UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                       For the year ended March 31, 2006

                                       OR

| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

           For the transition period from           to
                                         -----------  -----------

                         Commission file number: 0-20058


                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
             (Exact name of registrant as specified in its charter)

                California                            33-0316953
             (State or other jurisdiction of        (I.R.S. Employer
             incorporation or organization)        Identification No.)

               17782 Sky Park Circle                    92614-6404
                 Irvine, CA                             (Zip Code)
              (Address of principal executive offices)

                                 (714) 662-5565
                               (Telephone number)


           Securities registered pursuant to Section 12(b) of the Act:

                                      NONE

           Securities registered pursuant to section 12(g) of the Act:

                      UNITS OF LIMITED PARTNERSHIP INTEREST
                                (Title of Class)

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act.

Yes       No   X
   -------  -------

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act.

Yes       No    X
   -------  -------


<PAGE>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

 Yes          No     X
    ----------  -----------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

Indicate by check mark whether the registrant is an accelerated filer.
Yes           No     X
   ----------   -----------

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):
Large   accelerated   filer      Accelerated   filer      Non-accelerated
filer   X                 ------                    ------
     --------

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
 Yes     No  x
    -----  -----

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common  equity,  as of
the last business day of the registrant's most recently  completed second fiscal
quarter.

                                  INAPPLICABLE

                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K  (e.g.,  Part I, Part II,  etc.)  into  which the  document  is
incorporated:  (1) Any  annual  report  to  security  holders;  (2) Any proxy or
information  statement;  and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the  Securities Act of 1933.  The listed  documents  should be clearly
described for identification  purposes (e.g.,  annual report to security holders
for fiscal year ended December 24, 1980).

                                      NONE

                                       2
<PAGE>

PART I.

Item 1.  Business

Organization

WNC California  Housing Tax Credits,  L.P.  ("CHTC" or the  "Partnership")  is a
California Limited  Partnership formed under the laws of the State of California
on September 15, 1988. The Partnership was formed to acquire limited partnership
interests or membership interests in other Local Limited Partnerships or limited
liability  companies  ("Local  Limited  Partnerships")  which  own  multi-family
housing complexes ("Housing Complexes") that are eligible for Federal low-income
housing tax credits ("Low Income Housing Tax Credits").

The  general   partners  of  the   Partnership   are  WNC  &  Associates,   Inc.
("Associates") and Wilfred N. Cooper, Sr.  (collectively,  the "General Partner"
or  "General   Partners").   The  chairman  and  president  of  Associates   own
substantially  all of the outstanding  stock of Associates.  The business of the
Partnership is conducted primarily through Associates, as the Partnership has no
employees of its own.

Pursuant to a  registration  statement  filed with the  Securities  and Exchange
Commission,  on March 16, 1989, the  Partnership  commenced a public offering of
10,000 units of limited partnership  interest ("Units") at a price of $1,000 per
Unit.  As of the close of the public  offering on October 31,  1990,  a total of
7,450 Units representing $7,450,000 had been sold. Holders of Units are referred
to herein as "Limited  Partners".

The Partnership shall continue to be in full force and effect until December 31,
2037 unless terminated prior to that date pursuant to the Partnership  Agreement
(as defined below) or law.

Description of Business

The  Partnership's  principal  business  objective  is to  provide  its  Limited
Partners with Low Income Housing Credits.  The Partnership's  principal business
consists  of  investing  as a limited  partner or  non-managing  member in Local
Limited  Partnerships  each of which owns and  operates a  multi-family  housing
complex  (the  "Housing  Complexes")  which  qualify for the Low Income  Housing
Credits. In general,  under Section 42 of the Internal Revenue Code, an owner of
low-income  housing  can  receive  the Low Income  Housing  Credit to be used to
reduce Federal taxes otherwise due in each year of a ten-year credit period.  In
general,  under Section 17058 of the  California  Revenue and Taxation  Code, an
owner of low-income housing can receive the California Low Income Housing Credit
to be used against  California  taxes  otherwise due in each year of a four-year
period.  Each  Housing  Complex is subject to a 15 year  compliance  period (the
"Compliance  Period"),  and  under  state law may have to be  maintained  as low
income housing for 30 or more years.

In general,  in order to avoid  recapture  of Low Income  Housing  Credits,  the
Partnership  does not  expect  that it will  dispose of its  interests  in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited  Partnership of its Housing Complex prior to the end of the
applicable  Compliance  Period.  Because  of  (i)  the  nature  of  the  Housing
Complexes,  (ii) the  difficulty of predicting  the resale market for low-income
housing and (iii) the ability of  government  lenders to disapprove of transfer,
it is not  possible  at this time to  predict  whether  the  liquidation  of the
Partnership's assets and the disposition of the proceeds,  if any, in accordance
with the  Partnership's  Agreement of Limited  Partnership,  dated September 15,
1988 (the "Partnership Agreement"),  will be accomplished promptly at the end of
the  Compliance  Period.  If a Local Limited  Partnership  is unable to sell its
Housing  Complex,  it is  anticipated  that the local  general  partner  ("Local
General  Partner") will either  continue to operate such Housing Complex or take
such  other  actions as the Local  General  Partner  believes  to be in the best
interest  of the  Local  Limited  Partnership.  Notwithstanding  the  preceding,
circumstances  beyond the  control of the General  Partner or the Local  General
Partners  may occur  during the  Compliance  Period,  which  would  require  the
Partnership  to approve the  disposition  of a Housing  Complex prior to the end
thereof, possibly resulting in recapture of Low Income Housing Credits.

The  Partnership  invested in eleven Local Limited  Partnerships,  none of which
have been sold or otherwise  disposed as of March  31,2006.  Each of these Local
Limited  Partnerships  owns a Housing  Complex that was eligible for the Federal
Low Income Housing Credit and eight of them were eligible for the California Low
Income Housing Credit.  Certain Local Limited Partnerships may also benefit from
additional government programs promoting low- or moderate-income housing.

                                       3
<PAGE>

Certain Risks and Uncertainties

Item 1A.  Risk Factors

Set forth below are the principal risks the Partnership believes are material to
the Limited Partners. The Partnership and the Local Limited Partnerships operate
in a continually changing business environment and, therefore,  new risks emerge
from time to time. This section contains some forward-looking statements. For an
explanation of the qualifications and limitations on forward-looking statements,
see Item 7.

(a)  Risks  arising from the Internal  Revenue Code rules  governing  Low Income
     Housing Tax Credits

Unless a bond is posted or a Treasury Direct Account is established,  Low Income
Housing Tax Credits may be  recaptured  if Housing  Complexes  are not owned and
operated for 15 years.  Housing Complexes must comply with Internal Revenue Code
Section 42 for the 15-year  Compliance  Period.  Low Income  Housing Tax Credits
will be  recaptured  with  interest to the extent that a Housing  Complex is not
rented  as low  income  housing  or in some  other  way  does  not  satisfy  the
requirements of Internal  Revenue Code Section 42 during the Compliance  Period.
For  example,  unless  a  bond  is  posted  or  a  Treasury  Direct  Account  is
established, recapture with interest would occur if:

     o    a Local  Limited  Partnership  disposed  of its  interest in a Housing
          Complex during the Compliance Period, or
     o    the   Partnership   disposed  of  its  interest  in  a  Local  Limited
          Partnership during the Compliance Period.

For these purposes, disposition includes transfer by way of foreclosure.

It will be up to the Partnership to determine  whether to post a bond.  There is
no obligation under the agreements with the Local Limited  Partnerships that the
Local Limited Partnerships must do so.

There can be no assurance that recapture will not occur.  If it does,  recapture
will be a portion of all credits taken in prior years for that Housing  Complex,
plus   interest.   During  the  first  11  years  of  the   Compliance   Period,
non-compliance  results  in  one-third  of the  credits up to that point for the
particular Housing Complex being recaptured, plus interest. Between years 12 and
15, the recapture is phased out ratably.

     Sales of Housing  Complexes after 15 years are subject to limitations which
may impact a Local Limited  Partnership's  ability to sell its Housing  Complex.
Each  Local  Limited  Partnership   executes  an  extended  low  income  housing
commitment with the state in which the Housing Complex is located.  The extended
low income housing  commitment states the number of years that the Local Limited
Partnership  and any  subsequent  owners  must rent the  Housing  Complex as low
income housing. Under Federal law, the commitment must be for at least 30 years.
The commitment,  actually agreed to, may be significantly  longer than 30 years.
In prioritizing  applicants for Low Income Housing Tax Credits, most states give
additional  points for commitment  periods in excess of 30 years. On any sale of
the Housing  Complex during the commitment  period,  the purchaser would have to
agree to  continue  to rent the  Housing  Complex as low income  housing for the
duration of the  commitment  period.  This  requirement  reduces  the  potential
market, and possibly the sales price, for the Housing  Complexes.  The sale of a
Housing  Complex  may be subject to other  restrictions.  For  example,  Federal
lenders or subsidizers may have the right to approve or disapprove a purchase of
a Housing Complex.  Accordingly,  there can be no assurance that a Local Limited
Partnership will be able to sell its Housing Complex.  Even if it does so, there
can be no assurance that any  significant  amount of cash will be distributed to
the Limited Partners.  As a result, a material portion of the Low Income Housing
Tax  Credits  may  represent  a return of the money  originally  invested in the
Partnership.

(b)  Risks  related to  investment  in Local  Limited  Partnerships  and Housing
     Complexes

     Because the  Partnership has few  investments,  each investment will have a
great impact on the  Partnership's  results of  operations.  Any single  Housing
Complex  experiencing  poor  operating  performance,   impairment  of  value  or
recapture of Low Income Housing Tax Credits will have a significant  impact upon
the Partnership as a whole.

                                       4
<PAGE>

     The failure to pay mortgage debt could result in a forced sale of a Housing
Complex. Each Local Limited Partnership  leverages the Partnership's  investment
therein by incurring mortgage debt. A Local Limited Partnership's revenues could
be less than its debt payments and taxes and other  operating  costs. If so, the
Local  Limited  Partnership  would have to use working  capital  reserves,  seek
additional  funds, or suffer a forced sale of its Housing  Complex,  which could
include a  foreclosure.  The same results  could occur if  government  subsidies
ceased. Foreclosure would result in a loss of the Partnership's capital invested
in the Housing  Complex.  Foreclosure  could also  result in a recapture  of Low
Income Housing Tax Credits, and a loss of Low Income Housing Tax Credits for the
year  in  which   the   foreclosure   occurs.   If  the   Housing   Complex   is
highly-leveraged,  a relatively  slight  decrease in the rental  revenues  could
adversely affect the Local Limited Partnership's ability to pay its debt service
requirements.  Mortgage  debt may be  repayable in a  self-amortizing  series of
equal  installments  or with a large balloon  final  payment.  Balloon  payments
maturing  prior to the end of the  anticipated  holding  period for the  Housing
Complex create the risk of a forced sale if the debt cannot be refinanced. There
can be no assurance that additional funds will be available to any Local Limited
Partnership if needed on acceptable terms or at all.

     The Partnership  does not control the Local Limited  Partnerships  and must
rely on the Local General  Partners.  The Local  General  Partners will make all
management  decisions  for  the  Local  Limited  Partnerships  and  the  Housing
Complexes. The Partnership has very limited rights with respect to management of
the Local Limited Partnerships. The Partnership will not be able to exercise any
control  with  respect  to Local  Limited  Partnership  business  decisions  and
operations.  Consequently,  the  success of the  Partnership  will depend on the
abilities of the Local General Partners.

     Projects  subsidized by other government programs are subject to additional
rules which may make it difficult to operate and sell Housing Complexes. Some or
all of the Housing  Complexes  receive or may receive  government  financing  or
operating subsidies in addition to Low Income Housing Tax Credits. The following
are risks associated with some such subsidy programs:

     o    Obtaining tenants for the Housing  Complexes.  Government  regulations
          limit the  types of  people  who can rent  subsidized  housing.  These
          regulations may make it more difficult to rent the  residential  units
          in the Housing Complexes.
     o    Obtaining  rent  increases.  In many cases rents can only be increased
          with the prior approval of the subsidizing agency.
     o    Limitations  on cash  distributions.  The  amount  of cash that may be
          distributed to owners of subsidized Housing Complexes is less than the
          amount  that could be earned by the owners of  non-subsidized  Housing
          Complexes.
     o    Limitations on sale or refinancing of the Housing  Complexes.  A Local
          Limited  Partnership  may be unable to sell its Housing  Complex or to
          refinance  its  mortgage  loan  without  the  prior  approval  of  the
          subsidizer.   The   subsidizer  may  withhold  such  approval  in  the
          discretion of the  subsidizer.  Approval may be subject to conditions,
          including  the condition  that the purchaser  continues to operate the
          property as affordable  housing for terms which could be as long as 30
          years or more. In addition, any prepayment of a mortgage may result in
          the assessment of a prepayment penalty.
     o    Limitations  on transfers of interests in Local Limited  Partnerships.
          The  Partnership may be unable to sell its interest in a Local Limited
          Partnership  without  the  prior  approval  of  the  subsidizer.   The
          subsidizer  may  withhold  such  approval  in  the  discretion  of the
          subsidizer.  Approval may be subject to  conditions.  o Limitations on
          removal and admission of Local General  Partners.  The Partnership may
          be unable  to  remove a Local  General  Partner  from a Local  Limited
          Partnership  except for cause,  such as the  violation of the rules of
          the  subsidizer.  Regulations  may  prohibit  the  removal  of a Local
          General  Partner or permit removal only with the prior approval of the
          subsidizer.  Regulations may also require approval of the admission of
          a  successor  Local  General  Partner  even  upon  the  death or other
          disability of a Local General Partner.
     o    Limitations  on subsidy  payments.  Subsidy  payments  may be fixed in
          amount and subject to annual  legislative  appropriations.  The rental
          revenues  of  a  Housing  Complex,  when  combined  with  the  maximum
          committed subsidy,  may be insufficient to meet obligations.  Congress
          or the state legislature,  as the case may be, may fail to appropriate
          or increase  the  necessary  subsidy.  In those  events,  the mortgage
          lender  could  foreclose  on the  Housing  Complex  unless  a  workout
          arrangement could be negotiated.

                                       5
<PAGE>

     o    Possible changes in applicable regulations. Legislation may be enacted
          which adversely revises provisions of outstanding mortgage loans. Such
          legislation has been enacted in the past.
     o    Limited Partners may not receive  distributions  if Housing  Complexes
          are sold. There is no assurance that Limited Partners will receive any
          cash  distributions from the sale or refinancing of a Housing Complex.
          The price at which a Housing Complex is sold may not be high enough to
          pay the mortgage and other  expenses  which must be paid at such time.
          If that happens,  a Limited  Partner's return may be derived only from
          the Low Income Housing Tax Credits and tax losses.

     Uninsured  casualties  could  result in  losses  and  recapture.  There are
casualties  which are either  uninsurable or not economically  insurable.  These
include earthquakes,  floods, wars and losses relating to hazardous materials or
environmental  matters.  If a Housing Complex experienced an uninsured casualty,
the Partnership could lose both its invested capital and anticipated  profits in
such  property.  Even if the casualty  were an insured  loss,  the Local Limited
Partnership  might be unable to rebuild  the  destroyed  property.  A portion of
prior tax credits  could be  recaptured  and future tax credits could be lost if
the Housing  Complex were not restored  within a reasonable  period of time. And
liability judgments against the Local Limited Partnership could exceed available
insurance  proceeds  or  otherwise  materially  and  adversely  affect the Local
Limited Partnership.  The cost of liability and casualty insurance has increased
in recent years.  Casualty insurance has become more difficult to obtain and may
require large deductible amounts.

     Housing Complexes without financing or operating subsidies may be unable to
pay  operating  expenses.  If a Local  Limited  Partnership  were  unable to pay
operating expenses, one result could be a forced sale of its Housing Complex. If
a forced sale occurs during the first 15 years of a Housing  Complex,  a partial
recapture of Low Income Housing Tax Credits could occur. In this regard, some of
the Local Limited Partnerships may own Housing Complexes which have no subsidies
other than Low Income Housing Tax Credits.  Those Housing  Complexes do not have
the benefit of below-market-interest-rate financing or operating subsidies which
often are  important to the  feasibility  of low income  housing.  Those Housing
Complexes  rely  solely  on rents to pay  expenses.  However,  in order  for any
Housing  Complex to be  eligible  for Low Income  Housing Tax  Credits,  it must
restrict the rent which may be charged to tenants.  Over time, the expenses of a
Housing Complex will increase.  If a Local Limited  Partnership  cannot increase
its rents, it may be unable to pay increased operating expenses.

