UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2014

[ ] 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: 0-23908

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

California	33-0531301
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

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

(714) 662-5565

(Telephone number)

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 [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X] Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)

INDEX TO FORM 10-Q

For the Quarterly Period Ended ~~June~~September 30, 2014

PART I. FINANCIAL INFORMATION
~~Item 1. Financial Statements~~	Item 1. Financial Statements	~~F-1~~
Condensed Balance Sheets As of June 30, 2014 and March 31, 2014		F-1
	Condensed Balance Sheets As of September 30, 2014 and March 31, 2014	F-1
Condensed Statements of Operations For the Three Months Ended June 30, 2014 and 2013		F-2
	Condensed Statements of Operations For the Three and Six Months Ended September 30, 2014 and 2013	F-2
Condensed Statement of Partners’ Deficit For the Three Months Ended June 30, 2014		F-3
	Condensed Statement of Partners’ Deficit For the Six Months Ended September 30, 2014	F-3
Condensed Statements of Cash Flows For the Three Months Ended June 30, 2014 and 2013		F-4
	Condensed Statements of Cash Flows For the Six Months Ended September 30, 2014 and 2013	F-4
~~Notes to Condensed Financial Statements~~	Notes to Condensed Financial Statements	F-5
~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
~~Item 3. Quantitative and Qualitative Disclosures about Market Risks~~	Item 3. Quantitative and Qualitative Disclosures about Market Risks	45
Item 4.Controls and Procedures		4
	Item 4. Controls and Procedures	5
PART II. OTHER INFORMATION
~~Item 1. Legal Proceedings~~	Item 1. Legal Proceedings	56
~~Item 1A. Risk Factors~~	Item 1A. Risk Factors	57
~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	57
~~Item 3. Defaults Upon Senior Securities~~	Item 3. Defaults Upon Senior Securities	57
~~Item 4. Mine Safety Disclosures~~	Item 4. Mine Safety Disclosures	57
~~Item 5. Other Information~~	Item 5. Other Information	57
~~Item 6. Exhibits~~	Item 6. Exhibits	68
~~Signatures~~	Signatures	79

Part I. Financial Information

Item 1. Financial Statements

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)

CONDENSED BALANCE SHEETS

(Unaudited)

	June 30, 2014			March 31, 2014
	September 30, 2014			March 31, 2014
ASSETS
Cash	$	10,040		$	5,698
Other assets		6093,~~650~~242			60,756
Investments in Local Limited Partnerships, net (Note 2)		-			-
Total Assets	$	70103,~~690~~282		$	66,454
LIABILITIES AND PARTNERS’ DEFICIT
Liabilities:
Accrued fees and expenses due to General Partner and affiliates (Note 3)	$	1,~~720~~779,~~685~~975		$	1,717,344
Total Liabilities		1,~~720~~779,~~685~~975			1,717,344
Partners’ Deficit:
General Partner		(186,~~632~~899	)		(186,641	)
Limited Partners (30,000 Partnership Units authorized; 17,917 Partnership Units issued and outstanding)		(1,463,363	)		(1,464,249	)
Limited Partners (30,000 Partnership Units authorized; 17,897 and 17,917 Partnership Units issued and outstanding)		(1,489,794	)		(1,464,249	)
Total Partners’ Deficit		(1,~~649~~676,~~995~~693	)		(1,650,890	)
Total Liabilities and Partners’ Deficit	$	70103,~~690~~282		$	66,454

~~See accompanying notes to condensed financial statements~~F-1

~~F-1~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

(ACONDENSED ~~California~~STATEMENTS ~~Limited~~OF ~~Partnership)~~OPERATIONS

~~CONDENSED~~For ~~STATEMENTS~~the OFThree ~~OPERATIONS~~and Six Months Ended September 30, 2014 and 2013

~~For the Three Months Ended June 30, 2014 and 2013~~(Unaudited)

(Unaudited)

	2014						2013
	Three Months			Six Months			Three Months			Six Months

Operating income:
Distribution income	$	-		$	14,342		$	12,130		$	13,130

Total operating income		-			14,342			12,130			13,130

Operating expenses:
Asset management fees (Note 3)		6,272			12,544			9,132			21,861
Legal and accounting fees		15,750			15,750			16,810			21,720
Write off of other assets		1,641			7,051			-			-
Other		3,035			4,800			1,961			5,433

Total operating expenses		26,698			40,145			27,903			49,014

Loss from operations		(26,698	)		(25,803	)		(15,773	)		(35,884	)

Gain on sale of Local Limited Partnerships		-			-			8,409			8,409

Net loss	$	(26,698	)	$	(25,803	)	$	(7,364	)	$	(27,475	)

Net loss allocated to:
General Partner	$	(267	)	$	(258	)	$	(74	)	$	(275	)

Limited Partners	$	(26,431	)	$	(25,545	)	$	(7,290	)	$	(27,200	)

Net income loss per Partnership Unit	$	(1	)	$	(1	)	$	(1	)	$	(2	)

