5. Investment in Local Partnerships

12 Months Ended

Mar. 30, 2016

Notes

5. Investment in Local Partnerships

5.     Investment in Local Partnerships

The Partnership initially acquired a Local Partnership Interest in forty-three Local Partnerships. As of March 30, 2016, the Partnership owns a 99% Local Partnership Interest in the following four Local Partnerships:

1.	Country View Apartments (“Country View”);
2.	Fulton Street Houses Limited Partnership (“Fulton Street”);
3.	Hurlock Meadow Limited Partnership (“Hurlock Meadow”); and
4.	Summerfield Apartments Limited Partnership (“Summerfield Apartments”).

In connection with the initial purchase of forty-three Local Partnership Interests, under the terms of the partnership agreement of each Local Partnership, as of March 30, 2016 the Partnership is committed to make capital contributions in the aggregate of $29,384,966, which includes Advances to a certain Local Partnership and all of which has been paid. See discussion below herein Note 5 regarding Summerfield Apartments’ sale of its underlying Property subsequent to March 30, 2016.

The remaining Properties, excluding Summerfield Apartments, are principally comprised of subsidized and leveraged low-income multifamily residential complexes located in Maine (Country View), New York (Fulton Street) and Maryland (Hurlock Meadow). The required holding period of each Property, in order to avoid Low-income Housing Tax Credit recapture, is fifteen years from the year in which the Low-income Housing Tax Credits commence on the last building of the Property (the "Compliance Period"). The Compliance Periods of all the Local Partnerships expired in a prior year. The rents of the remaining Properties, of which Country View and Hurlock Meadow receive project based rental subsidy payments pursuant to subsidy agreements, are subject to specific laws, regulations and agreements with federal and state agencies. The subsidies expire at various times. The Partnership cannot predict legislative initiatives and governmental budget negotiations, the outcome of which could result in a reduction in funds available for the various federal and state administered housing programs. Such changes could adversely affect the future net operating income and debt structure of Country View and Hurlock Meadow. As of December 31, 2015, the remaining Local Partnerships have outstanding mortgage loans payable totaling approximately $7,129,000 and accrued interest payable on such loans totaling approximately $1,104,000, which are secured by security interests and liens common to mortgage loans on the remaining Local Partnerships' real property and other assets.

During the year ended March 30, 2016, the Partnership sold its Local Partnership Interest in Chowan Senior Manor Associates Limited Partnership (“Chowan Senior Manor”) to an affiliate of the Local General Partner of Chowan Senior Manor. The Partnership received $10,500 in connection with the sale; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2016.

During the year ended March 30, 2016, the Partnership sold its Local Partnership Interests in Long Reach Associates Limited Partnership and Nash Hill Associates Limited Partnership to an affiliate of one of the Local General Partners of such Local Partnerships. Such Local Partnerships have a common Local General Partner. The Partnership received $20,000 in connection with the sale; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2016.

During the year ended March 30, 2016, the Partnership sold its Local Partnership Interest in Loma del Norte Limited Partnership (“Loma del Norte”) to an affiliate of one of the Local General Partners of Loma del Norte. The Partnership received $85,000 in connection with the sale; such amount is included in gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2016.

During the year ended March 30, 2015, the Partnership sold its Local Partnership Interests in Union Valley Associates Limited Partnership and Waynesboro Apartments Limited Partnership to an affiliate of the Local General Partners of such Local Partnerships. Although the Partnership received no proceeds in connection with the sale, the Partnership received $20,000 for distributions that were due to the Partnership under the terms of the partnership agreements of such Local Partnerships. Such amount is included in other income from local partnerships in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2015 (see Note 1). Such Local Partnerships have a common Local General Partner.

During the year ended March 30, 2015, the Property owned by Sugar Cane Villas, Ltd. (“Sugar Cane Villas”) was sold at a public sale, in connection with which Sugar Cane Villas recognized a gain of $1,925,353; such amount is reflected as gain on sale of property in the combined statement of operations of the Local Partnerships for the year ended December 31, 2014 herein Note 5. The Partnership received no proceeds in connection with the sale. The Local General Partner of Sugar Cane Villas reported that the mortgage lender, which also provided project based rental assistance to Sugar Cane Villas under the terms of a contract subject to annual renewals, did not renew the rental assistance upon expiration of the contract, without which Sugar Cane Villas was unable to make the mandatory debt service payments required under the terms of its mortgages. Such non-renewal is permitted under the terms of the contract. As a result, the lender commenced a foreclosure action and the applicable jurisdiction issued a Final Judgment of Foreclosure.  Sugar Cane Villas has since been dissolved.