     The Partnership's  investment  protection policies will be worthless if the
net worth of the Local  General  Partners  is not  sufficient  to satisfy  their
obligations.  There is a risk that the Local General  Partners will be unable to
perform their financial obligations to the Partnership.  The General Partner has
not established a minimum net worth  requirement for the Local General Partners.
Rather,  each Local General  Partner  demonstrates a net worth which the General
Partner believes is appropriate under the circumstances. The assets of the Local
General  Partners are likely to consist  primarily  of real estate  holdings and
similar  assets.  The fair market value of these types of assets is difficult to
estimate.  These  types of assets  cannot be readily  liquidated  to satisfy the
financial  guarantees and commitments  which the Local General  Partners make to
the Partnership.  Moreover,  other creditors may have claims on these assets. No
escrow  accounts or other  security  arrangements  will be established to ensure
performance  of a Local  General  Partner's  obligations.  The cost to enforce a
Local General Partner's obligations may be high. If a Local General Partner does
not satisfy its obligations  the  Partnership may have no remedy,  or the remedy
may be limited to removing the Local General  Partner as general  partner of the
Local Limited Partnership.

     Fluctuating  economic  conditions can reduce the value of real estate.  Any
investment  in real  estate  is  subject  to  risks  from  fluctuating  economic
conditions.  These  conditions  can  adversely  affect the  ability to realize a
profit or even to recover invested capital. Among these conditions are:

     o    the general and local job market,
     o    the availability and cost of mortgage financing,
     o    monetary inflation,
     o    tax, environmental, land use and zoning policies,
     o    the supply of and demand for similar properties,
     o    neighborhood conditions,
     o    the availability and cost of utilities and water.

                                       6
<PAGE>

(c)      Tax risks other than those relating to tax credits

In addition to the risks pertaining specifically to tax credits, there are other
Federal income tax risks.  Additional  Federal income tax risks  associated with
the  ownership  of Units and the  operations  of the  Partnership  and the Local
Limited Partnerships include, but are not limited to, the following:

          No  opinion of counsel  as to  certain  matters.  No legal  opinion is
          obtained regarding matters:

     o    the determination of which depends on future factual circumstances,
     o    which are peculiar to individual Limited Partners, or
     o    which are not customarily the subject of an opinion.

The more significant of these matters include:

     o    allocating purchase price among components of a property, particularly
          as between  buildings and fixtures,  the cost of which is depreciable,
          and the underlying land, the cost of which is not depreciable,
     o    characterizing  expenses and payments made to or by the Partnership or
          a Local Limited Partnership,
     o    identifying  the  portion of the costs of any  Housing  Complex  which
          qualify for historic and other tax credits,
     o    Applying to any specific  Limited Partner the limitation on the use of
          tax  credits and tax  losses.  Limited  Partners  must  determine  for
          themselves  the  extent  to  which  they can use tax  credits  and tax
          losses, and
     o    the application of the alternative minimum tax to any specific Limited
          Partner,  or the  calculation  of the  alternative  minimum tax by any
          Limited  Partner.  The  alternative  minimum tax could  reduce the tax
          benefits from an investment in the Partnership.

There can be no assurance,  therefore,  that the IRS will not challenge  some of
the tax positions  adopted by the  Partnership.  The courts could sustain an IRS
challenge. An IRS challenge,  if successful,  could have a detrimental effect on
the Partnership's ability to realize its investment objectives.

     Passive activity rules will limit deduction of the Partnership's losses and
impose tax on interest  income.  The Internal Revenue Code imposes limits on the
ability of most investors to claim losses from  investments  in real estate.  An
individual may claim these so-called  passive losses only as an offset to income
from  investments  in real estate or rental  activities.  An individual  may not
claim  passive  losses as an  offset  against  other  types of  income,  such as
salaries,  wages,  dividends and interest.  These  passive  activity  rules will
restrict the ability of most Limited Partners to use losses from the Partnership
as an offset of non-passive income.

     The  Partnership  may earn interest  income on its reserves and loans.  The
passive activity rules generally will categorize  interest as portfolio  income,
and not passive income.  Passive losses cannot be used as an offset to portfolio
income.  Consequently,  a Limited  Partner  could pay tax liability on portfolio
income from the Partnership.

     At risk rules might  limit  deduction  of the  Partnership's  losses.  If a
significant portion of the financing used to purchase Housing Complexes does not
consist of  qualified  nonrecourse  financing,  the "at risk" rules will limit a
Limited Partner's ability to claim Partnership  losses to the amount the Limited
Partner invests in the Partnership.  The "at risk" rules of the Internal Revenue
Code generally limit a Limited Partner's ability to deduct Partnership losses to
the sum of:

     o    the amount of cash the Limited Partner invests in the Partnership, and
     o    the  Limited  Partner's  share of  Partnership  qualified  nonrecourse
          financing.

Qualified  nonrecourse  financing is non-convertible,  nonrecourse debt which is
borrowed  from a  government,  or  with  exceptions,  any  person  actively  and
regularly engaged in the business of lending money.


                                       7
<PAGE>

     Tax  liability  on sale of  Housing  Complex or Local  Limited  Partnership
Interest  may  exceed the cash  available  from the sale.  When a Local  Limited
Partnership  sells a Housing  Complex it will recognize gain. Such gain is equal
to the difference between:

     o    the sales  proceeds  plus the  amount of  indebtedness  secured by the
          Housing Complex, and
     o    the adjusted basis for the Housing  Complex.  The adjusted basis for a
          Housing Complex is its original cost, plus capital expenditures, minus
          depreciation.

Similarly, when the Partnership sells an interest in a Local Limited Partnership
the  Partnership  will  recognize  gain.  Such  gain is equal to the  difference
between:

     o    the  sales  proceeds  plus the  Partnership's  share of the  amount of
          indebtedness secured by the Housing Complex, and
     o    the  adjusted  basis  for the  interest.  The  adjusted  basis  for an
          interest  in a Local  Limited  Partnership  is the amount paid for the
          interest,  plus income allocations and cash  distributions,  less loss
          allocations.

Accordingly,  gain will be increased by the depreciation deductions taken during
the holding period for the Housing  Complex.  In some cases,  a Limited  Partner
could have a tax liability from a sale greater than the cash  distributed to the
Limited Partner from the sale.

     Alternative  minimum tax  liability  could reduce a Limited  Partner's  tax
benefits. If a Limited Partner pays alternative minimum tax, the Limited Partner
could suffer a reduction in benefits from an investment in the Partnership.  The
application of the alternative  minimum tax is personal to each Limited Partner.
Tax credits may not be utilized to reduce alternative minimum tax liability.

     IRS  could  audit  the  returns  of  the  Partnership,  the  Local  Limited
Partnerships  or the Limited  Partners.  The IRS can audit the  Partnership or a
Local Limited  Partnership  at the entity level with regard to issues  affecting
the  entity.  The IRS does not have to audit  each  Limited  Partner in order to
challenge a position taken by the  Partnership  or a Local Limited  Partnership.
Similarly,  only  one  judicial  proceeding  can  be  filed  to  contest  an IRS
determination.  A contest  by the  Partnership  of any IRS  determination  might
result in high legal fees.

     An audit of the  Partnership  or a Local  Limited  Partnership  also  could
result in an audit of a Limited  Partner.  An audit of a Limited  Partner's  tax
returns  could  result in  adjustments  both to items  that are  related  to the
Partnership and to unrelated  items.  The Limited Partner could then be required
to file amended tax returns and pay additional tax plus interest and penalties.

     A successful IRS challenge to tax allocations of the Partnership or a Local
Limited  Partnership  would  reduce the tax  benefits  of an  investment  in the
Partnership.  Under the Internal  Revenue  Code, a  partnership's  allocation of
income, gains, deductions, losses and tax credits must have substantial economic
effect.   Substantial  economic  effect  is  a  highly-technical   concept.  The
fundamental  principle is two-fold.  If a partner will benefit economically from
an item of  partnership  income or gain,  that item must be  allocated to him so
that he bears the correlative tax burden.  Conversely,  if a partner will suffer
economically  from an item of partnership  deduction or loss,  that item must be
allocated  to  him  so  that  he  bears  the  correlative  tax  benefit.   If  a
partnership's  allocations do not have  substantial  economic  effect,  then the
partnership's tax items are allocated in accordance with each partner's interest
in the  partnership.  The  IRS  might  challenge  the  allocations  made  by the
Partnership:

     o    between the Limited Partners and the General Partner,
     o    among the Limited Partners, or
     o    between the Partnership and a Local General Partner.

If any allocations were successfully  challenged,  a greater share of the income
or gain or a lesser share of the losses or tax credits might be allocated to the
Limited  Partners.  This  would  increase  the tax  liability  or reduce the tax
benefits to the Limited Partners.


                                       8
<PAGE>

     Tax  liabilities  could  arise in later years of the  Partnership.  After a
period  of  years  following  commencement  of  operations  by a  Local  Limited
Partnership,  the Local Limited  Partnership  may generate  profits  rather than
losses.  A Limited Partner would have tax liability on his share of such profits
unless he could offset the income with:

     o    unused passive losses from the Partnership or other investments, or
     o    current passive losses from other investments.

In such circumstances, the Limited Partner would not receive a cash distribution
from the Partnership with which to pay any tax liability.

     IRS challenge to tax treatment of expenditures could reduce losses. The IRS
may  contend  that  fees and  payments  of the  Partnership  or a Local  Limited
Partnership:

     o    should be deductible over a longer period of time or in a later year,
     o    are excessive and may not be capitalized or deducted in full,
     o    should be capitalized and not deducted, or
     o    may not be included as part of the basis for computing tax credits.

Any such contention by the IRS could adversely impact, among other things:

     o    the  eligible  basis of a Housing  Complex  used to compute Low Income
          Housing Tax Credits,
     o    the adjusted basis of a Housing Complex used to compute depreciation,
     o    the correct deduction of fees,
     o    the  amortization of organization  and offering  expenses and start-up
          expenditures.

If the IRS were successful in any such  contention,  the anticipated tax credits
and losses of the Partnership would be reduced, perhaps substantially.

     Changes  in tax law  might  reduce  the  value of Low  Income  Housing  Tax
Credits.  Although all Low Income Housing Tax Credits are allocated to a Housing
Complex at commencement of the 10-year credit period,  there can be no assurance
that  future   legislation  may  not  adversely  affect  an  investment  in  the
Partnership. For example, legislation could reduce or eliminate the value of Low
Income  Housing Tax Credits.  In this regard,  before 1986,  the  principal  tax
benefit of an investment in low income housing was tax losses.  These tax losses
generally  were  used to reduce  an  investor's  income  from all  sources  on a
dollar-for-dollar basis. Investments in low income housing were made in reliance
on the availability of such tax benefits.  However,  tax legislation  enacted in
1986 severely curtailed deduction of such losses.

     New administrative or judicial  interpretations of the law might reduce the
value of tax  credits.  Many of the  provisions  of the  Internal  Revenue  Code
related  to low  income  housing  and  real  estate  investments  have  not been
interpreted by the IRS in regulations,  rulings or public  announcements,  or by
the courts.  In the future,  these provisions may be interpreted or clarified by
the IRS or the  courts  in a manner  adverse  to the  Partnership  or the  Local
Limited Partnerships.  The IRS constantly reviews the Federal tax rules, and can
revise its  interpretations  of established  concepts.  Any such revisions could
reduce  or  eliminate  tax  benefits   associated  with  an  investment  in  the
Partnership.

     State income tax laws may adversely affect the Limited Partners.  A Limited
Partner  may be  required  to file  income tax returns and be subject to tax and
withholding  in each  state or local  taxing  jurisdiction  in which:  a Housing
Complex is located,  the Partnership or a Local Limited  Partnership  engages in
business  activities,  or the Limited Partner is a resident.  Corporate  Limited
Partners may be required to pay state franchise taxes.

     The tax treatment of particular  items under state or local income tax laws
may vary  materially  from the  Federal  income  tax  treatment  of such  items.
Nonetheless,  many of the Federal income tax risks associated with an investment
in the  Partnership  may also apply  under  state or local  income tax law.  The
Partnership may be required to withhold state taxes from distributions or income
allocations to Limited Partners in some instances.


                                       9
<PAGE>

(d) Risks related to the Partnership and the Partnership Agreement

     The  Partnership may be unable to timely provide  financial  reports to the
Limited   Partners  which  would  adversely  affect  their  ability  to  monitor
Partnership  operations.  Each  Local  General  Partner  is  required  to retain
independent  public  accountants  and to  report  financial  information  to the
Partnership  in a timely  manner.  There cannot be any assurance  that the Local
General Partners will satisfy these  obligations.  If not, the Partnership would
be unable to provide to the Limited  Partners in a timely  manner its  financial
statements and other reports. That would impact the Limited Partners' ability to
monitor  Partnership  operations.  The Partnership's  failure to meet its filing
requirements  under  the  Securities  Exchange  Act of  1934  could  reduce  the
liquidity  for  the  Units  due  to the  unavailability  of  public  information
concerning the  Partnership.  The failure to file could also result in sanctions
imposed by the SEC. Any defense  mounted by the  Partnership in the face of such
sanctions could entail legal and other fees, which would diminish cash reserves.

     Lack of liquidity of  investment.  It is unlikely that a public market will
develop for the purchase and sale of Units.  Accordingly,  Limited  Partners may
not be able to sell their Units promptly or at a reasonable price.  Units should
be considered as a long-term  investment  because the Partnership is unlikely to
sell any Local Limited Partnership Interests for at least 15 years. Units cannot
be transferred to tax-exempt or foreign entities, or through a secondary market.
The General Partner can deny  effectiveness  of a transfer if necessary to avoid
adverse  tax  consequences  from the  transfer.  The  General  Partner  does not
anticipate that any Units will be redeemed by the Partnership.

     The Limited Partners will not control the Partnership and must rely totally
on the General Partner.  The General Partner will make all management  decisions
for the Partnership.  Management  decisions include exercising powers granted to
the Partnership by a Local Limited  Partnership.  Limited Partners have no right
or power to take part in Partnership management.

Individual  Limited Partners will have no recourse if they disagree with actions
authorized  by a vote of the  majority.  The  Partnership  Agreement  grants  to
Limited Partners owning more than 50% of the Units the right to:

     o    remove the General Partner and elect a replacement general partner,
     o    amend the Partnership Agreement,
     o    terminate the Partnership.

Accordingly, a majority-in-interest of the Limited Partners could cause any such
events to occur,  even if Limited  Partners owning 49% of the Units opposed such
action.

     Limitations  on liability of the General  Partner to the  Partnership.  The
ability of Limited  Partners to sue the General  Partner  and it  affiliates  is
subject to limitations.  The Partnership  Agreement  limits the liability of the
General Partner and it affiliates to the Limited  Partners.  The General Partner
and it  affiliates  will not be  liable  to the  Limited  Partners  for acts and
omissions:  performed  or omitted in good faith,  and  performed or omitted in a
manner which the General Partner  reasonably  believed to be within the scope of
its authority and in the best  interest of the Limited  Partners,  provided such
conduct did not constitute negligence or misconduct.

Therefore,  Limited  Partners may be less able to sue the General Partner and it
affiliates  than would be the case if such  provisions  were not included in the
Partnership Agreement.

     Payment of fees to the General  Partner  and its  affiliates  reduces  cash
available for investment in Local Limited Partnerships.  The General Partner and
it affiliates perform many services for the Partnership.  They are paid fees for
these services,  which reduce the amount of the cash available for investment in
Local Limited Partnerships. Accordingly, an investor investing directly in a low
income  housing  Housing  Complex  would  have a greater  amount  available  for
investment  than  an  investor  investing  in low  income  housing  through  the
Partnership.

     Associates and its  affiliates are serving as the general  partners of many
other  partnerships.  Depending on their corporate area of  responsibility,  the
officers of Associates initially devote approximately 5% to 50% of their time to
the Partnership.  These individuals spend significantly less time devoted to the
Partnership after the investment of the  Partnership's  capital in Local Limited
Partnerships.


                                       10
<PAGE>

     The  interests of Limited  Partners may conflict  with the interests of the
General Partner and its  affiliates.  The General Partner and its affiliates are
committed to the  management  of more than 100 other limited  partnerships  that
have investments  similar to those of the  Partnership.  The General Partner and
its affiliates receive substantial compensation from the Partnership.