Outstanding weighted Partnership Units		17,897			17,897			17,957			17,957

	2014		2013
	Three Months		Three Months
Operating income:
Distribution income	$	-	$	1,000
Reporting fees		14,342		-
Total operating income		14,342		1,000
Operating expenses:
Asset management fees (Note 3)		6,272		12,729
Legal and accounting fees		-		4,910
Write off of other assets		5,410		-
Other		1,765		3,472
Total operating expenses		13,447		21,111
Net income (loss)	$	895	$	(20,111	)
Net income (loss) allocated to:
General Partner	$	9	$	(201	)
Limited Partners	$	886	$	(19,910	)
Net income (loss) per Partnership Unit	$	-	$	(1	)
Outstanding weighted Partnership Units		17,917		17,957

See accompanying notes to condensed financial statements

~~See accompanying notes to condensed financial statements~~F-2

~~F-2~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

(ACONDENSED ~~California~~STATEMENT ~~Limited~~OF ~~Partnership)~~PARTNERS’ DEFICIT

~~CONDENSED~~For ~~STATEMENT~~the OFSix ~~PARTNERS’~~Months ~~DEFICIT~~Ended September 30, 2014

~~For the Three Months Ended June 30, 2014~~(Unaudited)

(Unaudited)

	General			Limited
	Partner			Partners			Total

Partners’ deficit at March 31, 2014	$	(186,641	)	$	(1,464,249	)	$	(1,650,890	)

Net loss		(258	)		(25,545	)		(25,803	)

Partners’ deficit at September 30, 2014	$	(186,899	)	$	(1,489,794	)	$	(1,676,693	)

	General			Limited
	Partner			Partners			Total
Partners’ deficit at March 31, 2014	$	(186,641	)	$	(1,464,249	)	$	(1,650,890	)
Net income		9			886			895
Partners’ deficit at June 30, 2014	$	(186,632	)	$	(1,463,363	)	$	(1,649,995	)

See accompanying notes to condensed financial statements

~~See accompanying notes to condensed financial statements~~F-3

~~F-3~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

(ACONDENSED ~~California~~STATEMENTS ~~Limited~~OF ~~Partnership)~~CASH FLOWS

~~CONDENSED~~For ~~STATEMENTS~~the OFSix ~~CASH~~Months ~~FLOWS~~Ended September 30, 2014 and 2013

~~For the Three Months Ended June 30, 2014 and 2013~~(Unaudited)

(Unaudited)

	2014			2013

Cash flows from operating activities:
Net loss	$	(25,803	)	$	(27,475	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Increase in other assets		(32,486	)		(6,160	)
Gain on sale of Local Limited Partnerships		-			(8,409	)
Increase in accrued fees and expenses due to General Partner and affiliates		62,631			27,263

Net cash provided by (used in) operating activities		4,342			(14,781	)

Cash flows from investing activities:
Net proceeds from sale of Local Limited Partnerships		-			8,409

Net cash provided by investing activities		-			8,409

Net increase (decrease) in cash		4,342			(6,372	)

Cash, beginning of period		5,698			17,070

Cash, end of period	$	10,040		$	10,698

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Taxes paid	$	-		$	-

	2014		2013
Cash flows from operating activities:
Net income (loss)	$	895	$	(20,111	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Increase in accrued fees and expenses due to General Partner and affiliates		3,341		12,729
(Increase) decrease in other assets		106		(6,180	)
Net cash provided by (used in) operating activities		4,342		(13,562	)
Cash flows from investing activities:
Prepaid disposition proceeds		-		2,500
Net cash provided by investing activities		-		2,500
Net increase (decrease) in cash		4,342		(11,062	)
Cash, beginning of period		5,698		17,070
Cash, end of period	$	10,040	$	6,008
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid	$	-	$	-

See accompanying notes to condensed financial statements

~~See accompanying notes to condensed financial statements~~F-4

~~F-4~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

(ANOTES ~~California~~TO ~~Limited~~CONDENSED ~~Partnership)~~FINANCIAL STATEMENTS

~~NOTES~~For TOthe ~~CONDENSED~~Quarterly ~~FINANCIAL~~Period ~~STATEMENTS~~Ended -September ~~CONTINUED~~30, 2014

~~For the Quarterly Period Ended June 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~General

~~General~~The accompanying condensed unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2015. For further information, refer to the financial statements and footnotes thereto included in the Partnership’s annual report on Form 10-K for the fiscal year ended March 31, 2014.

The accompanying condensed unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q for quarterly reports under Section 13 or 15(d) of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2015. For further information, refer to the financial statements and footnotes included in the Partnership’s annual report on Form 10-K for the fiscal year ended March 31, 2014.Organization

~~Organization~~WNC California Housing Tax Credits III, L.P. (the “Partnership”), is a California Limited Partnership formed under the laws of the State of California on October 5, 1992 and began operations on July 19, 1993. The Partnership was formed to acquire limited partnership interests in other limited partnerships (“Local Limited Partnerships”) which own multi-family or senior housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits (“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 Complexes. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local Limited Partnership Agreement”).

