NATIONAL TAX CREDIT PARTNERS, L.P.
55 Beattie Place, P.O. Box 1089
Greenville, SC 29602
August 12, 2005
Correspondence Filing Via Edgar and Overnight Delivery
United States Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 4561
450 Fifth Street, NW
Washington, D.C. 20549
Attn: Mr. Steven Jacobs
Re: National Tax Credit Partners, L.P.
Form 10-KSB for the year ended December 31, 2004
Filed April 15, 2005
File No. 0-18541
Ladies and Gentlemen:
This letter responds to the comments of the staff of the Securities and Exchange
Commission (the "Staff") addressed to National Tax Credit Partners, L.P., a
California limited partnership (the "Partnership"), in a letter dated August 1,
2005 which was sent in response to the Partnership's July 14, 2005 response to
the Staff's third comment letter dated June 15, 2005, which was sent in response
to the Partnership's June 9, 2005 response to the Staff's second comment letter
dated May 25, 2005, which was sent in response to the Partnership's May 10, 2005
response to the Staff's original comment letter dated April 26, 2005. The
Partnership's response to the Staff's comments are set forth below and are
numbered to correspond to the numbering of the Staff's comments in the Staff's
letter dated August 1, 2005.
* * * * *
Form 10-KSB for the year ended December 31, 2004
Financial Statements and Notes
Note 1 - Summary of Partnership Organization and Significant Accounting
Policies
Recent Accounting Pronouncements
1. Comment: We note that your reconsideration of paragraph 5(c)
resulted in the identification of two additional local limited
partnerships as variable interest entities. We also note your
disclosure in Note 3 that "NTC, or another affiliate of the General
Partner, is the Local Operating General Partner in 10 of the
Partnership's 19 Local Partnerships." Since Exhibit A to your July 14,
2005 response letter only identifies five VIE's where the local
general partner is an affiliate of AIMCO, please tell us how you
considered paragraph 5(c) with respect to the remaining five local
limited partnerships referenced in Note 3.
Response: The Partnership's disclosure in Note 3 was incorrect with
respect to the number of local limited partnerships in which NTC or
another affiliate of the general partner of the Partnership serves as
local operating general partner. The correct number of local limited
partnerships with NTC or another affiliate of the general partner of
the Partnership serving as local operating general partner was seven
at December 31, 2004. The Partnership adjusted its disclosure in its
Quarterly Report on Form 10-QSB for the quarterly period ended March
31, 2005 to reflect a total of six local limited partnerships in which
NTC or an affiliate of the general partner of the Partnership serves
as local operating general partner due to the sale of Countryview
Columbus during the three months ended March 31, 2005.
The accompanying Exhibit A to the July 14, 2005 response letter
provided the name of the general partner of each of the nine local
limited partnerships originally determined to be a variable interest
entity ("VIE"). The Partnership did not include the two additional
local limited partnerships discussed in the "Revised Determination of
VIEs and Planned Future Disclosure" in the Exhibit A to the July 14,
2005 letter. The Partnership has attached a revised Exhibit A to this
response that includes all eleven VIEs and information about the local
general partner.
2. Comment: We note your conclusion that the general partner is more
closely associated with the local limited partnership and therefore is
the primary beneficiary. Please explain to us in sufficient detail how
you considered and concluded on each of the indicators in paragraph 17
and your rationale for doing so. In your response, tell us how you
weighted each of these factors in arriving at your conclusion.
Response: The Partnership was asked by the Staff in its letter dated
May 25, 2005 to explain how the Partnership considered each of the
criteria in paragraph 17 for those variable interest entities in which
the other investor is a related party under paragraph 16. The
Partnership responded to this comment, along with other comments, in
its response letter dated June 9, 2005. The Partnership considered
each of the four factors in paragraph 17 and determined that these
factors indicated that the general partner is the member of the
related party group that is more closely associated with the local
limited partnerships and therefore is the primary beneficiary.