     Anticipated  future and existing cash resources of the  Partnership are not
sufficient   to  pay  existing   liabilities   of  the   Partnership.   However,
substantially all of the existing  liabilities of the Partnership are payable to
the General  Partner and/or its  affiliates.  Though the amounts  payable to the
General Partner and/or its affiliates are contractually  currently payable,  the
Partnership  anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual  obligations until capital reserves are
in excess of the aggregate of then  existing  contractual  obligations  and then
anticipated future foreseeable  obligations of the Partnership.  The Partnership
would be adversely  affected  should the General  Partner  and/or its affiliates
demand current  payment of the existing  contractual  obligations and or suspend
services for this or any other reason.

Item 1B.  Unresolved Staff Comments

NONE

Exit Strategy

The IRS  Compliance  Period for  low-income  housing  tax credit  properties  is
generally  15  years  following   construction  or  rehabilitation   completion.
Associates was one of the first in the industry to offer syndicated  investments
in Low Income Housing Tax Credits.  The initial  programs are  completing  their
compliance periods.

With that in mind,  the General  Partner is continuing its review of the Housing
Complexes,  with special emphasis on the more mature properties such as any that
have  satisfied  the IRS  compliance  requirements.  The review  considers  many
factors,  including  extended  use  requirements  (such as those due to mortgage
restrictions  or state  compliance  agreements),  the  condition  of the Housing
Complex,  and the tax  consequences to the Limited Partners from the sale of the
Housing Complex.

Upon  identifying  those  Housing  Complexes  with the highest  potential  for a
successful sale, refinancing or syndication,  the Partnership expects to proceed
with  efforts to  liquidate  them.  The  objective  is to  maximize  the Limited
Partners'  return  wherever   possible  and,   ultimately,   to  wind  down  the
Partnership.  Local Limited Partnership interests may be disposed of any time by
the  General  Partner  in its  discretion.  While  liquidation  of  the  Housing
Complexes continues to be evaluated,  the dissolution of the Partnership was not
imminent as of March 31, 2006 and  therefore  the  Partnership  continues  to be
accounted for as a going concern.

As of March 31, 2006, no Housing  Complexes  had been selected for  disposition.
Subsequent to year-end the Partnership identified one Local Limited Partnership,
BCA  Associates,  for  disposition.  BCA  Associates  has  completed its 15-year
compliance  period,  a Proxy was filed with the SEC on June 23, 2006. All of the
Local Limited  Partnerships  have completed the 15-year  compliance period as of
March 31, 2006.

Properties Identified for Disposition

The  Partnership has identified one Local Limited  Partnership,  BCA Associates,
("BCA") for disposition.  BCA owns the Battle Creek Senior Apartments located in
Anderson, California (the "Property"). Consistent with the investment objectives
of the  Partnership,  the Property  qualified for Federal low income housing tax
credits under the Internal Revenue Code for a 10-year period.  The credit period
has expired,  and no further  credits are being  generated by the Property.  The
15-year Federal compliance period has also expired,  so there would be no credit
recapture upon a transfer of the Property.

On June 23, 2006, the Partnership filed a proxy with the Securities and Exchange


                                       11

<PAGE>

Commission for the written consent of the Limited  Partners for the commencement
of the disposition. An affiliate of the General Partners executed a Purchase and
Sales  Agreement  on July  21,  2006  for the  purchase  of the  Property  at an
anticipated  sales price of  $1,820,000.  It is estimated the sales  transaction
will be complete by September  18, 2006. As of August 1, 2006,  the  Partnership
achieved the 51% approval necessary for the disposition.

Item 2. Properties

Through its investments in Local Limited  Partnerships,  the  Partnership  holds
indirect  ownership  interests in the Housing  Complexes.  The  following  table
reflects the status of the eleven  Housing  Complexes as of the dates or for the
periods indicated:

                                       12

<PAGE>
<TABLE>
<CAPTION>
                                  ---------------------------------------------- ---------------------------------------------------
                                             As of March 31, 2006                              As of December 31, 2005
                                  ---------------------------------------------- ---------------------------------------------------
                                                                                                                          Mortgage
                                                                                                                          Balance
                                                            Partnership's                                  Estimated        of
                                                          Total Investment  Amount of                    Aggregate Low      Local
Local Limited                           General Partner   in Local Limited Investment Number of         Income Housing     Limited
Partnership Name      Location              Name            Partnerships  Paid to Date  Units  Occupancy Tax Credits (1) Partnership
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                             <C>       <C>         <C>   <C>     <C>           <C>
                                            Philip R. Hammond,
                                            Jr. and Diane M.
Alta Vista Investors   Orosi, California    Hammond             $ 583,000   $ 583,000     42    100%  $   1,274,000 $  1,406,000

BCA Associates(2)      Anderson, California Douglas W. Young      514,000     514,000     40    100%      1,105,000    1,394,000

                                            David J. Michael,
                                            Patrick R.
                                            Sabelhaus and
                                            Professional
Cloverdale Garden      Cloverdale,          Apartment
Apartments             California           Management            617,000     617,000     34    100%      1,387,000    1,607,000

                                            Philip R. Hammond,
                                            Jr. and Diane M.
Countryway Associates  Mendota, California  Hammond               571,000     571,000     41     66%      1,162,000    1,445,000

                                            David J. Michael
                                            and Professional
                                            Apartment
East Garden Apartments Jamestown,           Management            770,000     770,000     51    100%      1,772,000    2,115,000
                       California

HPA                    Shafter, California  Douglas W. Young      538,000     538,000     42     95%      1,223,000    1,483,000

Knights Landing        Knights Landing,     Douglas W. Young
 Harbor                California           and Diane L. Young    275,000     275,000     25    100%        446,000      963,000

</TABLE>
                                       13
<PAGE>

<TABLE>
<CAPTION>
                                    --------------------------------------------           -----------------------------------------
                                               As of March 31, 2006                                   As of December 31, 2005
                                    --------------------------------------------           -----------------------------------------
                                                                                                           Estimated
                                                           Partnership's                                 Aggregate Low    Mortgage
                                                          Total Investment  Amount of                      Income       Balances of
  Local Limited                        General Partner    in Local Limited Investment  Number of         Housing Tax   Local Limited
 Partnership Name    Location           Name               Partnerships    Paid to Date  Units  Occupancy Credits (1)    Partnership
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>                <C>                       <C>          <C>          <C>      <C>        <C>         <C>
                                           Philip R. Hammond,
Midland Manor          Mendota,            Jr. and Diane M.
Associates             California          Hammond                383,000      383,000       40         95%      668,000   1,402,000

                                           Richard Parasol
                       San Jacinto,        and Richard A.
San Jacinto Associates California          Gullota                469,000      469,000       38         95%      830,000   1,750,000

                                           Thomas G. Larson,
                                           William H. Larson
                       Woodlake,           and Raymond L.
Woodlake Manor         California          Tetzlaff               545,000      545,000       44         93%    1,146,000   1,424,000


                                           Ronald D.
Yreka Investment       Yreka, California   Bettencourt            538,000      538,000       36         97%    1,174,000   1,438,000
Group                                                          ----------    ---------      ----        ---    ---------   ---------

                                                              $ 5,803,000  $ 5,803,000      433         95%  $12,187,000 $16,427,000
                                                              ===========  ===========      ====        ===  =========== ===========
</TABLE>
(1) Represents  aggregate total  anticipated Low Income Housing Credits received
over the 10 year credit period if the Housing  complexes are retained and rented
and  in  compliance  with  credit  rules  for  the  15-year  Compliance  Period.
Substantially  all of the  anticipated  Low  Income  Housing  Credits  have been
received from the Local Limited Partnerships.  Accordingly, the Partnership does
not anticipate a significant  amount Low Income Housing  Credits being allocated
to the Limited Partners in the future.

(2) Identified on June 23, 2006 for disposition.

                                       14
<PAGE>

<TABLE>
<CAPTION>
                                    -------------------------------------------------
                                          For the Year Ended December 31, 2005
                                    -------------------------------------------------
                                                                                         Low Income Housing Tax
                                                                                          Credits Allocated to
         Partnership Name                   Rental Income            Net Income (Loss)          Partnership
-------------------------------------------------------------------------------------------------------------
<S>                                        <C>                      <C>                               <C>
Alta Vista Investors                        $    228,000             $    (33,000)                       99%

BCA Associates                                   236,000                  (16,000)                       99%

Cloverdale Garden Apartments                     240,000                  (28,000)                       99%

Countryway Associates                            187,000                 (106,000)                       99%

East Garden Apartments                           300,000                  (21,000)                       99%

HPA Investors                                    226,000                  (42,000)                       99%

Knights Landing Harbor                           164,000                    9,000                        99%

Midland Manor Associates                         226,000                  (25,000)                       99%

San Jacinto Associates                           285,000                  (18,000)                       99%

Woodlake Manor                                   284,000                   (5,000)                       99%

Yreka Investment Group                           225,000                  (18,000)                       99%
                                              ----------              ------------

                              Total         $  2,601,000             $   (303,000)
                                           =============             =============
</TABLE>

                                       15
<PAGE>

Item 3.  Legal Proceedings

NONE

Item 4.  Submission of Matters to a Vote of Security Holders

NONE

PART II.

Item 5. Market for Registrant's  Common Equity,  Related Stockholder Matters and
Issuer Purchases of Equity Securities

Item 5a.

(a)  The  Units  are not  traded on a public  exchange  but were sold  through a
     public offering.  It is not anticipated that any public market will develop
     for the  purchase  and  sale of any  Unit and  none  exists.  Units  can be
     assigned  or  otherwise  transferred  only if certain  requirements  in the
     Partnership Agreement are satisfied.

(b)  At March 31,  2006,  there were 639 Limited  Partners  and 12  assignees of
     Units who were not admitted as Limited Partners.

(c)  The Partnership was not designed to provide cash  distributions  to Limited
     Partners in  circumstances  other than  refinancing  or  disposition of its
     investments in Local Limited Partnerships.  Any such distributions would be
     made in accordance with the terms of the Partnership Agreement.

(d)  No securities are authorized for issuance by the  Partnership  under equity
     compensation plans.

(e)  No unregistered  securities  were sold by the  Partnership  during the year
     ended March 31, 2006.

Item 5b. Use of Proceeds

NOT APPLICABLE

Item 5c. Purchases of  Equity Securities by the Issuer and Affiliated Purchasers

NONE


                                       16
<PAGE>

Item 6.  Selected Financial Data

Selected balance sheet information for the Partnership is as follows:
<TABLE>
<CAPTION>
                                                      For the Years Ending March 31,
                                 -----------------------------------------------------------------------------------
                                      2006             2005             2004             2003             2002
                                 ---------------   --------------   --------------   -------------   ---------------

<S>                           <C>               <C>              <C>              <C>             <C>
ASSETS
Cash                           $         26,987  $        19,125  $         7,209  $          734  $         12,170
Investments in Local Limited
  Partnerships, net                           -                -                -         453,314           600,843
                                 ---------------   --------------   --------------   -------------   ---------------
                               $         26,987  $        19,125  $         7,209  $      454,048  $        613,013
                                 ===============   ==============   ==============   =============   ===============
LIABILITIES
Accrued fees and expenses
  due to general partner and
  affiliates                   $      1,709,640  $     1,568,394  $     1,432,637  $    1,300,219  $      1,180,524

PARTNERS' DEFICIT                    (1,682,653)      (1,549,269)      (1,425,428)       (846,171)         (567,511)
                                 ---------------   --------------   --------------   -------------   ---------------
                               $         26,987  $        19,125  $         7,209  $      454,048  $        613,013
                                 ===============   ==============   ==============   =============   ===============
</TABLE>

Selected  results  of  operations,  cash  flows  and other  information  for the
Partnership are as follows:
<TABLE>
<CAPTION>
                                                             For the Years Ended
                                                                  March 31,
                         --------------------------------------------------------------------------------------------
                             2006             2005               2004                2003                2002
                         -------------    -------------     ---------------     ---------------    ------------------

<S>                   <C>              <C>                <C>                <C>               <C>
Loss from
operations (Note 1)    $    (133,384)    $    (123,841)    $       (604,285)  $       (139,721)   $      (139,316)
Equity in income
  (losses) from
  Local Limited
  Partnerships                     -                 -               25,028           (138,939)          (201,095)
                         -------------    -------------     ---------------     ---------------    ------------------
Net loss               $    (133,384)    $    (123,841)    $       (579,257)  $       (278,660)   $      (340,411)
                         =============    =============     ===============     ===============    ==================
Net loss allocated
to:

   General partners    $      (1,334)    $      (1,238)    $         (5,793)   $        (2,787)   $        (3,404)
                       ==============     ===============     ===============    ==============   ===================
   Limited partners    $    (132,050)    $    (122,603)    $       (573,464)   $      (275,873)   $      (337,007)
                       ==============     ===============     ===============    ==============   ===================
Net loss per
  Partnership Unit     $      (17.72)    $      (16.46)    $         (76.98)   $        (37.03)   $        (45.24)
                       ==============     ===============    ================    ==============   ===================

Outstanding
  Partnerships Unit    $       7,450     $       7,450     $          7,450    $         7,450    $         7,450
                        =============     ===============     ===============   ===============   ==================
</TABLE>

Note 1-Loss from  operations for the year ended March 31, 2004 includes a charge
for impairment  losses on investment in Local Limited  Partnerships of $470,093.
(See Note 2 to the audited financial statements.)

                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                       For the Years Ended March 31,
                                 -----------------------------------------------------------------------
                                     2006            2005           2004          2003          2002
                                 --------------   ------------    ----------    ----------    ----------

<S>                           <C>               <C>             <C>            <C>        <C>
Net cash provided by
 (used in):
   Operating activities        $         7,862   $     11,916   $      3,659   $  (14,602) $     (34,751)
   Investing activities                      -              -          2,816        3,166          2,749
                                 --------------   ------------    ----------    ----------    ----------
Net change in cash and cash
  equivalents                            7,862         11,916          6,475      (11,436)       (32,002)

Cash, beginning of period               19,125          7,209            734       12,170         44,172
                                 --------------   ------------    ----------    ----------    ----------
Cash, end of period            $        26,987  $      19,125   $      7,209   $      734   $     12,170
                                 ==============   ============    ==========    ==========    ==========
</TABLE>
Low Income  Housing  Tax  Credits  per Unit were as follows  for the years ended
December 31:
<TABLE>
<CAPTION>
                                      2005           2004           2003          2002          2001
                                   ------------   ------------   -----------    ---------     ----------
<S>                             <C>            <C>            <C>            <C>           <C>
Federal                          $           -  $           1  $          1   $        1    $        16

State                                        -              -             -            -              -
                                   ------------   ------------   -----------    ---------     ----------
Total                            $           -  $           1  $          1   $        1    $        16
                                   ============   ============   ===========    =========     ==========
</TABLE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Forward Looking Statements

With the exception of the  discussion  regarding  historical  information,  this
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and other  discussions  elsewhere in this Form 10-K contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties  and other  factors which may involve known and unknown risks that
could  cause  actual  results  of  operations  to differ  materially  from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.

Risks and uncertainties  inherent in forward looking statements include, but are
not  limited  to,  our  future  cash  flows and  ability  to  obtain  sufficient
financing, level of operating expenses, conditions in the Low Income Housing Tax
Credit property market and the economy in general, as well as legal proceedings.
Historical  results are not necessarily  indicative of the operating results for
any future period.

Subsequent  written and oral  forward  looking  statements  attributable  to the
Partnership  or persons  acting on its behalf are  expressly  qualified in their
entirety by  cautionary  statements in this Form 10-K and in other reports filed
with the Securities and Exchange Commission.  The following discussion should be
read in conjunction with the Financial Statements and the Notes thereto included
elsewhere in this filing.