~~WNC~~The ~~California~~general ~~Housing~~partner ~~Tax~~of ~~Credits III, L.P., (~~the “Partnership~~”),~~ is aWNC California ~~Limited~~Housing ~~Partnership~~Tax ~~formed~~Credit ~~under~~Partners ~~the laws of the State of California on October 5~~III, ~~1992 and began operations on July 19, 1993~~L.P. ~~The Partnership was formed to acquire limited partnership interests in other limited partnerships~~ (the “~~Local~~General ~~Limited Partnerships~~Partner”) ~~which own multi-family~~. orWNC ~~senior~~& ~~housing~~Associates, ~~complexes~~Inc. (“~~Housing Complexes~~Associates”) ~~that~~and ~~are~~Wilfred ~~eligible~~N. ~~for~~Cooper ~~Federal low income housing tax credits (“Low Income Housing Tax Credits”)~~Sr. ~~The~~are ~~local~~the general partners (of the ~~“Local~~ General ~~Partners”)~~Partner. The ofchairman ~~each~~and ~~Local~~president ~~Limited Partnership~~of ~~retain~~Associates ~~responsibility~~own ~~for~~all ~~maintaining,~~of ~~operating~~the ~~and~~outstanding ~~managing~~stock ~~the~~of ~~Housing Complexes~~Associates. The ~~Each~~business ~~Local~~of ~~Limited~~the Partnership is ~~governed~~conducted byprimarily ~~its~~through ~~agreement~~Associates ofas ~~limited~~the ~~partnership~~Partnership ~~(the~~has ~~“Local~~no ~~Limited~~employees ~~Partnership~~of ~~Agreement”)~~its own.

The ~~general partner of the~~ Partnership isshall ~~WNC~~continue ~~California~~in ~~Tax~~full ~~Credits~~force ~~Partners~~and ~~III,~~effect ~~L.P.~~until ~~(the~~December ~~“General Partner”). WNC & Associates~~31, ~~Inc.~~2050 ~~(“Associates”)~~unless ~~and~~terminated ~~Wilfred~~prior N.to ~~Cooper~~that ~~Sr.~~date ~~are~~pursuant ~~the~~to ~~general partners of~~ the ~~General Partner. The chairman~~ ~~and~~partnership ~~president~~agreement ofor ~~Associates own all of the outstanding stock of Associates~~law. ~~The business of the Partnership is conducted primarily through Associates as the Partnership has no employees of its own.~~

The ~~Partnership~~financial ~~shall~~statements ~~continue~~include inonly ~~full~~activity ~~force~~relating ~~and~~to ~~effect~~the ~~until~~business ~~December~~of 31the Partnership, ~~2050~~and ~~unless~~do ~~terminated~~not ~~prior~~give effect to any assets that the ~~date~~partners ~~pursuant~~may tohave outside of their interests in the ~~partnership~~ ~~agreement~~Partnership, or ~~law~~to any obligations, including income taxes, of the partners.

~~The~~Pursuant ~~financial~~to ~~statements~~a ~~include~~registration ~~only~~statement ~~activity~~filed ~~relating~~with tothe Securities and Exchange Commission, on February 17, 1993, the ~~business~~Partnership commenced a public offering of 30,000 units of limited partnership interest (“Partnership Units”) at a price of $1,000 per Partnership Unit. As of the close of the public offering on July 22, 1994, a total of 17,990 Partnership Units representing $17,990,000 ~~and~~had been dosold. ~~not~~During ~~give~~1995, ~~effect~~an additional 10 Partnership Units amounting to ~~any~~$10,000 ~~assets~~was ~~that~~collected on subscriptions accepted and previously deemed uncollectible. The General Partner has a 1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the ~~partners~~Partnership ~~may~~and ~~have~~Low ~~outside~~Income Housing Tax Credits of ~~their~~the ~~interests~~Partnership. The investors in the Partnership, (“Limited orPartners”) will be allocated the remaining 99% of these items in proportion to ~~any~~their ~~obligations~~respective investments. As of September 30, ~~including~~2014 ~~income~~and ~~taxes~~March 31, 2014, a total of ~~the~~17,897 ~~partners~~and 17,917 Partnership Units, respectively, remain outstanding.

Pursuant to a registration statement filed with the Securities and Exchange Commission, on February 17, 1993, the Partnership commenced a public offering of 30,000 units of limited partnership interest (“Partnership Units”) at a price of $1,000 per Partnership Unit. As of the close of the public offering on July 22, 1994, a total of 17,990 Partnership Units representing $17,990,000 had been sold. During 1995, an additional 10 Partnership Units amounting to $10,000 was collected on subscriptions accepted and previously deemed uncollectible. The General Partner has a 1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the Partnership and Low Income Housing Tax Credits of the Partnership. The investors in the Partnership (“Limited Partners”) will be allocated the remaining 99% of these items in proportion to their respective investments. As of June 30, 2014, a total of 17,917 Partnership Units remain outstanding.F-5

~~F-5~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

(ANOTES ~~California~~TO ~~Limited~~CONDENSED ~~Partnership)~~FINANCIAL STATEMENTS - CONTINUED

~~NOTES~~For TOthe ~~CONDENSED~~Quarterly ~~FINANCIAL~~Period ~~STATEMENTS~~Ended -September ~~CONTINUED~~30, 2014

~~For the Quarterly Period Ended June 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~NOTE~~The 1proceeds -from ~~SUMMARY~~the OFdisposition ~~SIGNIFICANT~~of ~~ACCOUNTING~~any ~~POLICIES~~of the Local Limited Partnership Housing Complexes 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, ~~continued~~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 Partner would then be entitled to receive proceeds equal to their capital contributions from the remainder. Any additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments) and 10% to the General Partner.