During the year ended March 30, 2015, the Partnership sold its Local Partnership Interests in Batesville Family, L.P., Lawrence Road Properties, Ltd. and Purvis Heights Properties, L.P. to an affiliate of the Local General Partner of such Local Partnerships for a total of $30,660; such amount is reflected as gain on sale of limited partner interests/local partnership properties in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2015. In addition, the Partnership received $7,762 for distributions that were due to the Partnership under the terms of the partnership agreements of such Local Partnerships; such amount is included in other income from local partnerships in the accompanying statement of operations and comprehensive income (loss) of the Partnership for the year ended March 30, 2015 (see Note 1). Such Local Partnerships have the same Local General Partner. The 99% Local Partnership Interests in such Local Partnerships were acquired along with American Tax Credit Properties II L.P. (“ATCP II”), an investment partnership whose general partner is an affiliate of the General Partner, whereby the Partnership owned 61.75%. ATCP II sold its interest in such Local Partnerships as part of the same transaction.

Equity in loss of investment in local partnerships is limited to the Partnership’s investment balance in each Local Partnership; any excess is applied to other partners' capital in any such Local Partnership (see Note 1). The amount of such excess losses applied to other partners' capital was $357,472 and $563,127 for the years ended December 31, 2015 and 2014, respectively, as reflected in the combined statements of operations of the Local Partnerships herein Note 5.

The Partnership’s investment in local partnerships reached a zero balance during a prior year (see Note 1). The amounts reflected as the Partnership’s investment balance in the combined balance sheets of the Local Partnerships herein Note 5 represent cumulative Carrying Value adjustments made by the Partnership (see Note 1).

In May 2016, Summerfield Apartments sold its underlying Property to an unaffiliated entity; the Partnership received $837,665 in connection with the sale. The Partnership may be entitled to additional proceeds after further resolution of the accounts of Summerfield Apartments.

The combined balance sheets of the Local Partnerships as of December 31, 2015 and 2014 and the combined statements of operations of the Local Partnerships for the years then ended are reflected on pages 26 and 27, respectively. The combined balance sheets of the Local Partnerships as of December 31, 2015 and 2014 do not include any balances in connection with the Local Partnerships in which the Partnership no longer owns an interest as of such dates, while the combined statements of operations of the Local Partnerships for the years then ended include the results of operations of such Local Partnerships for the period prior to the sales or other dispositions (see discussion above herein Note 5).

The combined balance sheets of the Local Partnerships as of December 31, 2015 and 2014 are as follows:

	2015	2014
ASSETS
Cash and cash equivalents	$       231,648	$       469,966
Rents receivable	25,548	56,452
Escrow deposits and reserves	576,857	991,099
Land	280,636	693,933
Buildings and improvements (net of accumulated depreciation of $9,256,386 and $13,760,023)	2,986,398	6,284,166
Intangible assets (net of accumulated amortization of $48,042 and $46,340)	9,603	11,305
Other assets	164,337	187,830
	$     4,275,027	$     8,694,751
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses	$       145,799	$       199,015
Due to related parties	741,518	1,004,918
Mortgage loans	7,128,710	12,632,226
Accrued interest	1,104,636	1,128,395
Other liabilities	91,314	145,862
	9,211,977	15,110,416
Partners' equity (deficit)
American Tax Credit Properties III L.P.
Capital contributions, net of distributions	3,546,235	4,852,168
Cumulative loss	(2,954,243)	(4,260,176)
	591,992	591,992
General partners and other limited partners
Capital contributions, net of distributions	11,858	(55,549)
Cumulative loss	(5,540,800)	(6,952,108)
	(5,528,942)	(7,007,657)
	(4,936,950)	(6,415,665)
	$     4,275,027	$     8,694,751

The combined statements of operations of the Local Partnerships for the years ended December 31, 2015 and 2014 are as follows:

	2015	2014
REVENUE
Rental	$     2,298,420	$     3,285,530
Interest and other	32,970	79,115
Total Revenue	2,331,390	3,364,645
EXPENSES
Administrative	284,119	578,136
Payroll	311,376	486,280
Utilities	299,113	370,158
Operating and maintenance	429,266	627,612
Taxes and insurance	241,695	464,288
Financial	472,459	716,936
Depreciation and amortization	667,464	895,273
Total Expenses	2,705,492	4,138,683
LOSS BEFORE GAIN ON SALE OF PROPERTY	(374,102)	(774,038)
GAIN ON SALE OF PROPERTY	--	1,925,353
NET INCOME (LOSS)	$       (374,102)	$     1,151,315
NET INCOME (LOSS) ATTRIBUTABLE TO
American Tax Credit Properties III L.P.	$                   --	$                   --
General partners and other limited partners (includes $357,472 and $563,127 of Partnership losses in excess of investment and specially allocated income of $0 and $1,730,073)	(374,102)	1,151,315
	$       (374,102)	$     1,151,315