Critical Accounting Policies and Certain Risks and Uncertainties

The  Partnership  believes  that the  following  discussion  addresses  its most
significant  accounting  policies,  which are the most  critical to aid in fully
understanding and evaluating the Partnership's  reported financial results,  and
certain of the Partnership's risks and uncertainties.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements,  and the  reported  amounts of revenues and expenses
during the reporting  period.  Actual results could materially differ from those
estimates.
                                       18
<PAGE>

Method of Accounting for Investments in Local Limited Partnerships

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting,  whereby the Partnership adjusts its investment
balance for its share of the Local Limited  Partnerships'  results of operations
and for  any  contributions  made or  distributions  received.  The  Partnership
reviews the  carrying  amount of an  individual  investment  in a Local  Limited
Partnership for possible  impairment whenever events or changes in circumstances
indicate that the carrying  amount of such  investment  may not be  recoverable.
Recoverability  of such investment is measured by the estimated value derived by
management,  generally  consisting of the sum of the remaining future Low Income
Housing  Credits  estimated to be allocable to the Partnership and the estimated
residual  value  to  the  Partnership.  If an  investment  is  considered  to be
impaired,  the  Partnership  reduces the carrying value of its investment in any
such Local Limited  Partnership.  The  accounting  policies of the Local Limited
Partnerships,  generally,  are  expected  to be  consistent  with  those  of the
Partnership.  Costs incurred by the Partnership in acquiring the investments are
capitalized  as part of the investment  account and are being  amortized over 30
years. (See Notes 2 and 3 to the audited financial statements)

"Equity in losses of the Local Limited  Partnerships"  for each year ended March
31 have been  recorded  by the  Partnership  based on nine  months  of  reported
results provided by the Local Limited  Partnerships for each year ended December
31 and on three months of results  estimated by management  of the  Partnership.
Management's  estimate  for the  three-month  period is based on  either  actual
unaudited  results  reported by the Local  Limited  Partnerships  or  historical
trends in the operations of the Local Limited Partnerships. In subsequent annual
financial  statements,  upon receiving the actual annual results reported by the
Local Limited  Partnerships,  management reverses its prior estimate and records
the actual results reported by the Local Limited Partnerships.  Equity in losses
of  the  Local  Limited  Partnerships  allocated  to  the  Partnership  are  not
recognized to the extent that the  investment  balance  would be adjusted  below
zero.  As soon as the  investment  balance  reaches  zero,  amortization  of the
related  costs of acquiring  the  investment  are  accelerated  to the extent of
losses available.

Distributions  received from the Local Limited Partnerships are accounted for as
a  reduction  of  the  investment  balance.  Distributions  received  after  the
investment has reached zero are recognized as distribution  income. If the Local
Limited  Partnerships  report net income in future years,  the Partnership  will
resume applying the equity method only after its share of such net income equals
the share of net losses not  recognized  during the  period(s) the equity method
was suspended.

Income Taxes

No provision for income taxes has been  recorded in the financial  statements as
any  liabilities  and/or  benefits  for income taxes flow to the partners of the
Partnership  and  are  their  obligations  and/or  benefits.  For  income  taxes
purposes, the Partnership reports on a calendar year basis.

Certain Risks and Uncertainties

See Item 1A for a discussion of risks regarding the Partnerships

                                       19
<PAGE>

Substantially  all of the Low Income Housing Credits  anticipated to be realized
from the Local Limited Partnerships have been realized. The Partnership does not
anticipate  being  allocated a significant  amount of Low Income Housing Credits
from the Local  Limited  Partnerships  in the  future.  Until the Local  Limited
Partnerships  have completed the 15 year Low Income  Housing  Credit  compliance
period risks exist for potential recapture of prior low Income Housing Credits.

To date, certain Local Limited Partnerships have incurred significant  operating
losses and have working capital  deficiencies.  In the event these Local Limited
Partnerships continue to incur significant operating losses,  additional capital
contributions  by the  Partnership  and/or  the  Local  General  Partner  may be
required  to sustain  the  operations  of such Local  Limited  Partnerships.  If
additional  capital  contributions  are not made  when  they are  required,  the
Partnership's  investment in certain of such Local Limited Partnerships could be
lost,  and the loss and recapture of the related Low Income  Housing Tax Credits
could occur.

Anticipated  future and  existing  cash  resources  of the  Partnership  are not
sufficient   to  pay  existing   liabilities   of  the   Partnership.   However,
substantially all of the existing  liabilities of the Partnership are payable to
the General  Partner and/or its  affiliates.  Though the amounts  payable to the
General Partner and/or its affiliates are contractually  currently payable,  the
Partnership  anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual  obligations until capital reserves are
in excess of the aggregate of then  existing  contractual  obligations  and then
anticipated future foreseeable  obligations of the Partnership.  The Partnership
would be adversely  affected  should the General  Partner  and/or its affiliates
demand current  payment of the existing  contractual  obligations and or suspend
services for this or any other reason.

Financial Condition

The Partnership's  assets at March 31, 2006 (unaudited)  consisted of $27,000 in
cash.   Liabilities  at  March  31,  2006  (unaudited)  primarily  consisted  of
$1,626,000 of accrued annual management fees and $84,000 in advance payables due
to the General Partners. (See "Future Contractual Cash Obligations' below)

Results of Operations

Year  Ended  March  31,  2006   Compared  to  Year  Ended  March  31,  2005. The
Partnership's  net  loss for the  year  ended  March  31,  2006 was  $(133,000),
reflecting an increase of $(9,000)  from the net loss of $(124,000)  experienced
for the year ended March 31, 2005.  The increase in net loss is primarily due to
a $(6,000) increase of legal and accounting expense from $20,000 incurred in the
year ended  March 31,  2005  compared  to a $26,000 for the year ended March 31,
2006,  along with a  $(6,000)  decrease  in  distribution  income,  offset by an
increase  in  reporting  fee income of $2,000,  along with a $1,000  decrease in
miscellaneous expense.


                                       20
<PAGE>

Year  Ended  March  31,  2005   Compared  to  Year  Ended  March  31,  2004. The
Partnership's  net  loss for the  year  ended  March  31,  2005 was  $(124,000),
reflecting a decrease of $(455,000)  from the net loss  experienced for the year
ended March 31, 2004 of $(579,000). The decrease in net loss is primarily due to
the  impairment  loss of  $470,000  incurred  in the year ended  March 31,  2004
compared to a $0 impairment loss for the year ended March 31, 2005, along with a
$5,000  decrease in  amortization,  $(4,000)  increase in legal and accounting a
$1,000  decrease  in office  expense.  Additionally,  there was an  increase  in
distribution  income from Local Limited  Partnership  of $8,000.  Along with the
change in equity in income from Local Limited  Partnerships  which  decreased by
$(25,000) to $0 for the year ended March 31, 2005 from income of $25,000 for the
year ended March 31, 2004.  The decrease of equity in income from Local  Limited
Partnerships is primarily due to the Partnership not recognizing  certain losses
or income of the Local  Limited  Partnerships.  The  investments  in such  Local
Limited  Partnerships had reached $0 at March 31, 2004. Since the  Partnership's
liability  with  respect  to its  investments  is  limited,  losses in excess of
investment are not recognized.

Liquidity and Capital Resources

Year Ended March 31, 2006  Compared to Year Ended March 31, 2005.Net increase in
cash during the year ended March 31, 2006 was $8,000 compared to net increase in
cash for the year ended March 31, 2005 of $12,000.  The net cash decrease is due
to an increase in accrued expenses due to the General Partner and affiliates and
an increase in distribution income from Local Limited Partnerships.

Year Ended March 31, 2005  Compared to Year Ended March 31, 2004.Net increase in
cash during the year ended March 31, 2005 was $12,000  compared to net  increase
in cash during the year ended March 31, 2004 of $6,000. The net cash increase is
due to an increase of  approximately  $8,000 in  distribution  income from Local
Limited  Partnership  which  was  offset by a  $(2,000)  increase  in  operating
activities.

Accrued  payables,  which consist primarily of related party management fees due
to the General  Partner,  increased  by  $112,000  for each year ended March 31,
2006, 2005 and 2004,. The General Partner does not anticipate that these accrued
fees will be paid until such time as  capital  reserves  are in excess of future
foreseeable working capital requirements of the Partnership.

The  Partnership   currently  has  insufficient  working  capital  to  fund  its
operations.  Associate's has agreed to continue  providing  advances  sufficient
enough  to  fund  the  operations  and  working  capital   requirements  of  the
Partnership through March 31, 2007.

Future Contractual Cash Obligations

The  following  table  summarizes  the  Partnership's  future  contractual  cash
obligations as of March 31, 2006:
<TABLE>
<CAPTION>
                                     2007         2008       2009        2010       2011     Thereafter        Total
                                   ----------   ---------  ---------   ---------  ---------  ------------    ----------
<S>                             <C>          <C>        <C>         <C>        <C>        <C>             <C>
Asset Management Fees (1)        $ 1,737,950  $  111,855 $  111,855  $  111,855 $  111,855 $   2,908,230   $ 5,093,600
Capital Contributions Payable
   to Local Limited Partnerships           -           -          -           -          -             -             -
                                   ----------   ---------  ---------   ---------  ---------  ------------    ----------
Total contractual cash
   obligations                   $ 1,737,950  $  111,855 $  111,855  $  111,855 $  111,855 $   2,908,230   $ 5,093,600
                                   ==========   =========  =========   =========  =========  ============    ==========
</TABLE>
(1)  Asset  Management  Fees  are  payable  annually  until  termination  of the
     Partnership, which is to occur no later than 2037. The estimate of the fees
     payable included herein assumes the retention of the Partnership's interest
     in all Housing Complexes until 2037.  Amounts due to the General Partner as
     of March 31,  2006 have  been  included  in the 2007  column.  The  General
     Partner does not anticipate that these fees will be paid until such time as
     capital reserves are in excess of the aggregate of the existing contractual
     obligations  and the  anticipated  future  foreseeable  obligations  of the
     Partnership.

For additional  information  regarding asset  management fees, see Note 3 to the
financial statements included elsewhere herein.

                                       21
<PAGE>

Off-Balance Sheet Arrangements

The Partnerships has no off-balance sheet arrangements.

Exit Strategy

See Item 1A for information in this regard.

Impact of New Accounting Pronouncements

The Partnership adopted FASB  Interpretation No. 46 - Revised,  Consolidation of
Variable  Interest Entities  ("FIN46R").  FIN 46R provides guidance as to when a
company  should  include the assets,  liabilities,  and activities of a variable
interest entity ("VIE") in its financial  statements,  and when a company should
disclose  information  about  its  relationship  with  a VIE.  A VIE is a  legal
structure  used  to  conduct  activities  or  hold  assets,  and a VIE  must  be
consolidated  by a company if it is the  primary  beneficiary  because a primary
beneficiary  absorbs the majority of the entity's expected losses,  the majority
of the expected residual returns, or both.

Under FIN 46R, the Local Limited  Partnerships in which the Partnership  invests
are VIEs. However,  the Partnership does not consolidate it's interests in these
VIE's  under  FIN46R,   as  the   Partnership  is  not  considered  the  primary
beneficiary.  Rather,  the  Partnership  currently  records  the  amount  of the
investment in the Local Limited  Partnerships  as an asset in the balance sheet,
and  recognizes  its share of Local  Limited  Partnership  income or loss in the
statement of  operations.  (See "Method of Accounting  for  Investments in Local
Limited Partnerships" above)

The Partnership's balance in its investment in Local Limited Partnerships,  plus
the risk of recapture of Low Income Housing Tax Credits previously recognized on
these  investments,  represents its maximum exposure to loss. The  Partnership's
exposure to loss is mitigated by the condition and financial  performance of the
underlying  Housing  Complexes,  as well as the  strength  of the Local  General
Partners and their guarantee against credit recapture.

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154
(SFAS 154),  "Accounting  Changes and Error Corrections" which provides guidance
on the  accounting  for and  reporting of accounting  changes and  correction of
errors.  This  statement  changes the  requirements  for the  accounting for and
reporting  of a change in  accounting  principle  and  applies to all  voluntary
changes in  accounting  principle.  It also  applies to changes  required  by an
accounting pronouncement in the unusual instance that the pronouncement does not
include  specific  transition  provisions.   This  statement  is  effective  for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after December 15, 2005. The  Partnership  does not anticipate a material effect
due to the adoption of this statement.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

NOT APPLICABLE

Item 8.  Financial Statements and Supplementary Data

                                       22
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Partners
WNC California Housing Tax Credit, L.P.

We have audited the  accompanying  balance sheets of WNC California  Housing Tax
Credit,  L.P. (a California  Limited  Partnership) (the Partnership) as of March
31, 2006 and 2005, and the related  statements of operations,  partners' deficit
and cash flows for the periods  ended March 31, 2006,  2005 and 2004.  Our audit
also included the financial  statement  schedules  listed in Form 10-K, Part IV,
Item 15(a)(2).  These financial statements and the financial statement schedules
are the responsibility of the Partnership's management. Our responsibility is to
express  an  opinion  on these  financial  statements  and  financial  statement
schedules based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Partnership is not required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial reporting.  Our audit included  consideration of internal control over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the company's  internal control over financial
reporting.  Accordingly,  we express  no such  opinion.  An audit also  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of WNC  California  Housing Tax
Credit,  L.P. (a California Limited  Partnership) as of March 31, 2006 and 2005,
and the results of its operations and its cash flows for the periods ended March
31, 2006,  2005 and 2004 in  conformity  with  accounting  principles  generally
accepted in the United States of America.  Also, in our opinion,  such financial
statement  schedules,  when  considered  in  relation  to  the  basic  financial
statements  taken as a whole,  present  fairly  in all  material  respects,  the
information set forth therein.




/s/ Reznick Group, P.C.
-----------------------

Bethesda, Maryland
August 23, 2006




<PAGE>


                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                                 BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                               March 31
                                                                                     ------------------------------
                                                                                         2006             2005
                                                                                     --------------   -------------

<S>                                                                               <C>             <C>
ASSETS

Cash and cash equivalents                                                          $        26,987   $      19,125
Investments in Local Limited Partnerships, net (Notes 2 and 3)                                   -               -
                                                                                     --------------   -------------
                                                                                   $        26,987   $      19,125
                                                                                     ==============   =============
LIABILITIES AND PARTNERS' DEFICIT

Liabilities:
   Accrued fees and expenses due to General Partner and
     affiliates (Note 3)                                                           $     1,709,640   $   1,568,394

Partners' deficit:
    General partners                                                                       (81,668)        (80,334)
    Limited partners (10,000 units authorized; 7,450 units
     issued and outstanding)                                                            (1,600,985)     (1,468,935)
                                                                                     --------------   -------------
      Total partners' deficit                                                           (1,682,653)     (1,549,269)
                                                                                     --------------   -------------
                                                                                   $        26,987   $      19,125
                                                                                     ==============   =============
</TABLE>

                 See accompanying notes to financial statements
                                       24
<PAGE>

                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                              For the Years Ended March 31
                                                      ----------------------------------------------
                                                          2006             2005            2004
                                                      --------------    ------------    ------------

<S>                                                <C>               <C>             <C>
Interest income                                     $           114   $          29    $         10
Distribution income                                           5,799          11,886           3,650
Reporting fee income                                          1,937               -               -
                                                      --------------    ------------    ------------
Total income                                                  7,850          11,915           3,660
                                                      --------------    ------------    ------------
Operating expenses:
   Amortization (Notes 2 and 3)                                   -               -           5,433
   Asset management fees (Note 3)                           111,856         111,855         111,855
   Impairment loss (Note 2)                                       -               -         470,093
   Legal and accounting                                      26,236          20,025          16,106
   Other                                                      3,142           3,876           4,458
                                                      --------------    ------------    ------------
    Total operating expenses                                141,234         135,756         607,945
                                                      --------------    ------------    ------------
Loss from operations                                       (133,384)       (123,841)       (604,285)

Equity in income of Local Limited
    Partnerships (Note 2)                                         -               -          25,028
                                                      --------------    ------------    ------------
Net loss                                            $      (133,384)   $   (123,841)   $   (579,257)
                                                      ==============    ============    ============
Net loss allocated to:
   General Partners                                 $        (1,334)   $     (1,238)   $     (5,793)
                                                      ==============    ============    ============
   Limited Partners                                 $      (132,050)   $   (122,603)   $   (573,464)
                                                      ==============    ============    ============
Net loss per Partnership Unit                       $        (17.72)   $     (16.46)   $     (76.98)
                                                      ==============    ============    ============
Outstanding weighted Partnership Units                        7,450           7,450           7,450
                                                      ==============    ============    ============
</TABLE>

                 See accompanying notes to financial statements
                                       25
<PAGE>

                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                         STATEMENTS OF PARTNERS' DEFICIT

               For The Years Ended March 31, 2006, 2005, and 2004

<TABLE>
<CAPTION>
                                                               General             Limited             Total
                                                               Partners            Partners
                                                            ---------------     ---------------    ---------------
<S>                                                      <C>                <C>                  <C>
Partners' deficit at March 31, 2003                       $        (73,303) $        (772,868)    $    (846,171)

Net loss                                                            (5,793)          (573,464)         (579,257)
                                                            ---------------     ---------------    ---------------
Partners' deficit at March 31, 2004                                (79,096)        (1,346,332)       (1,425,428)