~~The~~Risks ~~proceeds from the disposition of any of the Local Limited Partnership Housing Complexes 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 Partner would then be entitled to receive proceeds equal to its capital contributions from the remainder. Any additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments) and 10% to the General Partner.Uncertainties

~~Risks~~An investment in the Partnership and ~~Uncertainties~~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:

AnThe ~~investment~~Low Income Housing Tax Credits rules are extremely complicated. Noncompliance with these rules results in the ~~Partnership~~loss of future Low Income Housing Tax Credits and the ~~Partnership’s~~fractional ~~investments~~recapture inof ~~Local~~Low ~~Limited~~Income ~~Partnerships~~Housing ~~and~~Tax ~~their~~Credits ~~Housing~~already ~~Complexes~~taken. In most cases the annual ~~are~~amount ~~subject~~of Low Income Housing Tax Credits that an individual can use is limited to ~~risks~~the tax liability due on the person’s last $25,000 of taxable income. ~~These~~The ~~risks~~Local Limited Partnerships may ~~impact~~be unable to sell the ~~tax~~Housing ~~benefits~~Complexes ofat ana ~~investment~~price which would result in the Partnership, ~~and~~realizing ~~the~~cash ~~amount~~distributions ofor proceeds from the transaction. Accordingly, the Partnership may be unable ~~available~~to ~~for~~distribute ~~distribution~~any cash to ~~the~~its Limited Partners,. ifLow ~~any,~~Income onHousing ~~liquidation~~Tax ofCredits may be the ~~Partnership’s~~only ~~investments.~~benefit ~~Some~~from ofan ~~those risks~~investment ~~include~~in the ~~following:~~ Partnership.

The ~~Low~~Partnership ~~Income~~has ~~Housing~~invested ~~Tax~~in ~~Credits~~a ~~rules~~limited ~~are~~number ~~extremely~~of ~~complicated~~Local Limited Partnerships. ~~Noncompliance~~Such ~~with~~limited ~~these~~diversity ~~rules~~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 “Compliance Period”), the loss of ~~future~~any ~~Low~~remaining future Low Income Housing Tax Credits, ~~and~~a ~~the~~ fractional recapture of prior Low Income Housing Tax Credits, ~~already~~and ~~taken.~~a Inloss ~~most~~of ~~cases~~ the ~~annual~~Partnership’s ~~amount~~investment ofin ~~Low~~the ~~Income~~ Housing ~~Tax~~Complex ~~Credits~~would ~~that~~occur. anThe ~~individual~~Partnership ~~can~~is ~~use~~a islimited partner or a non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the ~~tax~~Local ~~liability~~Limited ~~due~~Partnerships. The Partnership will rely totally on the ~~person~~Local General Partners. Neither the Partnership’s ~~last~~ ~~$25,000~~investments ofin ~~taxable~~Local ~~income.~~Limited Partnerships, ~~The~~nor the Local Limited Partnerships’ ~~may~~investments bein ~~unable~~Housing toComplexes, ~~sell~~are readily marketable. To the extent the Housing Complexes atreceive agovernment ~~price~~financing ~~which~~or ~~would~~operating subsidies, they may be subject to one or more of the following ~~result~~risks: difficulties in obtaining tenants for the ~~Partnership~~Housing ~~realizing~~Complexes; ~~cash~~difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or ~~proceeds~~refinancing ~~from~~of ~~the~~Housing ~~transaction.~~Complexes; ~~Accordingly,~~limitations ~~the~~on ~~Partnership~~transfers ~~may~~of beinterests ~~unable~~in Local Limited toPartnerships; ~~distribute~~limitations ~~any~~on ~~cash~~removal toof ~~its~~Local ~~Limited~~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 ~~may~~and berecapture ~~the~~of ~~only~~Low ~~benefit~~Income Housing Tax Credits previously taken. The value of real estate is subject to risks from anfluctuating ~~investment~~economic inconditions, ~~the~~including ~~Partnership~~employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar Housing Complexes, and neighborhood conditions, among others.

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 “Compliance Period”), the loss of any remaining future Low Income Housing Tax 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 a nonF-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 Housing Complexes, and neighborhood conditions, among others.6

~~F-6~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

(ANOTES ~~California~~TO ~~Limited~~CONDENSED ~~Partnership)~~FINANCIAL STATEMENTS - CONTINUED

~~NOTES~~For TOthe ~~CONDENSED~~Quarterly ~~FINANCIAL~~Period ~~STATEMENTS~~Ended -September ~~CONTINUED~~30, 2014

~~For the Quarterly Period Ended June 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

~~NOTE~~The 1-ability ~~SUMMARY~~of OFLimited ~~SIGNIFICANT~~Partners ~~ACCOUNTING~~to ~~POLICIES,~~claim ~~continued~~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 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.

