5. Investment in Local Partnerships

12 Months Ended

Mar. 30, 2015

Notes

5. Investment in Local Partnerships

5.     Investment in Local Partnerships

The Trust initially acquired a Local Partnership Interest in ten Local Partnerships. As of March 30, 2015, the Trust owns a 99% Local Partnership Interest in the following six Local Partnerships:

1.	ACP Housing Associates, L.P.;
2.	Creative Choice Homes VII, Ltd.;
3.	Ledge/McLaren Limited Partnership;
4.	SB-92 Limited Partnership;
5.	St. John Housing Associates, L.P. (“St. John Housing”); and
6.	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, 2015 the Trust is committed to make capital contributions in the aggregate of $14,837,956, which includes Advances to certain Local Partnerships 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, three 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 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. As of December 31, 2014, the Local Partnerships have outstanding mortgage loans payable totaling approximately $13,468,000 and accrued interest payable on such loans totaling approximately $2,124,000, 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, 2015 and 2014, the investment in local partnerships activity consists of the following:

	2015	2014
Investment in local partnerships as of March 30, 2014 and 2013	$   2,518,186	$   2,435,800
Distributions from Local Partnerships	(63,233)	(109,741)
Distributions classified as other income	3,000	52,500
Equity in income (loss) of investment in local partnerships	(2,062,171)	139,627
Investment in local partnerships as of March 30, 2015 and 2014	$       395,782	$   2,518,186

During the year ended March 30, 2014, the Trust sold its Local Partnership Interest in Penn Apartment Associates (“Penn Apartments”) to an affiliate of the Local General Partner of Penn Apartments. Although the Trust received no proceeds in connection with the sale, the Trust received $46,250 for distributions that were due to the Trust under the terms of Penn Apartments’ 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, 2014 (see Note 1). After accounting for its share of cumulative income, losses and distributions, the Trust’s investment in Penn Apartments had reached a zero balance prior to the sale.

During the year ended March 30, 2014, the Trust sold its Local Partnership Interest in St. Christopher’s Associates, L.P. V (“St. Christopher’s”) to an affiliate of the Local General Partner of St. Christopher’s; there were no proceeds in connection with the sale. The Trust made an Advance to St. Christopher's of $6,092 in a prior year to fund operating deficits; 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 had reached a zero balance prior to the sale. As a result of severe fire damage at the Property, St. Christopher’s recognized a gain on involuntary conversion of $809,114 for the year ended December 31, 2013. Such amount is reflected in the combined statement of operations of the Local Partnerships for the year ended December 31, 2013 herein Note 5.

During the year ended March 30, 2013, Edgewood Manor Associates, L.P. (“Edgewood”) sold its underlying Property to an unaffiliated third party, in connection with which Edgewood recognized a gain of $1,370,027. Such amount is reflected in the combined statement of operations of the Local Partnerships for the year ended December 31, 2013 herein Note 5. The Trust received $31,293 in connection with the sale; such amount was recorded as gain on sale of limited partner interests/local partnership properties for the year ended March 30, 2013.

The Trust’s investment in St. John Housing represents more than 20% of the Trust’s total assets as of March 30, 2015 and 2014 and the equity in income recognized by the Trust in connection with St. John Housing represents more than 20% of the Trust’s net loss for the year ended March 30, 2014. 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, 2014 and 2013:

	2014	2013
Total assets	$     5,245,539	$     5,444,612
Total liabilities	$     2,657,669	$     2,935,122
Revenue	$     1,465,166	$     1,464,956
Net income	$        139,221	$        141,037

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 $189,440 and $264,194 for the years ended December 31, 2014 and 2013, respectively, as reflected in the combined statements of operations of the Local Partnerships herein Note 5.

As a result of management’s assessment of the Carrying Value of the investment in local partnerships under applicable accounting guidelines (see Note 1), the Trust reduced its investment in St. John Housing by $2,200,000 during the year ended March 30, 2015. Such amount is included in equity in income (loss) of investment in local partnerships in the accompanying statement of operations and comprehensive income (loss) of the Trust for the year ended March 30, 2015. The differences between the Trust’s investment in local partnerships as of March 30, 2015 and 2014 and the amounts reflected as the Trust’s investment balance in the combined balance sheets of the Local Partnerships as of December 31, 2014 and 2013 herein Note 5 represent cumulative Carrying Value adjustments made by the Trust in the amount of $2,908,850 and $1,024,850, respectively.

The combined balance sheets of the Local Partnerships as of December 31, 2014 and 2013 and the combined statements of operations of the Local Partnerships for the years then ended are reflected on pages 27 and 28, respectively. The combined balance sheets of the Local Partnerships as of December 31, 2014 and 2013 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, 2014 and 2013 are as follows:

	2014	2013
ASSETS
Cash and cash equivalents	$     2,072,949	$         743,616
Rents receivable	64,987	99,462
Escrow deposits and reserves	1,135,647	2,185,014
Land	965,272	997,101
Buildings and improvements (net of accumulated depreciation of $15,952,715 and $18,330,320)	13,533,052	13,658,750
Intangible assets (net of accumulated amortization of $125,312 and $151,843)	141,138	158,857
Other assets	275,483	425,898
	$   18,188,528	$   18,268,698
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses	$         460,365	$         522,068
Due to related parties	1,469,345	2,005,580
Mortgage loans	13,468,459	14,361,626
Notes payable	250,000	250,000
Accrued interest	2,123,968	2,355,284
Other liabilities	179,156	114,406
	17,951,293	19,608,964
Partners' equity (deficit)
American Tax Credit Trust, Series I
Capital contributions, net of distributions	7,932,118	10,074,228
Cumulative loss	(4,627,486)	(6,531,192)
	3,304,632	3,543,036
General partners and other limited partners
Capital contributions, net of distributions	151,353	152,459
Cumulative loss	(3,218,750)	(5,035,761)
	(3,067,397)	(4,883,302)
	237,235	(1,340,266)
	$   18,188,528	$   18,268,698

The combined statements of operations of the Local Partnerships for the years ended December 31, 2014 and 2013 are as follows:

	2014	2013
REVENUE
Rental	$   4,452,442	$   4,552,291
Interest and other	177,777	241,812
TOTAL REVENUE	4,630,219	4,794,103
EXPENSES
Administrative	620,777	715,226
Payroll	751,481	743,073
Utilities	730,609	739,767
Operating and maintenance	746,746	987,672
Taxes and insurance	393,738	392,918
Financial	507,431	613,160
Depreciation and amortization	822,868	905,927
TOTAL EXPENSES	4,573,650	5,097,743
INCOME (LOSS) BEFORE GAIN ON SALE OF PROPERTY AND GAIN ON INVOLUNTARY CONVERSION	56,569	(303,640)
GAIN ON SALE OF PROPERTY	--	1,370,027
INCOME BEFORE GAIN ON INVOLUNTARY CONVERSION	56,569	1,066,387
GAIN ON INVOLUNTARY CONVERSION	--	809,114
NET INCOME	$         56,569	$   1,875,501
NET INCOME (LOSS) ATTRIBUTABLE TO
American Tax Credit Trust, Series I	$       137,829	$       139,627
General partners and other limited partners (includes    $189,440 and  $264,194 of Trust losses in excess of investment and specially allocated income of $107,614 and $1,981,251)	(81,260)	1,735,874
	$         56,569	$   1,875,501