Net loss                                                            (1,238)          (122,603)         (123,841)
                                                            ---------------     ---------------    ---------------
Partners' deficit at March 31, 2005                                (80,334)        (1,468,935)       (1,549,269)

Net loss                                                            (1,334)          (132,050)         (133,384)
                                                            ---------------     ---------------    ---------------
Partners' deficit at March 31, 2006                       $        (81,668) $      (1,600,985)    $  (1,682,653)
                                                            ---------------     ---------------    ---------------
</TABLE>

                 See accompanying notes to financial statements
                                       26
<PAGE>

                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                For the Years Ended March 31,
                                                          -------------------------------------------
                                                             2006            2005            2004
                                                          ------------    ------------    -----------

<S>                                                    <C>             <C>            <C>
Cash flows from operating activities:
  Net loss                                              $    (133,384)  $    (123,841)   $  (579,257)
  Adjustments to reconcile net loss to
  net cash used in operating activities:
     Amortization                                                   -               -          5,433
     Equity in income of Local Limited Partnerships                 -               -        (25,028)
     Impairment loss                                                -               -        470,093
     Change in accrued fees and expenses due to
         General Partner and affiliates                       141,246         135,757        132,418
                                                          ------------    ------------    -----------
Net cash provided by (used in) operating activities             7,862          11,916         (3,659)
                                                          ------------    ------------    -----------
Cash flows provided by investing activities:
   Distributions from Local Limited Partnerships                    -               -          2,816
                                                          ------------    ------------    -----------
Net increase (decrease) in cash and cash equivalents            7,862          11,916         (6,475)

Cash and Cash Equivalent, beginning of period                  19,125           7,209            734
                                                          ------------    ------------    -----------
Cash and Cash Equivalent, end of period                 $      26,987   $      19,125   $      7,209
                                                          ============    ============    ===========
SUPPLEMENTAL DISCLOSURE OF
     CASH FLOW INFORMATION:
Taxes paid                                              $         800   $         800   $        800
                                                          ============    ============    ===========
</TABLE>

                 See accompanying notes to financial statements
                                       27
<PAGE>

                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------
Organization
------------
WNC California Housing Tax Credits,  L.P., a California Limited Partnership (the
"Partnership"),  was formed on September 15, 1988 under the laws of the State of
California.  The  Partnership  was  formed to invest  primarily  in other  Local
Limited  Partnerships (the "Local Limited  Partnerships")  which own and operate
multi-family  housing complexes (the "Housing  Complexes") that are eligible for
low income housing tax credits.  The local general  partners (the "Local General
Partners")  of  each  Local  Limited   Partnership  retain   responsibility  for
maintaining, operating and managing the Housing Complex.

WNC & Associates, Inc., a California corporation ("Associates"),  and Wilfred N.
Cooper,  Sr., are general partners of the Partnership (the "General  Partners").
The chairman and president own  substantially  all of the  outstanding  stock of
Associates.  The  business of the  Partnership  is conducted  primarily  through
Associates, as the Partnership have no employees of their own.

The Partnership shall continue to be in full force and effect until December 31,
2037 unless terminated prior to that date pursuant to the partnership  agreement
or law.

The financial  statements  include only activity relating to the business of the
Partnership,  and do not give  effect to any assets that the  partners  may have
outside of their interests in the Partnership, or to any obligations,  including
income taxes, of the partners.

The  Partnership  Agreement  authorized the sale of up to 10,000 units at $1,000
per Unit  ("Units").  The  offering of Units  concluded in October 1990 at which
time 7,450 Units  representing  subscriptions  in the amount of $7,450,000,  had
been accepted.  The General Partners have a 1% interest in operating profits and
losses,  taxable income and losses,  in cash available for distribution from the
Partnership  and  tax  credits  of  the  Partnership.  The  investors  ("Limited
Partners") in WNC California  Housing Tax Credits,  L.P..  The limited  partners
will be  allocated  the  remaining  99% of these  items in  proportion  to their
respective investments.

The  proceeds  from the  disposition  of any of the  Local  Limited  Partnership
properties  will be used  first  to pay  debts  and  other  obligations  per the
respective Local Limited Partnership Agreement. Any remaining proceeds will then
be paid to the  Partnership.  The sale of a Housing  Complex  may be  subject to
other restrictions and obligations.  Accordingly, there can be no assurance that
a Local Limited Partnership will be able to sell its Housing Complex. Even if it
does so, there can be no assurance that any significant  amounts of cash will be
distributed to the  Partnership.  Should such  distributions  occur, the Limited
Partners  will be  entitled  to  receive  distributions  equal to their  capital
contributions  and their  return on  investment  (as defined in the  Partnership
Agreement) and the General  Partners would then be entitled to receive  proceeds
equal to their capital contributions from the remainder.  Any additional sale or
refinancing  proceeds  will  be  distributed  99% to the  Limited  Partners  (in
proportion to their respective investments) and 1% to the General Partners.

Risks and Uncertainties
-----------------------
An investment in the  Partnership  and the  Partnership's  investments  in Local
Limited  Partnerships  and their Housing  Complexes are subject to risks.  These
risks may impact the tax benefits of an investment in the  Partnership,  and the
amount of proceeds  available for distribution to the Limited Partners,  if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:

The Low Income Housing Tax Credit rules are extremely complicated. Noncompliance
with these rules  results in the loss of future Low Income  Housing  Credits and
the fractional  recapture of Low Income Housing  Credits  already taken. In most
cases the annual amount of Low Income Housing Credits that an individual can use
is limited to the tax  liability  due on the  person's  last  $25,000 of taxable
income.  The  Local  Limited  Partnerships  may be  unable  to sell the  Housing
Complexes  at a price  which  would  result in the  Partnership  realizing  cash
distributions or proceeds from the transaction. Accordingly, the Partnership may
be unable to distribute  any cash to its Limited  Partners.  Low Income  Housing
Credits may be the only benefit from an investment in the Partnership.

                                       28
<PAGE>

                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------------------------

The Partnership has invested in a limited number of Local Limited  Partnerships.
Such  limited  diversity  means that the  results of  operation  of each  single
Housing  Complex  will have a greater  impact on the  Partnership.  With limited
diversity,   poor   performance   of  one  Housing   Complex  could  impair  the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage  indebtedness.  If a Local Limited  Partnership failed to
pay its  mortgage,  it  could  lose  its  Housing  Complex  in  foreclosure.  If
foreclosure  were to occur during the first 15 years,  the loss of any remaining
future Low Income Housing  Credits,  a fractional  recapture of prior Low Income
Housing Tax Credits,  and a loss of the Partnership's  investment in the Housing
Complex would occur. The Partnership is a limited partner or non-managing member
of each Local Limited Partnership.  Accordingly,  the Partnership will have very
limited rights with respect to management of the Local Limited Partnerships. The
Partnership  will  rely  totally  on the Local  General  Partners.  Neither  the
Partnership's  investments in Local Limited Partnerships,  nor the Local Limited
Partnerships'  investments in Housing Complexes, are readily marketable.  To the
extent  the  Housing  Complexes  receive   government   financing  or  operating
subsidies,  they  may be  subject  to  one  or  more  of  the  following  risks:
difficulties  in obtaining  tenants for the Housing  Complexes;  difficulties in
obtaining  rent  increases;  limitations on cash  distributions;  limitations on
sales or refinancing of Housing Complexes; limitations on transfers of interests
in Local Limited Partnerships; limitations on removal of Local General Partners;
limitations on subsidy programs; and possible changes in applicable regulations.
Uninsured casualties could result in loss of property and Low Income Housing Tax
Credits and recapture of Low Income Housing Tax Credits  previously  taken.  The
value of real estate is subject to risks from fluctuating  economic  conditions,
including employment rates, inflation,  tax, environmental,  land use and zoning
policies, supply and demand of similar properties,  and neighborhood conditions,
among others.

The  ability of Limited  Partners to claim tax losses  from the  Partnership  is
limited.  The IRS may audit the  Partnership or a Local Limited  Partnership and
challenge the tax treatment of tax items.  The amount of Low Income  Housing Tax
Credits and tax losses allocable to the Limited Partners could be reduced if the
IRS were  successful  in such a  challenge.  The  alternative  minimum tax could
reduce tax benefits from an investment in the  Partnership.  Changes in tax laws
could also impact the tax benefits from an investment in the Partnership  and/or
the value of the Housing Complexes.

Substantially  all of the Low  Income  Housing  Tax  Credits  anticipated  to be
realized from the Local Limited Partnerships have been realized. The Partnership
does not anticipate  being allocated a significant  amount of Low Income Housing
Tax Credits from the Local Limited  Partnerships in the future.  Until the Local
Limited  Partnerships  have  completed the 15 year Low Income Housing Tax Credit
compliance  period  risks  exist for  potential  recapture  of prior Low  Income
Housing Tax Credits.

Anticipated  future and  existing  cash  resources  of the  Partnership  are not
sufficient   to  pay  existing   liabilities   of  the   Partnership.   However,
substantially all of the existing  liabilities of the Partnership are payable to
the General  Partner and/or its  affiliates.  Though the amounts  payable to the
General Partner and/or its affiliates are contractually  currently payable,  the
Partnership  anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual  obligations until capital reserves are
in excess of the aggregate of then  existing  contractual  obligations  and then
anticipated future foreseeable  obligations of the Partnership.  The Partnership
would be adversely  affected  should the General  Partner  and/or its affiliates
demand current  payment of the existing  contractual  obligations and or suspend
services for this or any other reason.

The  Partnership   currently  has  insufficent   working  capital  to  fund  its
operations.  Associates  has agreed to continue  providing  advances  sufficient
enough  to  fund  the  operations  and  working  capital   requirements  of  the
Partnership through March 31, 2007.

No trading  market  for the Units  exists or is  expected  to  develop.  Limited
Partners  may be unable to sell  their  Units  except at a  discount  and should
consider their Units to be a long-term  investment.  Individual Limited Partners
will have no recourse if they disagree with actions  authorized by a vote of the
majority of Limited Partners.

                                       29

<PAGE>

                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------------------------
Exit Strategy
-------------

The IRS  Compliance  Period for  low-income  housing  tax credit  properties  is
generally  15  years  following   construction  or  rehabilitation   completion.
Associates was one of the first in the industry to offer syndicated  investments
in Low Income Housing Tax Credits.  The initial  programs are  completing  their
compliance periods.

With that in mind,  the General  Partner is continuing its review of the Housing
Complexes,  with special emphasis on the more mature properties such as any that
have  satisfied  the IRS  compliance  requirements.  The review  considers  many
factors,  including  extended  use  requirements  (such as those due to mortgage
restrictions  or state  compliance  agreements),  the  condition  of the Housing
Complex,  and the tax  consequences to the Limited Partners from the sale of the
Housing Complex.

Upon  identifying  those  Housing  Complexes  with the highest  potential  for a
successful sale, refinancing or syndication,  the Partnership expects to proceed
with  efforts to  liquidate  them.  The  objective  is to  maximize  the Limited
Partners'  return  wherever   possible  and,   ultimately,   to  wind  down  the
Partnership.  Local Limited Partnership interests may be disposed of any time by
the  General  Partner  in its  discretion.  While  liquidation  of  the  Housing
Complexes continues to be evaluated,  the dissolution of the Partnership was not
imminent as of March 31, 2006 and  therefore  the  Partnership  continues  to be
accounted for as a going concern.

As of March 31, 2006, no Housing  Complexes  had been selected for  disposition.
Subsequent to year-end the Partnership identified one Local Limited Partnership,
BCA  Associates,  for  disposition.  BCA  Associates  has  completed its 15-year
compliance  period,  a Proxy was filed with the SEC on June 23, 2006. All of the
Local Limited  Partnerships  have completed the 15-year  compliance period as of
March 31, 2006.

Properties Identified for Disposition
-------------------------------------

The  Partnership has identified one Local Limited  Partnership,  BCA Associates,
("BCA") for disposition.  BCA owns the Battle Creek Senior Apartments located in
Anderson, California (the "Property"). Consistent with the investment objectives
of the  Partnership,  the Property  qualified for Federal low income housing tax
credits under the Internal Revenue Code for a 10-year period.  The credit period
has expired,  and no further  credits are being  generated by the Property.  The
15-year Federal compliance period has also expired,  so there would be no credit
recapture upon a transfer of the Property.

On June 23, 2006, the Partnership filed a proxy with the Securities and Exchange
Commission for the written consent of the Limited  Partners for the commencement
of the disposition. An affiliate of the General Partners executed a Purchase and
Sales  Agreement  on July  21,  2006  for the  purchase  of the  Property  at an
anticipated  sales price of  $1,820,000.  It is estimated the sales  transaction
will be complete by September  18, 2006. As of August 1, 2006,  the  Partnership
achieved the 51% approval necessary for the disposition.

Method of Accounting For Investments in Local Limited Partnerships
------------------------------------------------------------------

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting,  whereby the Partnership adjusts its investment
balance for its share of the Local Limited  Partnerships'  results of operations
and for any  contributions  made and  distributions  received.  The  Partnership
reviews the  carrying  amount of an  individual  investment  in a Local  Limited
Partnership for possible  impairment whenever events or changes in circumstances
indicate that the carrying  amount of such  investment  may not be  recoverable.
Recoverability  of such investment is measured by the estimated value derived by
management,  generally  consisting of the sum of the remaining future Low Income
Housing  Tax  Credits  estimated  to be  allocated  to the  Partnership  and the
estimated  residual value to the Partnership.  If an investment is considered to
be impaired, the Partnership reduces the carrying value of its investment in any

                                       30
<PAGE>

                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------------------------
such Local Limited  Partnership.  The  accounting  policies of the Local Limited
Partnerships,  generally,  are  expected  to be  consistent  with  those  of the
Partnership.  Costs incurred by the Partnership in acquiring the investments are
capitalized  as part of the  investment  and are being  amortized over 30 years.
(See Notes 2 and 3)

"Equity in losses of Local  Limited  Partnerships"  for each year ended March 31
have been recorded by the Partnership  based on nine months of reported  results
provided by the Local Limited  Partnerships  for each year ended December 31 and
on  three  months  of  results  estimated  by  management  of  the  Partnership.
Management's  estimate  for the  three-month  period is based on  either  actual
unaudited  results  reported by the Local  Limited  Partnerships  or  historical
trends in the operations of the Local Limited Partnerships. In subsequent annual
financial  statements,  upon receiving the actual annual results reported by the
Local Limited  Partnerships,  management reverses its prior estimate and records
the actual results reported by the Local Limited Partnerships.  Equity in losses
of Local Limited Partnerships allocated to the Partnership are not recognized to
the extent that the investment  balance would be adjusted below zero. As soon as
the  investment  balance  reaches  zero,  amortization  of the related  costs of
acquiring the investment is  accelerated to the extent of losses  available (see
Note 3). If the Local Limited Partnerships  reported net income in future years,
the  Partnership  will resume applying the equity method only after its share of
such net  income  equals  the share of net  losses  not  recognized  during  the
period(s) the equity method was suspended.

Distributions  received from the Local Limited Partnerships are accounted for as
a  reduction  of  the  investment  balance.  Distributions  received  after  the
investment has reached zero are recognized as distribution income.

Use of Estimates
----------------
The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements,  and the  reported  amounts of revenues and expenses
during the reporting  period.  Actual results could materially differ from those
estimates.

Cash and Cash Equivalents
-------------------------

The Partnership considers all highly liquid investments with original maturities
of three months or less when purchased to be cash  equivalents.  As of March 31,
2006 and 2005, the Partnership had no cash equivalents.

Net Loss Per Limited Partner Unit
---------------------------------
Net loss per  limited  partner  unit is  calculated  pursuant  to  Statement  of
Financial  Accounting  Standards No. 128,  Earnings per Share. Net loss per unit
includes no dilution  and is computed  by  dividing  loss  available  to limited
partners by the weighted average number of units outstanding  during the period.
Calculation of diluted net loss per unit is not required.

Income Taxes
------------
No provision  for income taxes has been recorded in the  accompanying  financial
statements  as any  liabilities  and/or  benefits  for income  taxes flow to the
partners of the  Partnership  and are their  obligations  and/or  benefits.  For
income taxes purposes, the Partnership reports on a calendar year basis.


                                       31

<PAGE>
                   WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,  continued
--------------------------------------------------------------------------------

Revenue Recognition
-------------------
The  Partnership  is entitled to receive  reporting  fees from the Local Limited
Partnerships.  The  intent  of  the  reporting  fees  is  to  offset  (in  part)
administrative costs incurred by the Partnership in corresponding with the Local
Limited  Partnerships.  Due to the  uncertainty of the collection of these fees,
the Partnership recognizes reporting fees as collections are made.

