5. Investment in Local Partnerships

12 Months Ended

Mar. 30, 2017

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, 2017, the Trust owns a 99% Local Partnership Interest in Creative Choice Homes VII, Ltd. (“Creative Choice”) and Vision Limited Dividend Housing Association Limited Partnership (“Vision”).  See discussion below herein Note 5 regarding the Trust’s sale of its Local Partnership Interest in Creative Choice subsequent to March 30, 2017.

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, 2017 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.

Vision owns a 97 unit subsidized and leveraged low-income multifamily residential complex located in Detroit, Michigan. 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 are subject to specific laws, regulations and agreements with federal and state agencies. As of December 31, 2016, the remaining Local Partnerships have outstanding mortgage loans payable, net of unamortized debt issuance costs, totaling approximately $6,137,000 and accrued interest payable on such loans totaling approximately $2,076,000, 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, 2017, the Trust sold its Local Partnership Interest in ACP Housing Associates, L.P. (“ACP Housing”) to an affiliate of the Local General Partner of ACP Housing; the Trust received $1,331,798 in connection with the sale. Such amount is reflected as 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, 2017.

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 year ended March 30, 2016, the investment in local partnerships activity consists of the following:

Investment in local partnerships as of March 30, 2015	$ 395,782
Distributions from Local Partnerships	(13,562)
Distributions classified as other income	13,562
Equity in loss of investment in local partnerships	(116,987)
Write-off of remaining investment balance in St. John Housing	(278,795)
Investment in local partnerships as of March 30, 2016	$ --

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 year ended December 31, 2015:

Total assets	$ 5,137,079
Total liabilities	$ 2,667,378
Revenue	$ 1,227,965
Net loss	$ (118,169)

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 $180,177 and $244,924 for the years ended December 31, 2016 and 2015, respectively, as reflected in the combined statements of operations of the Local Partnerships herein Note 5.

The difference between the Trust’s investment in local partnerships as of March 30, 2017 and the amount reflected as the Trust’s investment balance in the combined balance sheet of the Local Partnerships as of December 31, 2016 herein Note 5 represents cumulative Carrying Value adjustments made by the Trust (see Note 1). 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).

In June 2017, the Trust sold its Local Partnership Interest in Creative Choice to an unaffiliated third party.  The Trust received $900,000 in connection with the sale.

The combined balance sheets of the Local Partnerships as of December 31, 2016 and 2015 and the combined statements of operations of the Local Partnerships for the years then ended are reflected on pages 22 and 23, respectively. The combined balance sheets of the Local Partnerships as of December 31, 2016 and 2015 do not include any balances in connection with the Local Partnerships in which the Trust 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, 2016 and 2015 are as follows:

	2016	2015
ASSETS
Cash and cash equivalents	$ 179,344	$ 1,940,725
Rents receivable	28,960	53,657
Escrow deposits and reserves	1,296,653	1,194,380
Land	179,799	768,599
Buildings and improvements (net of accumulated depreciation of $7,820,447 and $13,529,112)	6,037,801	10,683,023
Intangible assets (net of accumulated amortization of $0 and $127,547)	--	116,438
Other assets	105,387	194,842
	$ 7,827,944	$ 14,951,664
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Accounts payable and accrued expenses	$ 39,284	$ 314,872
Due to related parties	861,622	1,182,001
Mortgage loans	6,136,502	10,061,371
Notes payable	100,000	100,000
Accrued interest	2,075,697	1,981,767
Other liabilities	53,034	99,549
	9,266,139	13,739,560
Partners' equity (deficit)
American Tax Credit Trust, Series I
Capital contributions, net of distributions	3,775,145	6,817,784
Cumulative loss	(3,273,345)	(3,837,189)
	501,800	2,980,595
General partners and other limited partners
Capital contributions, net of distributions	(5,897)	164,176
Cumulative loss	(1,934,098)	(1,932,667)
	(1,939,995)	(1,768,491)
	(1,438,195)	1,212,104
	$ 7,827,944	$ 14,951,664

The combined statements of operations of the Local Partnerships for the years ended December 31, 2016 and 2015 are as follows:

	2016	2015
REVENUE
Rental	$ 2,227,795	$ 4,381,625
Interest and other	121,318	102,611
TOTAL REVENUE	2,349,113	4,484,236
EXPENSES
Administrative	279,499	616,161
Payroll	303,714	740,136
Utilities	409,131	696,193
Operating and maintenance	473,314	750,765
Taxes and insurance	196,083	440,622
Financial	258,378	512,515
Depreciation and amortization	563,241	972,702
TOTAL EXPENSES	2,483,360	4,729,094
NET LOSS	$ (134,247)	$ (244,858)
NET LOSS ATTRIBUTABLE TO
American Tax Credit Trust, Series I	$               --	$ (116,987)
General partners and other limited partners (includes    $180,177 and $244,924 of Trust losses in excess of investment and specially allocated income of $47,273 and $119,503)	(134,247)	(127,871)
	$ (134,247)	$ (244,858)