and all tax credits, shall be allocated 99% to the limited partner and 1% to the general partner. 13 --------------------------------------------------------------------------- Regency Court Partners CHFA Project No. 92-002-S Notes to Financial Statements, December 31, 2001 Page 6 - -------------------------------------------------------------------------------- Cash Distributions: Residual rental receipts, as defined, shall be distributed as follows: (i) 70% to the CDC until $750,000 of the construction loan has been repaid; 3.4% thereafter; (ii) 30% to the CDC as payment under the ground lease; (iii)The remaining residual rental receipts shall be distributed to the Partners in proportion to their partnership interests. Distribution of sale or refinancing proceeds, as defined, shall be made in accordance with the Limited Partnership Agreement. A monthly asset management fee is payable to the general partner. Fees of $22,383 and $20,700 were incurred for the years 2001 and 2000 respectively. An affiliate of one of the former general partners provided property management services to the Partnership from January 1996 to September 1997. Such services are now provided by an affiliate of the limited partner. Included in long-term accrued expenses at December 31, 2001 and December 31, 2000 is $88,000 of management fees payable to such entity. An affiliate of the limited partner provides property management services to the Partnership. Property management fees were $32,657 and $32,576 for the years 2001 and 2000, respectively. 8. COMMITMENTS AND CONTINGENCIES Purchase Option: On January 4, 1994, the Partnership executed a Disposition and Development Agreement with the CDC. The Disposition and Development Agreement grants the Partnership the option to purchase the Rental Property under construction commencing on the first day of the 15th year of the ground lease and ending on the last day of the 20th year of the ground lease. The purchase price will be the future value of the CDC's original interest in the Rental Property under construction based on an 8% annually compounded return, less any payments made by the Partnership related to interest. Ground Lease: On January 4, 1994, the Partnership executed a Ground Lease Agreement with the CDC. Future minimum rental payments on the ground lease are based on 30% of residual rental receipts, as defined, and will be paid annually through 2049. No payments were made during the years ended December 31, 2001 and 2000. 14 --------------------------------------------------------------------------- Regency Court Partners CHFA Project No. 92-002-S Notes to Financial Statements, December 31, 2001 Page 7 - -------------------------------------------------------------------------------- 9. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS The Partnership's sole asset is a 115-unit apartment complex. The Partnership's operations are concentrated in the multifamily real estate market In addition, the Partnership operates in a heavily regulated environment. The operations of the project are subject to the administrative directives, rules and regulations of federal, state and local regulatory agencies, including, but not limited to CHFA. Such administrative directives, rules and regulations are subject to change by an act of congress, the State of California or an administrative change mandated by CHFA. Such changes may occur with little notice or inadequate funding to pay for related costs, including the additional administrative burden, to comply with a change. 15 --------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----