~~The~~All ~~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~~anticipated ~~tax losses allocable~~ to ~~Limited Partners could~~ be ~~reduced~~realized iffrom the ~~IRS~~Local ~~were~~Limited ~~successful~~Partnerships inhave ~~such~~been ~~a challenge~~realized. The ~~alternative minimum tax could~~Partnership ~~reduce~~does ~~tax~~not ~~benefits~~anticipate ~~from~~being anallocated ~~investment~~any inLow ~~the~~Income ~~Partnership.~~Housing ~~Changes~~Tax inCredits ~~tax~~from ~~laws could also impact~~ the ~~tax~~Local ~~benefits~~Limited ~~from~~Partnerships ~~an investment~~ in the ~~Partnership and/or the value of the Housing Complexes~~future.

~~All~~Anticipated future and existing cash resources of the ~~Low~~Partnership ~~Income~~are ~~Housing~~not ~~Tax~~sufficient ~~Credits~~to ~~anticipated~~pay toexisting beliabilities ~~realized~~of ~~from~~the Partnership. However, substantially all of the ~~Local~~existing ~~Limited~~liabilities ~~Partnerships~~of ~~have~~the ~~been~~Partnership ~~realized~~are payable to the General Partner and/or its affiliates. ~~The~~Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates ~~does~~that ~~not~~the ~~anticipate~~General ~~being~~Partner ~~allocated~~and/or ~~any~~its ~~Low~~affiliates ~~Income~~will ~~Housing~~not ~~Tax~~require ~~Credits~~the ~~from~~payment ~~the~~of ~~Local~~these ~~Limited~~contractual ~~Partnerships~~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.

~~Anticipated~~No ~~future~~trading ~~and~~market ~~existing~~for ~~cash resources of~~ the Partnership ~~are~~Units ~~not~~exists ~~sufficient~~or tois ~~pay~~expected ~~existing~~to ~~liabilities of the Partnership~~develop. ~~However, substantially~~Limited ~~all~~Partners ofmay ~~the~~be ~~existing~~unable ~~liabilities~~to ofsell ~~the~~their Partnership Units ~~are~~except ~~payable~~at toa ~~the~~discount ~~General Partner~~ and~~/or~~ ~~its~~should ~~affiliates.~~consider ~~Though the~~their ~~amounts~~Partnership ~~payable~~Units to ~~the~~be ~~General~~a ~~Partner~~long-term ~~and/or~~investment. ~~its~~Individual ~~affiliates~~Limited ~~are contractually currently payable, the Partnership anticipates~~Partners ~~that the General Partner and/or its affiliates~~ will ~~not~~have ~~require~~no ~~the~~recourse ~~payment~~if ofthey ~~these~~disagree ~~contractual~~with ~~obligations~~actions ~~until~~authorized ~~capital~~by ~~reserves are~~a invote ~~excess~~ of the ~~aggregate~~majority of ~~then~~Limited ~~existing contractual obligations and then anticipated future foreseeable obligations of the Partnership~~Partners. 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.

NoThe ~~trading market for the~~ Partnership ~~Units~~currently ~~exists~~has orinsufficient isworking ~~expected~~capital to ~~develop.~~fund ~~Limited~~its ~~Partners~~operations. ~~may~~Associates behas ~~unable~~agreed to ~~sell~~continue ~~their~~providing ~~Partnership~~advances ~~Units~~sufficient ~~except~~enough ~~at a discount and should consider their Partnership Units~~ to befund athe ~~long-term~~operations ~~investment.~~and ~~Individual~~working ~~Limited~~capital ~~Partners will~~requirements ~~have no recourse if they disagree with actions authorized by a vote~~ of the ~~majority~~Partnership ofthrough ~~Limited~~November ~~Partners~~30, 2015.

~~The~~Exit Partnership currently has insufficient 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 September 30, 2015.Strategy

~~Exit~~The ~~Strategy~~Compliance Period for a Housing Complex 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 have completed their Compliance Periods.

~~The~~Upon ~~Compliance~~the ~~Period~~sale ~~for~~of a Local Limited Partnership Interest or Housing Complex isafter ~~generally~~the 15end ~~years~~of ~~following~~the ~~construction~~Compliance orPeriod, ~~rehabilitation~~there ~~completion.~~would ~~Associates~~be no ~~were~~recapture ~~one~~ of ~~the~~Low ~~first~~Income inHousing ~~the~~Tax ~~industry~~Credits. A sale prior to ~~offer~~the ~~syndicated~~end ~~investments~~of the Compliance Period could result in ~~Low~~recapture ~~Income~~if ~~Housing~~certain conditions ~~Tax~~are ~~Credits~~not met. ~~The~~All ~~initial~~remaining ~~programs~~ Local Limited Partnerships have completed their Compliance Periods.