The Partnership provides below the text of the Partnership's June 9,
2005 response letter: "Having determined under paragraph 16 that a
related party relationship exists between the Partnership, the general
partner and, where applicable, the administrative general partner of
each local limited partnership identified as a VIE, the Partnership
considered the guidance in paragraph 17 to identify the primary
beneficiary of each partnership. Paragraph 17 of FIN 46R states, "If
two or more related parties (including the de facto agents described
in paragraph 16) hold variable interests in the same variable interest
entity, and the aggregate variable interest held by those parties
would, if held by a single party, identify that party as the primary
beneficiary, then the party, within the related party group, that is
most closely associated with the variable interest entity is the
primary beneficiary." The Partnership determined that the variable
interests held by the related party group, consisting of the
Partnership and the general partners, would, if held by a single
party, identify that party as the primary beneficiary. Accordingly,
the Partnership considered the guidance in paragraph 17 of FIN 46R to
determine the party within the related party group that is the primary
beneficiary.
Paragraph 17 goes on to state that:
"the determination of which party within the related party group is most
closely associated with the variable interest entity requires judgment and
shall be based on an analysis of all relevant facts and circumstances,
including:
a. The existence of a principal-agency relationship between parties
within the related party group
b. The relationship and significance of the activities of the variable
interest entity to the various parties within the related party group
c. A party's exposure to the expected losses of the variable interest
entity
d. The design of the variable interest entity."
The Partnership believes that in the application of paragraph 17 of FIN
46R, the factors listed need to be considered together in conjunction with
the structure of each local limited partnership and how the Partnership
believes other entities would view the roles of the general partner,
administrative general partner and the limited partner (i.e., the
Partnership).
This consideration revealed factors that individually could identify either
the general partner or the Partnership as the party with the
characteristics most closely associated with the respective local limited
partnerships.
Ultimately, as discussed below, the Partnership concluded that the general
partner is the party within the related party group that has the
characteristics most closely associated with the local limited
partnerships. Factors that the Partnership considered to be most relevant
include:
o Although the de facto agency relationships that were identified in
connection with paragraph 16 do not clearly indicate which party is
principal or agent, the Partnership believes that the general partner
and the administrative general partner have characteristics that are
commonly associated with the principal. In this regard, the
Partnership noted that the general partner and the administrative
general partner are the parties an outside entity would contact
regarding a local limited partnership matter. For example, regulatory
agencies, such as the Internal Revenue Service or the United States
Department of Housing and Urban Development would contact either the
general partner or the administrative general partner when necessary.
Similarly, the mortgage lenders would also contact the general partner
when necessary. In all instances the general partner and/or the
administrative general partner acts with authority in addressing these
matters.
o The Partnership noted that each general partner's relationship with
the local limited partnerships involves the following significant
activities related to its rights and obligations under the related
limited partnership agreements:
o The general partner shall manage and conduct the business of the local
limited partnership;
o Employees of the general partner (or its affiliates) are actively
involved in managing the operations of the local limited partnerships
o The general partner has the obligation to fund any recourse
obligations of the local limited partnership
o The general partner is authorized to borrow funds, execute and issue
mortgage notes and other evidences of indebtedness
o The general partner shall operate the local limited partnerships and
shall cause the management agents to manage the properties in such a
manner that the properties will be eligible to receive applicable tax
credits
o The general partner shall promptly take any and all action which may
be necessary or appropriate to perfect and maintain the local limited
partnership, as a limited partnership under state law, and to develop,
maintain, and operate the respective local limited partnerships in
accordance with provisions of the local limited partnership agreement
and applicable Federal, state and local laws and regulations
o The general partner shall cause the local limited partnership to
obtain and maintain at all times, insurance in such amounts and at
terms customary for a project similar to the local limited partnership
o The general partner is responsible for obtaining a management agent
for the respective local limited partnership
In addition, the local limited partnership agreements state that the
Partnership, as limited partner, shall not take part in the management or
control of the business of the local limited partnerships or have the
authority to bind the local limited partnerships.