New Accounting Pronouncements
-----------------------------
The Partnership adopted FASB  Interpretation No. 46 - Revised,  Consolidation of
Variable  Interest Entities  ("FIN46R").  FIN 46R provides guidance as to when a
company  should  include the assets,  liabilities,  and activities of a variable
interest entity ("VIE") in its financial  statements,  and when a company should
disclose  information  about  its  relationship  with  a VIE.  A VIE is a  legal
structure  used  to  conduct  activities  or  hold  assets,  and a VIE  must  be
consolidated  by a company if it is the  primary  beneficiary  because a primary
beneficiary  absorbs the majority of the entity's expected losses,  the majority
of the expected residual returns, or both.

Under FIN 46R, the Local Limited  Partnerships in which the Partnership  invests
are VIEs.  However,  the Partnership does not consolidate its interests in these
VIE's  under  FIN46R,  as  the  Partnership  is   not  considered  the   primary
beneficiary.  Rather,  the  Partnership  currently  records  the  amount  of the
investment in the Local Limited  Partnerships  as an asset in the balance sheet,
and  recognizes  its share of Local  Limited  Partnership  income or loss in the
statement of operations.

The Partnership's balance in its investment in Local Limited Partnerships,  plus
the risk of recapture of Low Income Housing Tax Credits previously recognized on
these  investments,  represents its maximum exposure to loss. The  Partnership's
exposure to loss is mitigated by the condition and financial  performance of the
underlying properties, as well as the strength of the Local General Partners and
their guarantee against credit recapture.

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154
(SFAS 154),  "Accounting Changes and Error  Corrections" which provides guidance
on the  accounting  for and  reporting of accounting  changes and  correction of
errors.  This  statement  changes the  requirements  for the  accounting for and
reporting  of a change in  accounting  principle  and  applies to all  voluntary
changes in  accounting  principle.  It also  applies to changes  required  by an
accounting pronouncement in the unusual instance that the pronouncement does not
include  specific  transition  provisions.   This  statement  is  effective  for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after December 15, 2005. The  Partnership  does not anticipate a material effect
due to the adoption of this statement.

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
--------------------------------------------------

As of the periods  presented,  the Partnership has acquired limited  partnership
interests  in 11  Local  Limited  Partnerships  each of which  owns one  Housing
Complex  consisting of an aggregate of 433 apartment units. The respective Local
General  Partners  of the  Local  Limited  Partnerships  manage  the  day to day
operations  of the entities.  Significant  Local  Limited  Partnership  business
decisions require approval from the Partnership.  The Partnership,  as a limited
partner,  is  generally  entitled  to 99%,  as  specified  in the Local  Limited
Partnership governing agreements,  of the operating profits and losses,  taxable
income and losses, and tax credits of the Local Limited Partnerships.

The  Partnership's  investments  in Local Limited  Partnerships  as shown in the
balance  sheets at March 31, 2006 and 2005,  are  approximately  $1,059,000  and
$740,000  respectively,  greater than the Partnership's  equity at the preceding
December 31  as shown in the  Local  Limited  Partnerships'  combined  financial
statements  presented  below.  This  difference  is primarily  due to unrecorded
losses as discussed below, and acquisition, selection and other costs related to
the  acquisition  of  the  investments   which  have  been  capitalized  in  the
Partnership's  investment  account along with impairment  losses recorded in the
Partnership's  investment  account.  The Partnership's  investment is also lower
than  the  Partnership's  equity  as shown in the  Local  Limited  Partnership's
combined  financial  statements  due to the  estimated  losses  recorded  by the
Partnership for the three month period ended March 31.

                                       32
<PAGE>
                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
A loss in value from a Local Limited  Partnership other than a temporary decline
would be recorded as an impairment loss. Impairment is measured by comparing the
investment  carrying  amount to the sum of the total amount of the remaining Low
Income  Housing Tax  Credits  allocated  to the  Partnership  and the  estimated
residual  value of the  investment.  Accordingly,  the  Partnership  recorded an
impairment  loss of $0, $0 and $470,093 during each of the years ended March 31,
2006, 2005, and 2004, respectively.

Distributions  from  the  Local  Limited  Partnerships  are  accounted  for as a
reduction of the investment balance. Distributions received after the investment
has reached zero are recognized as distribution income.

At March 31, 2006, the investment accounts in all of Local Limited  Partnerships
have reached a zero balance.  Consequently,  all of  the  Partnership's estimate
of its  share  of  losses  for   the   years  ended  March  31,  2006, 2005  and
2004, amounting to approximately $303,000, $302,000, and $13,000,  respectively,
have not been  recognized.  As of March 31,  2006,  the  aggregate  share of net
losses not recognized by the Partnership amounted to $1,553,000.

The following is a summary of the equity method  activity of the  investments in
Local Limited Partnerships for the periods presented:
<TABLE>
<CAPTION>
                                                                           For the Years
                                                                           Ended March 31
                                                             -------------------------------------------
                                                                2006            2005           2004
                                                             ------------    -----------    ------------
<S>                                                       <C>             <C>            <C>
Investments per balance sheet, beginning of period         $           -   $          -   $     453,314
Equity in income of Local Limited Partnerships                         -              -          25,028
Distributions received from Local Limited Partnerships                 -              -          (2,816)
Impairment loss                                                        -              -        (470,093)
Amortization of paid acquisition fees and costs                        -              -          (5,433)
                                                             ------------    -----------    ------------
Investments per balance sheet, end of period               $           -   $          -   $           -
                                                             ============    ===========    ============
</TABLE>

                                       33
<PAGE>
                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------

The financial  information from the individual financial statements of the Local
Limited  Partnerships  includes rental and interest subsidies.  Rental subsidies
are included in total  revenues  and interest  subsidies  are  generally  netted
against interest expense.  Approximate combined condensed financial  information
from the individual financial statements of the Local Limited Partnerships as of
December 31 and for the years then ended is as follows:
<TABLE>
<CAPTION>
                                                            COMBINED CONDENSED BALANCE SHEETS

                                                                 2005                2004
                                                            ---------------     ---------------
ASSETS
<S>                                                      <C>                 <C>
Buildings and improvements (net of accumulated
   depreciation for 2005 and 2004 of $10,034,000 and
   $9,321,000, respectively)                              $     12,489,000    $     12,931,000
Land                                                             1,484,000           1,484,000
Other assets                                                     2,131,000           2,110,000
                                                            ---------------     ---------------
                                                          $     16,104,000    $     16,525,000
                                                            ===============     ===============
LIABILITIES

Mortgage loans payable                                    $     16,427,000    $     16,522,000
Due to related parties                                             349,000             345,000
Other liabilities                                                  185,000             174,000
                                                            ---------------     ---------------
                                                                16,961,000          17,041,000
                                                            ---------------     ---------------
PARTNERS' CAPITAL (DEFICIT)

WNC California Housing Tax Credits, L.P.                        (1,059,000)           (740,000)
Other partners                                                     202,000             224,000
                                                            ---------------     ---------------
                                                                  (857,000)           (516,000)
                                                            ---------------     ---------------
                                                          $     16,104,000    $     16,525,000
                                                            ===============     ===============
</TABLE>

                                       34
<PAGE>
                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
<TABLE>
<CAPTION>
                                              COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                                                 2005                2004               2003
                                                            ---------------     ---------------    ---------------
<S>                                                      <C>                 <C>                 <C>
Revenues                                                  $      2,681,000    $      2,677,000    $      2,657,000
                                                            ---------------     ---------------    ---------------
Expenses:
  Operating expenses                                             1,907,000           1,861,000           1,660,000
  Interest expense                                                 364,000             365,000             381,000
  Depreciation and amortization                                    713,000             690,000             672,000
                                                            ---------------     ---------------    ---------------
   Total expenses                                                2,984,000           2,916,000           2,713,000
                                                            ---------------     ---------------    ---------------
Net loss                                                  $       (303,000)   $       (239,000)   $        (56,000)
                                                            ===============     ===============    ===============
Net loss allocable to the Partnership                     $       (300,000)   $       (236,000)   $        (55,000)
                                                            ===============     ===============    ===============
Net loss recorded by the Partnership                      $              -    $              -    $        (25,000)
                                                            ===============     ===============    ===============
</TABLE>

Certain Local Limited  Partnerships have incurred  significant  operating losses
and/or have  working  capital  deficiencies.  In the event  these Local  Limited
Partnerships continue to incur significant operating losses,  additional capital
contributions  by the  Partnership  and/or  the Local  General  Partners  may be
required to sustain operations of such Local Limited Partnerships. If additional
capital  contributions  are not made when they are required,  the  Partnership's
investment in certain of such Local Limited Partnerships could be impaired,  and
the loss and recapture of the related tax credits could occur.

NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------
Under the terms of the  Partnership  Agreement,  the  Partnership has paid or is
obligated to the General Partners or their affiliates for the following items:

     Acquisition  fees equal to 6% of the gross  proceeds from the sale of Units
     as compensation for services rendered in connection with the acquisition of
     Local  Limited  Partnerships.  At the  end of all  periods  presented,  the
     Partnership incurred acquisition fees of $447,060. Accumulated amortization
     of these capitalized costs was $447,060,  as of March 31, 2006 and 2005. Of
     the  accumulated  amortization  recorded on the balance  sheet at March 31,
     2006, $0 of the related  expense was reflected as equity in losses of Local
     Limited  Partnerships  during each of the years ended March 31, 2006,  2005
     and 2004,  to reduce  the  respective  net  acquisition  fee  component  of
     investments  in local Local  Limited  Partnerships  to zero for those Local
     Limited Partnerships.

     Reimbursement  of costs incurred by the General Partners or an affiliate in
     connection  with the acquisition of the Local Limited  Partnerships.  These
     reimbursements have not exceeded 3% of the gross proceeds. As of the end of
     all periods  presented,  the Partnership had incurred  acquisition costs of
     $32,018  which  have  been  included  in   investments   in  Local  Limited
     Partnerships and were fully amortized at March 31, 2004.

     An annual  management fee equal to 0.5% of the invested assets of the Local
     Limited  Partnerships,  including the  Partnerships  allocable share of the
     mortgages,  for the life of the  Partnership.  Management fees of $111,856,
     $111,855 and $111,855 were incurred  during the years ended March 31, 2006,
     2005 and 2004,  respectively  of which $0 was paid during each of the years
     ended March 31, 2006, 2005 and 2004.

                                       35
<PAGE>

                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 3 - RELATED PARTY TRANSACTIONS, continued
----------------------------------------------
     The  Partnership  reimbursed  the  General  Partner or its  affiliates  for
     operating  expenses incurred by the Partnership and paid for by the General
     Partner or its affiliates on behalf of the Partnership.  Operating  expense
     reimbursements  were  approximately  $0 and $24,000  during the years ended
     March 31, 2006 and 2005, respectively.

The accrued fees and expenses due to the General Partners and affiliates consist
of the following at:
<TABLE>
<CAPTION>
                                                                                                March 31
                                                                                      -----------------------------
                                                                                         2006            2005
                                                                                      ------------   --------------
<S>                                                                                <C>            <C>
Expenses paid by the General Partners
   or an affiliate on behalf of the Partnership                                     $      83,544  $        54,154

Asset management fee payable                                                            1,626,096        1,514,240
                                                                                      ------------   --------------
Total                                                                               $   1,709,640  $     1,568,394
                                                                                      ============   ==============
</TABLE>
The General  Partners and/or its affiliates do not anticipate that these accrued
fees will be paid  until  such  time as  capital  reserves  are in excess of the
future foreseeable working capital requirements of the Partnership.

                                       36
<PAGE>
                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
----------------------------------------------------
The following is a summary of the quarterly operations for the years ended March
31:
<TABLE>
<CAPTION>
                                           June 30           September 30       December 31           March 31
                                        ---------------     ---------------    ---------------     ---------------
               2006
               ----
<S>                                  <C>                 <C>                <C>                 <C>
Income                                $          2,000    $          4,000   $              -    $          2,000

Operating expenses                             (30,000)            (40,000)           (40,000)            (31,000)

Equity in losses of Local Limited
     Partnerships                                    -                   -                  -                   -

Net loss                                       (28,000)            (36,000)           (40,000)            (29,000)

Net Loss available to limited
     partners                                  (28,000)            (36,000)           (40,000)            (28,000)

Net Loss per limited partner unit                   (4)                 (5)                (5)                 (4)
</TABLE>

<TABLE>
<CAPTION>
                                           June 30           September 30       December 31           March 31
                                        ---------------     ---------------    ---------------     ---------------
               2005
               ----
<S>                                 <C>                <C>                <C>                  <C>
Income                                $         6,000    $          5,000   $              -    $          1,000

Operating expenses                            (30,000)            (37,000)           (28,000)            (41,000)

Equity in losses of Local Limited
     Partnerships                                   -                   -                  -                   -

Net loss                                      (24,000)            (32,000)           (28,000)            (40,000)

Net Loss available to limited
     partners                                 (24,000)            (31,000)           (28,000)            (40,000)

Net Loss per limited partner unit                  (3)                 (4)                (4)                 (5)
</TABLE>

NOTE 5 - SEBSEQUENT EVENT
-------------------------

Subsequent to year-end the Partnership identified one Local Limited Partnership,
BCA  Associates,  for  disposition.  The  Partnership  has  identified one Local
Limited  Partnership,  BCA  Associates,  ("BCA") for  disposition.  BCA owns the
Battle Creek Senior Apartments located in Anderson, California (the "Property").
Consistent  with  theinvestment  objectives  of the  Partnership,  the  Property

                                       37
<PAGE>

                    WNC CALIFORNIA HOUSING TAX CREDITS, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 5 - SEBSEQUENT EVENT, continued
------------------------------------
qualified for Federal low income housing tax credits under the Internal  Revenue
Code for a 10-year period. The credit period has expired, and no further credits
are being generated by the Property.  The 15-year Federal  compliance period has
also  expired,  so there  would be no credit  recapture  upon a transfer  of the
Property.

On June 23, 2006, the Partnership filed a proxy with the Securities and Exchange
Commission for the written consent of the Limited  Partners for the commencement
of the disposition. An affiliate of the General Partners executed a Purchase and
Sales  Agreement  on July  21,  2006  for the  purchase  of the  Property  at an
anticipated  sales price of  $1,820,000.  It is estimated the sales  transaction
will be complete by September  18, 2006. As of August 1, 2006,  the  Partnership
achieved the 51% approval necessary for the disposition.

                                       38
<PAGE>
Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

NOT APPLICABLE

Item 9A. Controls and Procedures

(a)  As of the end of the  period  covered  by this  report,  the  Partnership's
     General  Partner,  under the supervision and with the  participation of the
     Chief Executive Officer and Chief Financial Officer of Associates,  carried
     out an evaluation of the effectiveness of the Fund's  "disclosure  controls
     and  procedures" as defined in Securities  Exchange Act of 1934 Rule 13a-15
     and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief
     Financial  Officer have concluded that, as of the end of the period covered
     by this report, the Partnership's  disclosure  controls and procedures were
     adequate and  effective  in timely  alerting  them to material  information
     relating to the  Partnership  required to be included in the  Partnership's
     periodic SEC filings.

(b)  There were no changes in the Partnership's  internal control over financial
     reporting  that  occurred   during the  year  ended   March 31,   2006 that
     materially  affected,  or are reasonably likely to materially  affect,  the
     Partnership's internal control over financial reporting.

Item 9B. Other Information

NONE

PART III.

Item 10. Directors and Executive Officers of the Registrant

(a)  Identification of Directors,  (b) Identification of Executive Officers, (c)
     ---------------------------------------------------------------------------
     Identification of Certain Significant Employees,  (d) Family Relationships,
     ---------------------------------------------------------------------------
     and (e) Business Experience
     ---------------------------

Neither  the General  Partner  nor the  Partnership  has  directors,  executives
officers or employees of its own. The business of the  Partnership  is conducted
primarily through Associates.  Associates is a California  corporation which was
organized in 1971. The following  biographical  information is presented for the
directors of Associates,  and for the officers and employees of Associates  with
principal responsibility for the Partnership's affairs.