~~Upon~~With ~~the~~that ~~sale~~in ofmind, athe ~~Local~~General ~~Limited~~Partner ~~Partnership~~is ~~interest~~continuing orits ~~Housing~~review ~~Complex~~of ~~after~~ the ~~end~~Housing ofComplexes. ~~the~~The ~~Compliance~~review ~~Period~~considers many factors, ~~there~~including extended ~~would~~use berequirements ~~no recapture~~(such ofas ~~Low~~those ~~Income~~due ~~Housing~~to ~~Tax~~mortgage ~~Credits.~~restrictions Aor ~~sale~~state ~~prior~~compliance toagreements), the ~~end~~condition of the ~~Compliance Period could result in recapture if certain~~Housing ~~conditions~~Complexes, ~~are~~and ~~not~~the ~~met.~~tax ~~All~~consequences ~~remaining~~to ~~Local~~the Limited ~~Partnerships~~Partners ~~have~~from ~~completed~~the ~~their~~sale ~~Compliance~~of ~~Periods~~the Housing Complexes.

With that in mind, the General Partner is continuing its review of the Housing Complexes. 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 Complexes, and the tax consequences to the Limited Partners from the sale of the Housing Complexes.F-7

~~Upon~~WNC ~~identifying~~CALIFORNIA ~~those~~HOUSING ~~Housing~~TAX ~~Complexes~~CREDITS ~~with the highest potential for a successful sale~~III, ~~refinancing or re-syndication, the Partnership expects to proceed with efforts to liquidate them~~L. ~~The objective is to wind down the Partnership as Low Income Housing Tax Credits are no longer available~~P. 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 June 30, 2014.

~~F-7~~(A California Limited Partnership)

~~WNC~~NOTES ~~CALIFORNIA~~TO ~~HOUSING~~CONDENSED ~~TAX~~FINANCIAL ~~CREDITS~~STATEMENTS ~~III,~~- ~~L.P.~~CONTINUED

(AFor ~~California~~the ~~Limited~~Quarterly ~~Partnership)~~Period Ended September 30, 2014

~~NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED~~(Unaudited)

~~For~~NOTE ~~the~~1 ~~Quarterly~~- ~~Period~~SUMMARY ~~Ended~~OF ~~June~~SIGNIFICANT 30ACCOUNTING POLICIES, ~~2014~~continued

~~(Unaudited)~~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 September 30, 2014.

~~NOTE~~As 1of -March ~~SUMMARY~~31, OF2014, ~~SIGNIFICANT~~the ~~ACCOUNTING~~Partnership ~~POLICIES~~sold its Local Limited Partnership Interest in Rosewood Apartments L.P., ~~continued~~Venus Retirement Village, Ltd., Winters Investment Group, Parlier Garden Apartments, L.P., Tahoe Pines Apartments, L.P., Candleridge Apartments of Perry L.P II, Nueva Sierra Vista Associates, L.P., Walnut – Pixley, L.P., Orosi Apartments, Ltd., Memory Lane, L.P., Sun Manor, L.P., Almond Garden Apartment Associates, Buccaneer Villas, Limited, Dallas County Housing Ltd., Old Fort Limited Partnership, Almond View Apartments L.P., and La Paloma del Sol, Phase II, L.P. The Partnership also sold the Housing complexes of Sequoia View as of March 31, 2014 .

As of ~~March~~September 3130, 2014, the ~~Partnership sold its~~ Local Limited Partnership Interest in ~~Rosewood~~Colonial ~~Apartments~~Village ~~L.P.,~~Roseville ~~Venus~~was ~~Retirement~~identified to be sold. Colonial Village Roseville was appraised for $2, ~~Ltd~~590,000 ~~Winters~~and ~~Investment~~had ~~Group~~a mortgage note balance of $1,408,000 ~~Parlier~~as ~~Garden~~of ~~Apartments~~December 31, L2013.~~P.,~~ ~~Tahoe~~The ~~Pines~~Partnership’s investment ~~Apartments,~~balance Lis zero.~~P.,~~ ~~Candleridge~~The ~~Apartments~~Compliance Period has been completed therefore there is no risk of ~~Perry L~~recapture.P. ~~II,~~The ~~Nueva~~sales ~~Sierra~~price has ~~Vista~~yet ~~Associates,~~been Ldetermined.~~P.,~~ ~~Walnut~~The –Local ~~Pixley,~~General ~~L.P.,~~Partner ~~Orosi~~prevented ~~Apartments,~~a ~~Ltd.,~~sale ~~Memory~~from ~~Lane,~~moving ~~L.P.,~~forward ~~Sun~~and ~~Manor,~~the Partnership filed suit to force Lthe sale.~~P.,~~ ~~Almond~~The ~~Garden~~Court ~~Apartment~~will ~~Associates,~~identify ~~Buccaneer~~appraisers ~~Villas,~~to ~~Limited,~~appraise ~~Dallas~~the ~~County~~property ~~Housing,~~and ~~Ltd.,~~recommend ~~Old~~a ~~Fort~~sales ~~Limited~~price ~~Partnership, Almond~~to ~~View~~proceed. ~~Apartments,~~The ~~Limited~~sale ~~and~~is Lanot expected ~~Paloma~~to ~~del~~be ~~Sol,~~concluded ~~Phase~~this ~~II,~~calendar Lyear.P.

