6. Investment in Local Partnerships

12 Months Ended

Mar. 30, 2013

Notes

6. Investment in Local Partnerships

6.     Investment in Local Partnerships

The Trust initially acquired a Local Partnership Interest in ten Local Partnerships. As of March 30, 2013, the Trust owns a 98.99% to 99% Local Partnership Interest in the following nine Local Partnerships:

1.	ACP Housing Associates, L.P.;
2.	Creative Choice Homes VII, Ltd.;
3.	Edgewood Manor Associates, L.P. (“Edgewood”);
4.	Ledge/McLaren Limited Partnership;
5.	Penn Apartment Associates;
6.	SB-92 Limited Partnership;
7.	St. Christopher's Associates, L.P. V (“St. Christopher’s”);
8.	St. John Housing Associates, L.P. (“St. John Housing”); and
9.	Vision Limited Dividend Housing Association Limited Partnership.

In connection with the initial purchase of ten Local Partnership Interests, under the terms of the partnership agreement of each Local Partnership, as of March 30, 2013 the Trust is committed to make capital contributions in the aggregate of $14,837,956, which includes Advances to certain Local Partnerships (see discussion below), and all of which has been paid.

The remaining Properties are principally comprised of subsidized and leveraged low-income multifamily residential complexes located throughout the United States. 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 Properties, certain of which 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 Trust cannot reasonably 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 the Local Partnerships receiving such subsidies. The rents of the Properties are controlled by federal and state agencies pursuant to applicable laws and regulations. As of December 31, 2012, the Local Partnerships have outstanding mortgage loans payable totaling approximately $16,556,000 and accrued interest payable on such loans totaling approximately $4,948,000, which are secured by security interests and liens common to mortgage loans on the Local Partnerships' real property and other assets.

For the years ended March 30, 2013 and 2012, the investment in local partnerships activity consists of the following:

	2013	2012
Investment in local partnerships as of March 30, 2012 and 2011	$ 2,267,000	$ 2,297,912
Distributions from Local Partnerships	(13,941)	(152,015)
Distributions classified as other income	6,250	36,250
Equity in income of investment in local partnerships	176,491	84,853
Investment in local partnerships as of March 30, 2013 and 2012	$   2,435,800	$   2,267,000

During the year ended March 30, 2013, Edgewood sold its underlying Property to an unaffiliated third party, in connection with which the Trust received $31,293; 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 Trust for the year ended March 30, 2013. The Local General Partners of Edgewood intend to dissolve Edgewood as soon as possible. The Trust made Advances to Edgewood in prior years to fund operating deficits. Cumulative Advances as of March 30, 2013 and 2012 are $90,000; such Advances were recorded as investment in local partnerships (see Note 1). After accounting for its share of cumulative income, losses and distributions, the Trust’s investment in Edgewood reached a zero balance prior to the sale.

During the year ended March 30, 2012, Starved Rock - LaSalle Manor Limited Partnership (“Starved Rock”) sold its underlying Property to an affiliate of the Local General Partner of Starved Rock, in connection with which the Trust received $108,000; 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 Trust for the year ended March 30, 2012. In addition, the Trust received $30,000 for distributions that were due to the Trust under the terms of Starved Rock’s partnership agreement; such amount is included in other income from local partnerships in the accompanying statement of operations and comprehensive income (loss) of the Trust for the year ended March 30, 2012 (see Note 1). Starved Rock recognized a loss of $232,801 in connection with the sale; such amount is reflected as loss on sale of property in the combined statement of operations of the Local Partnerships for the year ended December 31, 2012 herein Note 6. After accounting for its share of cumulative income, losses and distributions, the Trust’s investment in Starved Rock reached a zero balance prior to the sale.

The Trust made an Advance to St. Christopher's in a prior year to fund operating deficits. Cumulative Advances as of March 30, 2013 and 2012 are $6,092; such Advance was recorded as investment in local partnerships (see Note 1). After accounting for its share of cumulative income, losses and distributions, the Trust’s investment in St. Christopher’s reached a zero balance in a prior year.

