5. Investment in Local Partnerships

12 Months Ended

Mar. 30, 2016

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, 2016, the Trust owns a 99% Local Partnership Interest in the following three Local Partnerships:

1.	ACP Housing Associates, L.P. (“ACP Housing”);
2.	Creative Choice Homes VII, Ltd. (“Creative Choice”); and
3.	Vision Limited Dividend Housing Association Limited Partnership (“Vision”).

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, 2016 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 in New York (“ACP Housing”), Florida (Creative Choice) and Michigan (Vision). 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, of which Creative Choice receives project based rental subsidy payments pursuant to a subsidy agreement, are subject to specific laws, regulations and agreements with federal and state agencies. The subsidy is scheduled to expire in 2019. 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 Creative Choice. As of December 31, 2015, the remaining Local Partnerships have outstanding mortgage loans payable totaling approximately $10,061,000 and accrued interest payable on such loans totaling approximately $1,982,000, 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 Trust sold its Local Partnership Interest in Ledge/McLaren Limited Partnership (“Ledge/McLaren”) to an affiliate of the Local General Partner of Ledge/McLaren; the Trust received $2,250 in connection with the sale. Such amount is included in gain (loss) 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, 2016. After accounting for its share of cumulative income, losses and distributions, the Trust’s investment in Ledge/McLaren had reached a zero balance prior to the sale.

During the year ended March 30, 2016, the Trust sold its Local Partnership Interest in SB-92 Limited Partnership (“SB-92”) to an affiliate of the Local General Partner of SB-92; the Trust received $5,000 in connection with the sale.  Such amount is included in gain (loss) 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, 2016. After accounting for its share of cumulative income, losses and distributions, the Trust’s investment in SB-92 had reached a zero balance prior to the sale.

During the year ended March 30, 2016, the Trust assigned its Local Partnership Interest in St. John Housing Associates, L.P. (“St. John Housing”) to an affiliate of the Local General Partner of St. John Housing; there were no proceeds in connection with the assignment. After accounting for its share of cumulative income, losses and distributions, the Trust recognized a loss of $278,795 in connection with the assignment as a write-off of its remaining investment balance. Such amount is included in gain (loss) 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, 2016.

For the years ended March 30, 2016 and 2015, the investment in local partnerships activity consists of the following:

	2016	2015
Investment in local partnerships as of March 30, 2015 and 2014	$       395,782	$   2,518,186
Distributions from Local Partnerships	(13,562)	(63,233)
Distributions classified as other income	13,562	3,000
Equity in loss of investment in local partnerships	(116,987)	(2,062,171)
Write-off of remaining investment balance in St. John Housing	(278,795)	--
Investment in local partnerships as of March 30, 2016 and 2015	$                 --	$       395,782

The Trust’s investment in St. John Housing represents more than 20% of the Trust’s total assets as of March 30, 2015 and the equity in loss 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, 2016. 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, 2015 and 2014:

	2015	2014
Total assets	$     5,137,079	$     5,245,539
Total liabilities	$     2,667,378	$     2,657,669
Revenue	$     1,227,965	$     1,465,166
Net income (loss)	$       (118,169)	$        139,221

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 $244,924 and $189,440 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.

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 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 difference between the Trust’s investment in local partnerships as of March 30, 2016 and the amount reflected as the Trust’s investment balance in the combined balance sheet of the Local Partnerships as of December 31, 2015 herein Note 5 represents cumulative Carrying Value adjustments made by the Trust in the amount of $2,701,800 and the Trust’s write-off of its investment in St. John Housing of $278,795 during the three months ended March 30, 2016 (see discussion above herein Note 5).  The difference between the Trust’s investment in local partnerships as of March 30, 2015 and the amount reflected as the Trust’s investment balance in the combined balance sheet of the Local Partnerships as of December 31, 2014 herein Note 5 represents cumulative Carrying Value adjustments made by the Trust in the amount of $2,908,850.

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 24 and 25, 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	$     1,940,725	$     2,072,949
Rents receivable	53,657	64,987
Escrow deposits and reserves	1,194,380	1,135,647
Land	768,599	965,272
Buildings and improvements (net of accumulated depreciation of $13,529,112 and $15,952,715)	10,683,023	13,533,052
Intangible assets (net of accumulated amortization of $127,547 and $125,312)	116,438	141,138
Other assets	194,842	275,483
	$   14,951,664	$   18,188,528
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses	$         314,872	$         460,365
Due to related parties	1,182,001	1,469,345
Mortgage loans	10,061,371	13,468,459
Notes payable	100,000	250,000
Accrued interest	1,981,767	2,123,968
Other liabilities	99,549	179,156
	13,739,560	17,951,293
Partners' equity (deficit)
American Tax Credit Trust, Series I
Capital contributions, net of distributions	6,817,784	7,932,118
Cumulative loss	(3,837,189)	(4,627,486)
	2,980,595	3,304,632
General partners and other limited partners
Capital contributions, net of distributions	164,176	151,353
Cumulative loss	(1,932,667)	(3,218,750)
	(1,768,491)	(3,067,397)
	1,212,104	237,235
	$   14,951,664	$   18,188,528

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	$   4,381,625	$   4,452,442
Interest and other	102,611	177,777
TOTAL REVENUE	4,484,236	4,630,219
EXPENSES
Administrative	616,161	620,777
Payroll	740,136	751,481
Utilities	696,193	730,609
Operating and maintenance	750,765	746,746
Taxes and insurance	440,622	393,738
Financial	512,515	507,431
Depreciation and amortization	972,702	822,868
TOTAL EXPENSES	4,729,094	4,573,650
NET INCOME (LOSS)	$     (244,858)	$         56,569
NET INCOME (LOSS) ATTRIBUTABLE TO
American Tax Credit Trust, Series I	$     (116,987)	$       137,829
General partners and other limited partners (includes    $244,924 and  $189,440 of Trust losses in excess of investment and specially allocated income of $119,503 and $107,614)	(127,871)	(81,260)
	$     (244,858)	$         56,569