Wilfred N. Cooper, Sr.         Chairman
Wilfred N. Cooper, Jr.         President and Chief Executive Officer
David N. Shafer, Esq.          Executive Vice President
Michael J. Gaber               Executive Vice President
Sylvester P. Garban            Senior Vice President - Institutional Investments
Thomas J. Riha, CPA            Senior Vice President - Chief Financial Officer
Thomas J. Hollingsworth        Vice President - Asset Management
Gregory S. Hand                Vice President - Acquisitions
Melanie R. Wenk                Vice President - Portfolio Management
Thomas H. Mason                Director of Construction
J. Brad Hurlbut                Director of Syndications
Elizabeth Selby                Director of Development

In addition to Wilfred N. Cooper,  Sr., the directors of Associates  are Wilfred
N. Cooper, Jr., David N. Shafer, and Kay L. Cooper. The principal shareholder of
Associates is a trust established by Wilfred N. Cooper, Sr. and Kay L. Cooper.

Wilfred N.  Cooper,  Sr.,  age 75, is the founder  and  Chairman of the Board of
Directors of Associates,  a Director of WNC Capital  Corporation,  and a general
partner in some of the  partnerships  previously  sponsored by  Associates.  Mr.
Cooper has been actively involved in the affordable housing industry since 1968.
Previously,  during 1970 and 1971,  he was  founder and a principal  of Creative
Equity  Development  Corporation,  a predecessor of Associates,  and of Creative
Equity Corporation, a real estate investment firm. For 12 years before that, Mr.
Cooper was employed by Rockwell International  Corporation,  last serving as its
manager  of  housing  and urban  developments  where he had  responsibility  for
factory-built  housing  evaluation and project  management in urban planning and
development.  He has testified before committees of the U.S. Senate and the U.S.
House of  Representatives  on the matters  pertaining to the affordable  housing
industry.  Mr.  Cooper is a Life  Director of the National  Association  of Home
Builders,  a National Trustee for NAHB's Political Action Committee,  and a past
Chairman of NAHB's Multifamily Council.

                                       39
<PAGE>
He is a Director of the National Housing  Conference and a member of NHC's Board
of Governors,  and a founder and Director of the California Housing  Consortium.
He is the  husband of Kay Cooper  and the father of Wilfred N.  Cooper,  Jr. Mr.
Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree.

Wilfred  N.  Cooper,  Jr.,  age  42,  is  President,  Chief  Executive  Officer,
Secretary,  a Director and a member of the Acquisition  Committee of Associates.
He is President and a Director of, and a registered  principal with, WNC Capital
Corporation, and is a Director and Vice President of WNC Management, Inc. He has
been involved in real estate  investment and acquisition  activities  since 1988
when he  joined  Associates.  Previously,  he  served  as a  Government  Affairs
Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of
the Editorial  Advisory  Boards of Affordable  Housing Finance and LIHTC Monthly
Report,  a  Steering  Member  of  the  Housing  Credit  Group  of  the  National
Association  of Home  Builders,  a  member  of the Tax  Policy  Council  for the
National Trust for Historic Preservation,  a member of the Advisory Board of the
New York State  Association for Affordable  Housing,  a member of the Urban Land
Institute  and a member  of TEC  International,  a global  network  of  business
leaders  and chief  executives.  He is the son of  Wilfred  Cooper,  Sr. and Kay
Cooper.  Mr.  Cooper  graduated  from The  American  University  in 1985  with a
Bachelor of Arts degree.

David N. Shafer, age 53, is an Executive Vice President, a Director and a member
of the Acquisition Committee of Associates,  and a Director,  Vice President and
Secretary of WNC Management,  Inc. Mr. Shafer has been active in the real estate
industry  since 1984.  Before  joining  Associates in 1990, he was engaged as an
attorney  in the private  practice  of law with a  specialty  in real estate and
taxation.  Mr. Shafer is a Director and past President of the California Council
of Affordable Housing,  and a member of the State Bar of California.  Mr. Shafer
graduated  from the  University  of  California  at Santa Barbara in 1978 with a
Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris
Doctor  degree  cum  laude and from the  University  of San Diego in 1986 with a
Master of Law degree in Taxation.

Michael  J.  Gaber,  age  39,  is an  Executive  Vice  President,  oversees  the
Originations,  Acquisitions and Real Estate  Development  Departments,  and is a
member of the  Acquisition  Committee  and the  Commercial  Real Estate Group of
Associates  and a Vice  President  of WNC  Management,  Inc.  Mr. Gaber has been
involved in real estate acquisition,  valuation and investment  activities since
1989 and has been  associated  with  Associates  since  1997.  Prior to  joining
Associates, he was involved in the valuation and classification of major assets,
restructuring  of debt and  analysis of real estate  taxes with H.F.  Ahmanson &
Company,  parent of Home  Savings  of  America.  Mr.  Gaber  graduated  from the
California State University, Fullerton in 1991 with a Bachelor of Science degree
in Business Administration - Finance.

Sylvester  P.  Garban,   age  59,  is  Senior  Vice  President  -  Institutional
Investments  of  Associates   and  a  registered   principal  with  WNC  Capital
Corporation.  Mr.  Garban  has been  involved  in  domestic  and  multifinancial
institutional  real estate  investment  activities  since 1978.  Before  joining
Associates  in 1989, he served as Executive  Vice  President  with MRW,  Inc., a
commercial real estate  development and management  firm. Mr. Garban is a member
of the National  Association  of  Affordable  Housing  Lenders and the Financial
Planning Association. He graduated from Michigan State University in 1967 with a
Bachelor of Science degree in Business Administration.

Thomas J. Riha, age 50, is Senior Vice President - Chief Financial Officer and a
member of the  Acquisition  Committee  and the  Commercial  Real Estate Group of
Associates and Vice President,  Treasurer and a Director of WNC Management, Inc.
He has been involved in real estate acquisition and investment  activities since
1979.  Before joining  Associates in 1994, Mr. Riha was employed by Trust Realty
Advisor, a real estate acquisition and management company,  last serving as Vice
President - Operations.  He is a founding member of the Housing Credit Certified
Professional Board of Governors,  a national professional  certification program
administered  by  the  NAHB  and  the  National  Affordable  Housing  Management
Association. Mr. Riha graduated from the California State University,  Fullerton
in 1977 with a Bachelor of Arts degree cum laude in Business Administration with
a concentration in Accounting and is a Certified Public  Accountant and a member
of the American Institute of Certified Public Accountants.

                                       40
<PAGE>

Thomas J.  Hollingsworth,  CPA, age 54, is Vice President - Asset  Management of
WNC  &  Associates,   Inc.  and  oversees  WNC's  asset  management  group.  Mr.
Hollingsworth  has been  involved in real estate  acquisitions,  operations  and
syndication  of  multifamily  properties  for 25 years.  Prior to joining WNC in
2005,  he  was  the  senior  workout  specialist  at  Key  Corporation   Housing
Management,  Inc.,  a division  of Key Bank.  He has also been  responsible  for
structuring  several tax sheltered  multifamily  acquisitions during his career.
Mr. Hollingsworth  graduated from the University of Utah in 1973 with a Bachelor
of Science degree (cum laude) in Business Administration.

Gregory S. Hand, age 42, is Vice  President -  Acquisitions  and a member of the
Commercial Real Estate Group of Associates.  He is responsible for the oversight
of property  underwriting.  Mr. Hand has been involved in real estate  analysis,
development and management since 1987.  Prior to joining  Associates in 1998, he
was  a  portfolio  asset  manager  with  a  national  tax  credit  sponsor  with
responsibility  for the management of $200 million in assets.  Prior to that, he
was a finance  manager  with The Koll  Company and a financial  analyst with The
Irvine  Company.  Mr. Hand graduated  from Iowa State  University in 1987 with a
Bachelor of Business Administration degree in finance.

Melanie  R.  Wenk,  CPA,  age 37, is Vice  President-  Portfolio  Management  of
Associates.  She is  responsible  for overseeing  institutional  and retail fund
portfolio management, including partnership accounting, SEC reporting, quarterly
and  annual  investor  reporting  and  monitoring  investment  returns  for  all
stabilized WNC  institutional  funds.  Prior to joining  Associates in 2003, Ms.
Wenk was associated as a public accountant with BDO Seidman,  LLP. She graduated
from  the  California  Polytechnic  State  University,  Pomona,  in 1999  with a
Bachelor of Science degree in accounting.

Thomas H. Mason,  CPM, age 49, is Director of  Construction  and a member of the
Commercial  Real Estate Group of Associates  and is  responsible  for overseeing
Associates' construction management department. He has 20 years of experience in
the real estate and banking  industries and holds a Certified  Property  Manager
designation  from the  Institute  of Real  Estate  Management.  Prior to joining
Associates  in 1999,  Mr.  Mason  was  responsible  for  managing  assets in the
western-states region for a national  owner/operating company of commercial real
estate.  Prior to  that,  he  served  with  the  FDIC as a  senior  real  estate
specialist.  Mr. Mason  graduated from the University of California,  Santa Cruz
with  a  Bachelor  of  Arts  degree,   and  also  holds  a  Master  of  Business
Administration   degree  in  finance  and  marketing   from  the  University  of
California, Irvine, Graduate School of Management.

J.  Brad  Hurlbut,  age 46,  is  Director  of  Syndications  and a member of the
Commercial Real Estate Group of Associates.  He is responsible for the financial
structuring  of  Associates'  institutional  funds.  Mr. Hurlbut has 20 years of
experience  in  real  estate  investment  and  development.   Prior  to  joining
Associates in 2000, he served as corporate  controller  for Great Western Hotels
Corporation.  Mr. Hurlbut has been an enrolled agent licensed to practice before
the IRS since 1984. He graduated  from the University of Redlands in 1981 with a
Bachelor of Science  degree in business  management  and from  California  State
University, Fullerton in 1985 with a Master of Science degree in taxation.

Elizabeth Selby, age 31, is Director of Development of Associates. Ms. Selby has
been involved in real estate acquisition,  development and valuation  activities
since 1998 and has been associated with Associates  since 2003. Prior to joining
Associates,  she was  involved in the  development  of  affordable  multi-family
housing in New York City with BFC  Construction.  Ms. Selby  graduated  from the
University  of  California,  Berkeley in 1995 with a Bachelor of Arts degree and
from the University of Southern  California in 2001 with a Master of Real Estate
Development degree.

                                       41
<PAGE>

Kay L. Cooper,  age 69, is a Director of  Associates.  Mrs.  Cooper was the sole
proprietor of Agate 108, a manufacturer and retailer of home accessory products,
from 1975 until its sale in 1998. She is the wife of Wilfred Cooper, Sr. and the
mother of Wilfred  Cooper,  Jr. Ms.  Cooper  graduated  from the  University  of
Southern California in 1958 with a Bachelor of Science degree.

(f)  Involvement in Certain Legal Proceedings
     ----------------------------------------

     Two Local Limited  Partnerships  invested in by other  Associates-sponsored
     public limited  partnerships  were unable to meet their obligations as they
     became due,  and each has filed a voluntary  petition  in  bankruptcy.  The
     local general partner of one of them is not affiliated with Associates. The
     original  unaffiliated  local general  partner of the other was removed and
     replaced  with a  general  partner  wholly-owned  by  two of the  executive
     officers of WNC identified above.

(g)  Promoters and Control Persons
     -----------------------------
     Inapplicable.

(h)  Audit  Committee  Financial  Expert,  and (i)  Identification  of the Audit
     ---------------------------------------------------------------------------
     Committee
     ---------

     Neither the  Partnership,  the General  partner nor Associates has an audit
     committee.

(j)  Changes to Nominating Procedures
     --------------------------------
     Inapplicable.

(k)  Compliance With Section 16(a) of the Exchange Act
     -------------------------------------------------
     None.

(l)  Code of Ethics
     --------------
     Associates  has  adopted  a Code  of  Ethics  which  applies  to the  Chief
     Executive  Officer and Chief Financial  Officer of Associates.  The Code of
     Ethics will be provided  without charge to any person who requests it. Such
     requests  should  be  directed  to:  Investor  Relations  at  (714)662-5565
     extension 187.

Item 11.  Executive Compensation

The Partnership has no officers,  employees,  or directors.  However,  under the
terms of the  Partnership  Agreement the Partnership is obligated to the General
Partner or its  affiliates  during the current or future years for the following
fees:

(a)  Annual Asset  Management Fee. An annual asset  management fee accrues in an
     amount equal to 0.5% of the Invested Assets of the Partnership, as defined.
     "Invested  Assets" means the sum of the  Partnership's  investment in Local
     Limited Partnership Interests and the Partnership's  allocable share of the
     amount of the  mortgage  loans on and other  debts  related to the  Housing
     Complexes owned by such Local Limited  Partnerships.  Fees of approximately
     $112,000 were incurred  during each of the years ended March 31, 2006, 2005
     and 2004. The Partnership paid the General Partners and or their affiliates
     $0 of those fees during the each of the years ended  March 31,  2006,  2005
     and 2004.

                                       42
<PAGE>

(b)  Operating Expenses.  The Partnership  reimbursed the General Partner or its
     affiliates for operating  expenses of approximately $0, $24,000 and $19,000
     during the years ended March 31, 2006, 2005 and 2004, respectively.

(c)  Interest  in  Partnership.   The  General   Partners   receive  1%  of  the
     Partnership's  allocated Low Income Housing Tax Credits, which approximated
     $0,  $34 and $60 for  Associates  and $0, $4 and $7 for Mr.  Cooper for the
     calendar years ended December 31, 2005,  2004 and 2003,  respectively.  The
     General  Partners are also entitled to receive a percentage of  Partnership
     income or losses, and of cash distributions. There were no distributions of
     cash to the General  Partners  during the years ended March 31, 2006,  2005
     and 2004.

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters

(a)  Securities Authorized for Issuance Under Equity Compensation Plans
     ------------------------------------------------------------------
     Inapplicable.

(b)  Security Ownership of Certain Beneficial Owners
     -----------------------------------------------
     No person is known to the General Partners to own beneficially in excess of
     5% of the outstanding Units.

(c)  Security Ownership of Management
     --------------------------------
     Neither the General Partners,  Associates, their affiliates, nor any of the
     officers or directors of the corporate  General Partner,  Associates or its
     affiliates own directly or beneficially any Units in the Partnership.

(d)  Changes in Control
     ------------------
     The  management  and control of the General  Partner and of Associates  and
     their  affiliates  may be  changed  at any time in  accordance  with  their
     respective organizational documents, without the consent or approval of the
     Limited Partners.  In addition,  the Partnership Agreement provides for the
     admission  of one or more  additional  and  successor  General  Partners in
     certain circumstances.

     First,   with  the   consent   of  any  other   General   Partners   and  a
     majority-in-interest  of the  Limited  Partners,  any  General  Partner may
     designate  one or  more  persons  to be  successor  or  additional  General
     Partners. In addition,  any General Partner may, without the consent of any
     other General Partner or the Limited Partners,  (i) substitute in its stead
     as General  Partner  any  entity  which has,  by merger,  consolidation  or
     otherwise,  acquired  substantially  all  of its  assets,  stock  or  other
     evidence of equity interest and continued its business, or (ii) cause to be
     admitted to the Partnership an additional General Partner or Partners if it
     deems such  admission to be necessary or desirable so that the  Partnership
     will be classified a partnership for Federal income tax purposes.  Finally,
     a  majority-in-interest  of the Limited Partners may at any time remove the
     General Partner of the Partnership and elect a successor General Partner.

Item 13.  Certain Relationships and Related Transactions

The General Partners manage all of the Partnership's  affairs.  The transactions
with  the  General  Partners  are  primarily  in the  form of  fees  paid by the
Partnership for services rendered to the Partnership, reimbursement of expenses,
and the General Partner's interests in the Partnership,  as discussed in Item 11
and in the notes to the Partnership's financial statements.

                                       43
<PAGE>

Item 14. Principal Accountant Fees and Services

The  following  is a  summary  of  fees  paid  to  the  Partnership's  principal
independent auditors for the years ended March 31:
<TABLE>
<CAPTION>
                                             2006                2005
                                        ---------------     ---------------
<S>                                  <C>                 <C>
Audit Fees                            $         22,392    $         17,025
Audit-related Fees                                   -                   -
Tax Fees                                         3,000               3,000
All Other Fees                                       -                   -
                                        ---------------     ---------------
TOTAL                                 $         25,392    $         20,025
                                        ===============     ===============
</TABLE>

The  Partnership  has no Audit  Committee.  All audit services and any permitted
non-audit  services  performed  by the  Partnership's  independent  auditors are
preapproved by the General Partner.

                                       44

<PAGE>

PART IV.