The Trust’s investment in St. John Housing represents more than 20% of the Trust’s total assets as of March 30, 2013 and 2012 and the equity in income recognized by the Trust for the years ended March 30, 2013 and 2012 in connection with St. John Housing represents more than 20% of the Trust’s net income (loss) for such years. The following financial information represents certain balance sheet and operating statement data of St. John Housing as of and for the years ended December 31, 2012 and 2011:

	2012	2011
Total assets	$     5,522,530	$     5,636,912
Total liabilities	$     3,093,236	$     3,325,051
Revenue	$     1,469,771	$     1,444,889
Net income	$        178,274	$          85,710

Equity in loss of investment in local partnerships is limited to the Trust’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 $1,016,695, $619,937, and $640,634 for the years ended December 31, 2012, 2011 and 2010, respectively, as reflected in the combined statements of operations of the Local Partnerships herein Note 6.

The differences between the Trust’s investment in local partnerships as of March 30, 2013 and 2012 and the amounts reflected as the Trust’s investment balance in the combined balance sheets of the Local Partnerships as of December 31, 2012 and 2011 herein Note 6 are as follows:

	2013	2012
Investment in local partnerships as of March 30 - Trust	$2,435,800	$2,267,000
Distributions from Local Partnerships for the period January 1 through March 30	--	60,233
Carrying value adjustments (see Note 1)	1,461,850	1,667,948
Investment in local partnerships as of December 31, 2012 and 2011 - Local Partnerships’ combined balance sheets	$3,897,650	$3,995,181

The combined balance sheets of the Local Partnerships as of December 31, 2012 and 2011 and the combined statements of operations of the Local Partnerships for the years ended December 31, 2012, 2011 and 2010 are reflected on pages 29 and 30, respectively.

The combined balance sheets of the Local Partnerships as of December 31, 2012 and 2011 are as follows:

	2012	2011
ASSETS
Cash and cash equivalents	$760,971	$696,549
Rents receivable	93,456	74,710
Escrow deposits and reserves	1,916,418	2,065,245
Land	1,010,458	1,213,303
Buildings and improvements (net of accumulated depreciation of $18,325,748 and $18,795,401)	13,690,637	16,454,213
Intangible assets (net of accumulated amortization of $148,306 and $164,642)	171,471	223,567
Other assets	392,021	442,692
	$18,035,432	$21,170,279
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses	$596,708	$684,071
Due to related parties	2,541,398	2,646,659
Mortgage loans	16,555,508	18,758,639
Notes payable	100,000	100,000
Accrued interest	4,948,039	4,675,602
Other liabilities	126,959	140,303
	24,868,612	27,005,274
Partners' equity (deficit)
American Tax Credit Trust, Series I
Capital contributions, net of distributions	13,037,450	13,739,701
Cumulative loss	(9,139,800)	(9,744,520)
	3,897,650	3,995,181
General partners and other limited partners
Capital contributions, net of distributions	152,970	466,308
Cumulative loss	(10,883,800)	(10,296,484)
	(10,730,830)	(9,830,176)
	(6,833,180)	(5,834,995)
	$18,035,432	$21,170,279

The combined statements of operations of the Local Partnerships for the years ended December 31, 2012, 2011 and 2010 are as follows:

	2012	2011	2010
REVENUE
Rental	$4,551,556	$4,834,032	$4,790,746
Interest and other	280,671	303,156	263,948
TOTAL REVENUE	4,832,227	5,137,188	5,054,694
EXPENSES
Administrative	1,260,668	1,088,411	1,110,818
Utilities	752,113	778,210	732,869
Operating and maintenance	1,267,607	1,186,236	1,147,203
Taxes and insurance	409,213	442,146	454,494
Financial	759,462	810,269	810,922
Depreciation and amortization	953,628	1,078,681	1,089,127
TOTAL EXPENSES	5,402,691	5,383,953	5,345,433
LOSS BEFORE LOSS ON SALE OF PROPERTY	(570,464)	(246,765)	(290,739)
LOSS ON SALE OF PROPERTY	(232,801)	--	--
NET LOSS	$(803,265)	$(246,765)	$(290,739)
NET INCOME (LOSS) ATTRIBUTABLE TO
American Tax Credit Trust, Series I	$176,491	$84,853	$231,447
General partners and other limited partners (includes    $1,016,695, $619,937 and $640,634 of Trust losses in excess of investment and specially allocated income of $44,987, $290,801 and $121,375)	(979,756)	(331,618)	(522,186)
	$(803,265)	$(246,765)	$(290,739)