These factors strongly indicate that the general partner is the party most
closely associated with the local limited partnerships.
Although the Partnership has not performed a quantitative analysis to determine
the relative exposures of the Partnership and general partners to the expected
losses of the respective local limited partnerships, the Partnership generally
believes that it would have the greatest exposure based on provisions in the
local limited partnership agreements that provide for profit and loss
allocations and distributions to the limited partner(s) in accordance with
ownership interest. The Partnership considered in this analysis the effects of
any voluntary advances made by the Partnership to the local limited
partnerships. These advances are designated a specific priority within the
distribution provisions of the local limited partnership agreements. The
Partnership's exposure to expected losses is greatly reduced for those local
limited partnerships in which the Partnership holds a limited partner interest
of less than 50% and/or does not have any voluntary advances outstanding.
Although the Partnership's generally greater exposure to expected losses is a
factor that tends to indicate the Partnership is the primary beneficiary, the
Partnership concluded that this factor is not sufficient to offset the other
factors described above which predominantly indicate that the general partner is
the party most closely associated with the local limited partnerships.
As an additional note, the Partnership is unable to make a clear determination
as to which parties were more involved with the design of the local limited
partnerships due to the length of time since the local limited partnerships were
created and the lack of individuals associated with that process available for
consultation. The Partnership presumes that both the general partner and the
Partnership were highly involved in the negotiation of local limited partnership
provisions. Those negotiations ultimately resulted in the general partner having
more substantial rights and obligations under each local limited partnership
agreement.
The Partnership concluded, based on its qualitative consideration of the factors
in paragraph 17 of FIN 46R as noted above, that the general partner is the party
in the related party group that is most closely associated with, and therefore
is the primary beneficiary of, the respective local limited partnership.
Accordingly, the Partnership is not the primary beneficiary of any of the nine
local limited partnerships identified as VIEs and is not required to consolidate
any of the local limited partnerships."
* * * * *
As requested by the Staff in its letter dated April 26, 2005, the Partnership
again acknowledges that: (a) the Partnership is responsible for the adequacy and
accuracy of the disclosure in the filings; (b) Staff comments or changes to
disclosure in response to Staff comments do not foreclose the Commission from
taking any action with respect to the filings; and (c) the Partnership may not
assert Staff comments as a defense in any proceeding initiated by the Commission
or any person under the federal securities laws of the United States.
If you have further questions regarding the information provided, please contact
the undersigned or Stephen Waters. Mr. Waters can be reached directly at (864)
239-1554 or by fax at (864) 239-5824.
Sincerely,
/s/ David R. Robertson
David R. Robertson
President and Chief Executive Officer
National Partnership Investments Corp.,
the general partner of National Tax
Credit Partners, L.P.
Exhibit A - Schedule of General Partners of the Local Limited Partnerships
GP an
AIMCO GP
Registrant Local Limited Partnership General Partner (GP) (1) Affiliate Consolidating
NTCP Comfed Qualified Housing LP XII Commercial Federal Realty No Unknown
Investors Corp.
NTCP Countryview Columbus, Ltd. (2) NTC, Inc. Yes No
NTCP Dickens Associates II D. Egidi No Unknown
NTCP Glenark Associates LP Rhode Island Housing & No Unknown
Mortgage Finance Corp.
NTCP Grinnell Park Apartments, LP NTC, Inc. Yes No
NTCP North Liberty Park LP NTC, Inc. Yes No
NTCP Summit Tax Credit Properties NTC, Inc. Yes No
I, LP
NTCP Summit Tax Credit Properties NTC, Inc. Yes No
II, LP
NTCP Summit Tax Credit Properties NTC, Inc. Yes No
III, LP
NTCP Tyrone Elderly Limited NTC, Inc. Yes No
Partnership
NTCP Vinton Park/School LP Roseland Redevelopment No Unknown
Company
(1) General Partner of the Local Limited Partnership
(2) Local Limited Partnership sold its investment property during the three
months ended March 31, 2005.