AsMethod of ~~June~~Accounting ~~30,~~for ~~2014~~Investments ~~the~~in Local Limited Partnership Interest in Colonial Village Roseville was identified to be sold. Colonial Village Roseville was appraised for $2,590,000 and had a mortgage note balance of $1,408,000 as of December 31, 2013. The Partnership’s investment balance is zero. The Compliance Period has been completed therefore there is no risk of recapture. The sales price has yet been determined. The Local General Partner prevented a sale from moving forward and the Partnership filed suit to force the sale. The Court will identify appraisers to appraise the property and recommend a sales price to proceed. The sale is not expected to be concluded this calendar year.Partnerships

~~Method~~The Partnership accounts for its investments in Local Limited Partnerships using the equity method of ~~Accounting~~accounting, whereby the Partnership adjusts its investment balance for ~~Investments~~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 at least annually or 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 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 were amortized over 27.5 years (see Note 2).

~~The~~“Equity ~~Partnership~~in ~~accounts~~losses ~~for~~of ~~its investments in~~ Local Limited Partnerships” ~~using~~for the ~~equity~~periods ~~method~~ended ofSeptember ~~accounting~~30, ~~whereby~~2014 ~~the~~and ~~Partnership adjusts~~2013 ~~its~~has ~~investment~~been ~~balance~~recorded ~~for~~by ~~its share of~~ the ~~Local Limited Partnerships~~Partnership. Management’s ~~results~~estimate ~~of operations and~~ for ~~any~~the ~~contributions made~~three and ~~distributions~~six-month ~~received.~~periods is ~~The~~based ~~Partnership~~on ~~reviews~~either ~~the~~actual ~~carrying~~unaudited ~~amount~~results ofreported anby ~~individual~~the ~~investment in a~~ Local Limited ~~Partnership for~~Partnerships ~~possible impairment whenever events~~ or ~~changes~~historical trends in ~~circumstances indicate that~~ the ~~carrying amount of such investment may not~~operations ~~be recoverable. Recoverability~~ of ~~such investment is measured by~~ the ~~estimated~~Local ~~value~~Limited ~~derived~~Partnerships. byEquity ~~management,~~in ~~generally~~losses ~~consisting~~ of ~~the~~Local ~~sum~~Limited ofPartnerships ~~the remaining future Low Income Housing Tax Credits estimated~~ allocated to ~~be allocable to~~ the Partnership ~~and~~are ~~the~~not ~~estimated residual~~recognized ~~value~~ to the ~~Partnership.~~extent Ifthat anthe investment isbalance ~~considered~~would to be ~~impaired,~~adjusted ~~the~~below ~~Partnership~~zero. ~~reduces~~If the ~~carrying~~Local Limited ~~value~~Partnerships ~~of its~~report ~~investment~~net income in ~~any~~future ~~such~~years, ~~Local~~the ~~Limited~~ Partnership. ~~The~~will ~~accounting~~resume ~~policies~~applying of the ~~Local~~equity ~~Limited~~method ~~Partnerships,~~only ~~generally,~~after ~~are~~its ~~expected~~share toof besuch ~~consistent~~net ~~with~~income ~~those~~equals of the ~~Partnership.~~share ~~Costs~~of ~~incurred~~net bylosses ~~the~~not ~~Partnership~~recognized induring ~~acquiring~~ the ~~investments~~period(s) ~~are capitalized as part of~~ the ~~investment~~equity ~~account~~method ~~and~~was ~~were~~suspended ~~being amortized over 27.5 years~~ (see Note 2).

~~“Equity in losses of Local Limited Partnerships” for the periods ended June 30, 2014 and 2013 has not been recorded by the Partnership. Management’s estimate for the three~~F-month periods is based on either actual unaudited results reported by the Local Limited Partnerships or historical trends in the operations of 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. 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 (see Note 2).8

InWNC ~~accordance~~CALIFORNIA ~~with~~HOUSING ~~the~~TAX ~~accounting~~CREDITS ~~guidance for the consolidation of variable interest entities~~III, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIEL. ~~The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors~~P. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.

~~F-8~~(A California Limited Partnership)

~~WNC~~NOTES ~~CALIFORNIA~~TO ~~HOUSING~~CONDENSED ~~TAX~~FINANCIAL ~~CREDITS~~STATEMENTS ~~III,~~- ~~L.P.~~CONTINUED

(AFor ~~California~~the ~~Limited~~Quarterly ~~Partnership)~~Period Ended September 30, 2014

~~NOTES TO CONDENSED FINANCIAL STATEMENTS - CONTINUED~~(Unaudited)

~~For~~NOTE ~~the~~1 ~~Quarterly~~- ~~Period~~SUMMARY ~~Ended~~OF ~~June~~SIGNIFICANT 30ACCOUNTING POLICIES, ~~2014~~continued

In accordance with the accounting guidance for the consolidation of variable interest entities, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (~~Unaudited~~VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.

~~NOTE~~Based 1on -this ~~SUMMARY~~guidance, OFthe ~~SIGNIFICANT~~Local ~~ACCOUNTING~~Limited ~~POLICIES~~Partnerships in which the Partnership invests meet the definition of a VIE because the owners of the equity at risk in these entities do not have the power to direct their operations. However, ~~continued~~management does not consolidate the Partnership’s interests in these VIEs, as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. The Partnership currently records the amount of its investment in these Local Limited Partnerships as an asset on its balance sheets, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Partnership’s balance in investment in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss. The Partnership’s exposure to loss on these Local Limited Partnerships 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 to the investors in the Partnership.