Item 15.  Exhibits and Financial Statement Schedules

(a)(1)    List of Financial statements included in Part II hereof:
          --------------------------------------------------------
          Balance Sheets, March 31, 2006 and 2005
          Statements of Operations for the years ended March 31, 2006,  2005 and
          2004
          Statements of Partners' Equity (Deficit) for the years ended March 31,
          2006, 2005 and 2004
          Statements of Cash Flows for the years ended March 31, 2006,  2005 and
          2004
          Notes to Financial Statements

(a)(2)   List of Financial statement schedules included in Part IV hereof:
         -----------------------------------------------------------------
         Schedule III -Real Estate Owned by Local Limited Partnerships

(a)(3)   Exhibits.
         ---------

3.1      Agreement of Limited  Partnership  dated  September  15, 1988  filed as
         Exhibit 28.1  to  Form  10-K  for the year ended December 31,  1992  is
         hereby incorporated herein by reference as Exhibit 3.1.

31.1     Certification  of the Chief Executive  Officer  pursuant to Rule 13a-14
         and 15d-14,  as adopted  pursuant to  section 302 of the Sarbanes-Oxley
         Act of 2002.  (filed herewith)

31.2     Certification  of the Chief Financial  Officer  pursuant to Rule 13a-14
         and 15d-14,  as  adopted  pursuant to section 302 of the Sarbanes-Oxley
         Act of 2002.  (filed herewith)

32.1     Section 1350, to  Certification of the Chief Executive Officer.  (filed
         herewith)

32.2     Section 1350 Certification  of  the  Chief  Financial  Officer.  (filed
         herewith)

99.1     Amended and Restated  Agreement  of Limited Partnership  of  Countryway
         Associates  filed as  exhibit 10.1 on Form 10-K dated December 31, 1992
         is hereby incorporated herein as exhibit 99.1

                                       45
<PAGE>

99.2     Amended and  Restated  Agreement of Limited  Partnership  of Alta Vista
         Investors  filed as  exhibit  10.2 on Form 10-K dated December 31, 1992
         is hereby incorporated herein as exhibit 99.2.

99.3     Amended  and   Restated  Agreement  of  Limited  Partnership  of  Yreka
         Investment Group filed as exhibit 10.3 on Form 10-K  dated December 31,
         1992 is hereby incorporated herein as exhibit 99.3.

99.4     Amended and Restated Agreement of Limited Partnership of BCA Associates
         filed as exhibit 10.7 on  Form 10-K dated  December 31, 1992 is  hereby
         incorporated herein as exhibit 99.4.

99.5     Amended and Restated Agreement of Limited  Partnership of HPA Investors
         filed as exhibit 10.8on Form 10-K dated  December  31,  1992 is  hereby
         incorporated herein as exhibit 99.5.

99.6     Amended and Restated  Agreement of Limited  Partnership  of  Cloverdale
         Garden Apartments  filed as exhibit 10.11 on Form 10-K  dated  December
         31, 1992 is hereby incorporated herein as exhibit 99.6.

99.7     Amended and  Restated  Agreement  of  Limited  Partnership  of  Knights
         Landing Harbor filed as exhibit 10.13 on Form 10-K  dated  December 31,
         1992 is hereby incorporated herein as exhibit 99.7.

99.8     Amended and Restated Agreement of Limited Partnership of Woodlake Manor
         filed as exhibit 10.16 on Form 10-K dated December 31, 1992  is  hereby
         incorporated herein as exhibit 99.8.

99.9     Amended and Restated  Agreement of Limited  Partnership  of East Garden
         Apartments  filed as exhibit 10.18 on Form 10-K dated December 31, 1992
         is hereby incorporated herein as exhibit 99.9.

99.10    Amended and Restated Agreement of Limited  Partnership of Midland Manor
         Associates filed as exhibit 10.26 on Form 10-K  dated December 31, 1992
         is hereby incorporated herein as exhibit 99.10.

99.11    Amended and Restated  Agreement of Limited  Partnership  of San Jacinto
         Associates  filed as exhibit 10.27 on Form 10-K dated December 31, 1992
         is hereby incorporated herein as exhibit 99.1

                                       46
<PAGE>

WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2006
<TABLE>
<CAPTION>
                            -------------------------------------------  ----------------------------------------------------
                                          As of March 31,2006                                As of December 31, 2005
                            -------------------------------------------  ----------------------------------------------------
                                                                            Mortgage
                                      Partnership's Total   Amount of      Balances of                                       Net
                                      Investment in Local Investment Paid Local Limited         Buildings &  Accumulated     Book
  Partnership Name       Location    Limited Partnerships    to Date      Partnership   Land     Equipment   Depreciation   Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>             <C>          <C>                <C>          <C>         <C>          <C>
Alta Vista Investors    Orosi,
                        California   $  583,000      $   583,000     $  1,406,000       $ 40,000    $2,260,000 $1,194,000 $1,106,000

BCA Associates          Anderson,
                        California      514,000          514,000        1,394,000        150,000     2,003,000    835,000  1,318,000

Cloverdale Garden       Cloverdale,
Apartments              California      617,000          617,000        1,607,000        182,000     2,028,000    778,000  1,432,000

Countryway Associates   Mendota,
                        California      571,000          571,000        1,445,000         90,000     2,176,000  1,246,000  1,020,000

East Garden Apartments  Jamestown,
                        California      770,000          770,000        2,115,000        225,000     2,743,000  1,043,000  1,925,000

HPA Investors           Shafter,
                        California      538,000          538,000        1,483,000         94,000     2,150,000    885,000  1,359,000

Knights Landing Harbor  Knights
                        Landing,
                        California      275,000          275,000          963,000        100,000     1,294,000    546,000    848,000
</TABLE>

                                       47
<PAGE>

WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2006
<TABLE>
<CAPTION>
                                          ---------------------------   ------------------------------------------------------------
                                               As of March 31,2006                         As of December 31, 2005
                                          ---------------------------   ------------------------------------------------------------
                                                                         Mortgage
                                      Partnership's Total   Amount of   Balances of
                                      Investment in Local Investment Paid Local Limited     Buildings & Accumulated   Net Book
     Partnership Name      Location  Limited Partnerships   to Date     Partnership   Land  Equipment  Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>          <C>            <C>           <C>        <C>          <C>           <C>
Midland Manor            Mendota,
                         California      383,000         383,000      1,402,000     80,000   1,843,000       983,000         940,000

San Jacinto              San
Associates               Jacinto,
                         California      469,000         469,000      1,750,000    223,000   2,143,000       669,000       1,697,000

                         Woodlake,
Woodlake Manor           California      545,000         545,000      1,424,000    144,000   1,996,000     1,180,000         960,000

Yreka Investment Group
                         Yreka,
                         California      538,000         538,000      1,438,000    157,000   1,886,000       675,000       1,368,000
                                      ----------      ----------    ----------- ----------  ----------     ----------     ----------
                                      $5,803,000      $5,803,000    $16,427,000 $1,485,000 $22,522,000  $ 10,034,000     $13,973,000
                                      ==========      ==========    =========== ========== ===========  =============    ===========
</TABLE>

                                       48
<PAGE>
WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2006
<TABLE>
<CAPTION>
                                                  ----------------------------------------------------------------------------------
                                                                         For the year ended December 31, 2005
                                                  ----------------------------------------------------------------------------------
                                                                          Year                    Estimated
                                                     Net Income         Investment                Useful Life
   Partnership Name               Rental Income        (Loss)            Acquired     Status       (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>           <C>              <C>           <C>              <C>
Alta Vista Investors            $    228,000     $  (33,000)              1989       Completed           27.5

BCA Associates                       236,000        (16,000)              1989       Completed             40

Cloverdale Garden Apartments         240,000        (28,000)              1989       Completed             40

Countryway Associates                187,000       (106,000)              1989       Completed           27.5

East Garden Apartments               300,000        (21,000)              1989       Completed             40

HPA Investors                        226,000        (42,000)              1989       Completed             40

Knights Landing Harbor               164,000          9,000               1989       Completed             40

Midland Manor Associates             226,000        (25,000)              1990       Completed           27.5

San Jacinto Associates               285,000        (18,000)              1990       Completed             50

Woodlake Manor                       284,000         (5,000)              1989       Completed             30

Yreka Investment Group               225,000        (18,000)              1989       Completed             50
                                  ----------     -----------

                                 $ 2,601,000     $ (303,000)
                                 ===========     ===========
</TABLE>

                                       49
<PAGE>

WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2005
<TABLE>
<CAPTION>
                                          ------------------------------------------------------------------------------------------
                                                      As of March 31,2005                   As of December 31, 2004
                                          ------------------------------------------------------------------------------------------
                                                                                     Mortgage
                                           Partnership's Total     Amount of        Balances of
                                           Investment in Local  Investment Paid    Local Limited Property &   Accumulated   Net Book
     Partnership Name         Location    Limited Partnerships      to Date         Partnership   Building    Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>            <C>              <C>                <C>              <C>           <C>           <C>
Alta Vista Investors        Orosi,
                            California      $  583,000      $   583,000         $  1,412,000   $ 2,149,000   $1,095,000   $1,054,000

BCA Associates              Anderson,
                            California         514,000          514,000            1,401,000     2,138,000      773,000    1,365,000

Cloverdale Garden           Cloverdale,
Apartments                  California         617,000          617,000            1,614,000     2,201,000      715,000    1,486,000

Countryway Associates       Mendota,
                            California         571,000          571,000            1,452,000     2,249,000     1,158,00    1,091,000

East Garden Apartments      Jamestown,
                            California         770,000          770,000            2,123,000     2,981,000      962,000    2,019,000

HPA Investors               Shafter,
                            California         538,000          538,000            1,489,000     2,226,000      826,000    1,400,000

Knights Landing Harbor      Knights
                            Landing,
                            California         275,000          275,000              967,000     1,386,000      509,000      877,000

Midland Manor Associates    Mendota,           383,000          383,000            1,407,000     1,874,000      911,000      963,000
                            California

San Jacinto Associates      San Jacinto,
                            California         469,000          469,000            1,781,000     2,349,000      626,000    1,723,000

Woodlake Manor              Woodlake,
                            California         545,000          545,000            1,431,000     2,140,000    1,107,000    1,033,000

Yreka Investment Group      Yreka,
                            California
                                               538,000          538,000            1,445,000     2,043,000      639,000    1,404,000
                                           -----------      -----------         ------------  ------------    ---------- -----------
                                          $  5,803,000      $ 5,803,000         $ 16,522,000  $ 23,736,000   $9,321,000  $14,415,000
                                           ===========      ===========         ============  ============   =========== ===========
</TABLE>

                                       50
<PAGE>

WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2005
<TABLE>
<CAPTION>
                                              -------------------------------------------------------------------------------------
                                                                      For the year ended December 31, 2004
                                              -------------------------------------------------------------------------------------
                                                                                                                       Estimated
                                                                     Net Income      Year Investment                  Useful Life
              Partnership Name                       Rental Income     (Loss)           Acquired      Status            (Years)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>              <C>          <C>             <C>
Alta Vista Investors                                  $   226,000   $   (20,000)           1989      Completed         27.5

BCA Associates                                            235,000        21,000            1989      Completed           40

Cloverdale Garden Apartments                              241,000       (26,000)           1989      Completed           40

Countryway Associates                                     190,000       (60,000)           1989      Completed         27.5

East Garden Apartments                                    337,000       (50,000)           1989      Completed           40

HPA Investors                                             210,000       (29,000)           1989      Completed           40

Knights Landing Harbor                                    162,000             -            1989      Completed           40

Midland Manor Associates                                  240,000        16,000            1990      Completed         27.5

San Jacinto Associates                                    274,000         9,000            1990      Completed           50

Woodlake Manor                                            285,000       (18,000)           1989      Completed           30

Yreka Investment Group                                    224,000       (82,000)           1989      Completed           50
                                                          -------     ----------
                                                      $ 2,624,000   $  (239,000)
                                                      ===========     ==========
</TABLE>

                                       51
<PAGE>

WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2004
<TABLE>
<CAPTION>
                              ------------------------------------------------ -----------------------------------------------------
                                       As of March 31, 2004                                     As of December 31, 2003
                              ------------------------------------------------ -----------------------------------------------------
                                                                                   Mortgage
                                        Partnership's Total     Amount of         Balances of
                                        Investment in Local  Investment Paid     Local Limited Property &    Accumulated   Net Book
  Partnership Name       Location       Limited Partnerships     to Date         Partnerships   Building     Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                <C>             <C>             <C>          <C>           <C>
Alta Vista Investors     Orosi,
                         California
                                                $  583,000    $   583,000      $  1,418,000   $ 2,128,000  $ 1,014,000  $  1,114,000

BCA Associates           Anderson,
                         California                514,000        514,000         1,407,000     2,062,000      715,000     1,347,000

Cloverdale Garden        Cloverdale,
Apartments               California                617,000        617,000         1,619,000     2,201,000      651,000     1,550,000

Countryway Associates    Mendota,
                         California                571,000        571,000         1,458,000     2,194,000    1,069,000     1,125,000

East Garden Apartments   Jamestown,
                         California                770,000        770,000         2,135,000     2,962,000      879,000     2,083,000

HPA Investors            Shafter,
                         California                538,000        538,000         1,495,000     2,209,000      768,000     1,441,000

Knights Landing Harbor   Knights
                         Landing,
                         California                275,000        275,000           971,000     1,372,000      474,000       898,000

Midland Manor Associates Mendota,
                         California                383,000        383,000         1,412,000     1,867,000      841,000     1,026,000

San Jacinto Associates   San Jacinto,
                         California                469,000        469,000         1,797,000     2,349,000      584,000     1,765,000

Woodlake Manor           Woodlake,
                         California                545,000        545,000         1,437,000     2,137,000    1,034,000     1,103,000

Yreka Investment Group   Yreka,
                         California                538,000        538,000         1,451,000     2,044,000      602,000     1,442,000
                                              ------------    -----------       -----------  ------------  -----------  ------------
                                              $  5,803,000    $ 5,803,000        16,600,000  $ 23,525,000  $ 8,631,000  $ 14,894,000
                                              ============    ===========       ===========  ============  ===========  ============
</TABLE>

                                       52
<PAGE>

WNC California Housing Tax Credits, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2004
<TABLE>
<CAPTION>
                                                -------------------------------------------------------------------------------
                                                                     For the year ended December 31, 2003
                                                -------------------------------------------------------------------------------
                                                                                    Year                           Estimated
                                                                    Net Income   Investment                       Useful Life
               Partnership Name                   Rental Income       (Loss)       Acquired           Status         (Years)
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>           <C>            <C>             <C>
Alta Vista Investors                                    $ 225,000       $ (6,000)         1989          Completed         27.5

BCA Associates                                            233,000         22,000          1989          Completed           40

Cloverdale Garden Apartments                              237,000          3,000          1989          Completed           40

Countryway Associates                                     170,000        (72,000)         1989          Completed         27.5

East Garden Apartments                                    334,000         24,000          1989          Completed           40

HPA Investors                                             227,000          5,000          1989          Completed           40

Knights Landing Harbor                                    159,000         11,000          1989          Completed           40

Midland Manor Associates                                  237,000         15,000          1990          Completed         27.5

San Jacinto Associates                                    260,000        (12,000)         1990          Completed           50

Woodlake Manor                                            284,000         23,000          1989          Completed           30

Yreka Investment Group                                    226,000        (69,000)         1989          Completed           50
                                                      -----------       ---------
                                                      $ 2,592,000      $ (56,000)
                                                      ===========       =========
</TABLE>

                                       53
<PAGE>
                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

WNC CALIFORNIA HOUSING TAX CREDITS, L.P.

By:      WNC & Associates, Inc.,
         General Partner




By: /s/ Wilfred N. Cooper, Jr.
    -------------------------
    Wilfred N. Cooper, Jr.,
    President of WNC & Associates, Inc.

Date:  August 31, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.




By:  /s/ Wilfred N. Cooper, Jr.
     --------------------------
     Wilfred N. Cooper, Jr.,
     Chief  Executive  Officer, President and Director of WNC & Associates, Inc.
     (principal executive officer)

Date:  August 31, 2006




By:  /s/ Thomas J. Riha
     ------------------
     Thomas J. Riha,
     Senior  Vice-President  - Chief Financial Officer of WNC & Associates, Inc.
     (principal  financial  officer and  principal accounting officer)

Date:  August 31, 2006




By:  /s/ Wilfred N. Cooper, Sr.
     --------------------------
     Wilfred N. Cooper, Sr.,
     Chairman of the Board of WNC & Associates, Inc.

Date:  August 31, 2006





By:  /s/ David N. Shafer
     -------------------
     David N Shafer,
     Director of WNC & Associates, Inc.

Date:  August 31, 2006