~~Based~~Distributions onreceived ~~this~~by ~~guidance,~~ the ~~Local Limited Partnerships in which the~~ Partnership ~~invests~~are ~~meet~~accounted ~~the~~for ~~definition~~as of a ~~VIE.~~reduction ~~However,~~of ~~management does not consolidate~~ the ~~Partnership’s~~investment ~~interests in these VIEs, as it is not considered to be the primary beneficiary~~balance. ~~The Partnership~~Distributions ~~currently~~received ~~records~~after the ~~amount of its~~ investment has inreached ~~these~~zero ~~Local~~are ~~Limited~~recognized ~~Partnerships~~ as ~~an asset on its balance sheets, recognizes its share of partnership~~ income. orAs ~~losses in the statements~~ of ~~operations,~~September ~~and discloses how it accounts for material types of these investments in its financial statements. The Partnership’s balance in investment in Local Limited Partnerships~~30, ~~plus~~ ~~the risk of recapture of tax credits previously recognized on these investments~~2014, ~~represents~~all ~~its maximum exposure to loss. The Partnership’s exposure to loss to these Local Limited Partnerships is mitigated by the condition and financial performance~~ of the ~~underlying~~investment ~~Housing~~balances ~~Complexes~~had asreached ~~well as the strength of the Local General Partners and their guarantee against credit recapture to the investors in the Partnership~~zero.

~~Distributions~~Use ~~received by the Partnership are accounted for as a reduction~~ of ~~the investment balance. Distributions received after the investment has reached zero are recognized as income. As of June 30, 2014, all of the investment balances had reached zero.~~Estimates

~~Use~~The preparation of ~~Estimates~~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.

~~The~~Cash ~~preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates~~ and ~~assumptions~~Cash 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.Equivalents

~~Cash~~The Partnership considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of September 30, 2014 and ~~Cash~~March ~~Equivalents~~31, 2014, the Partnership had no cash equivalents.

~~The~~Reporting ~~Partnership~~Comprehensive ~~considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. As of all periods presented, the Partnership had no cash equivalents.~~Income

~~Reporting~~The ~~Comprehensive~~Partnership ~~Income~~had no items of other comprehensive income for all periods presented.

~~The Partnership had no items of other comprehensive income for all periods presented.~~F-9

~~Income~~WNC ~~Taxes~~CALIFORNIA HOUSING TAX CREDITS III, L.P.

~~The~~(A ~~Partnership~~California ~~has~~Limited elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. Income tax returns filed by the Partnership are subject to examination by the Internal Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue Service, tax years since 2011 remain open.)

FNOTES TO CONDENSED FINANCIAL STATEMENTS -9 CONTINUED

~~WNC CALIFORNIA~~For ~~HOUSING~~the ~~TAX~~Quarterly ~~CREDITS~~Period ~~III~~Ended September 30, ~~L.P.~~2014

(~~A California Limited Partnership~~Unaudited)

~~NOTES~~NOTE TO1 ~~CONDENSED~~- ~~FINANCIAL~~SUMMARY ~~STATEMENTS~~OF -SIGNIFICANT ~~CONTINUED~~ACCOUNTING POLICIES, continued

~~For~~Income ~~the Quarterly Period Ended June 30, 2014~~Taxes

~~(Unaudited)~~The Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns. The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. Income tax returns filed by the Partnership are subject to examination by the Internal Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue Service, tax years since 2011 remain open.

~~NOTE~~Net 1Loss -Per ~~SUMMARY~~Partnership ~~OF SIGNIFICANT ACCOUNTING POLICIES, continued~~Unit

Net ~~Loss~~loss ~~Per~~per Partnership Unit includes no dilution and is computed by dividing loss allocated to Limited Partners by the weighted average number of Partnership Units outstanding during the period. Calculation of diluted net loss per Partnership Unit is not required.

~~Net~~Revenue loss per Partnership Unit includes no dilution and is computed by dividing loss allocated to Limited Partners by the weighted average number of Partnership Units outstanding during the period. Calculation of diluted net loss per Partnership Unit is not required.Recognition

~~Revenue~~The ~~Recognition~~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.

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.F-10

~~F-10~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

(ANOTES ~~California~~TO ~~Limited~~CONDENSED ~~Partnership)~~FINANCIAL STATEMENTS - CONTINUED

~~NOTES~~For TOthe ~~CONDENSED~~Quarterly ~~FINANCIAL~~Period ~~STATEMENTS~~Ended -September ~~CONTINUED~~30, 2014

~~For the Quarterly Period Ended June 30, 2014~~(Unaudited)

~~(Unaudited)~~NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

~~NOTE~~As 2of -September ~~INVESTMENTS~~30, IN2014 ~~LOCAL~~and ~~LIMITED~~March ~~PARTNERSHIPS~~31, 2014, the Partnership owns a Local Limited Partnership interest in 1 Local Limited Partnership which owns one Housing Complex consisting of an aggregate of 56 apartment units. The Local General Partner of the Local Limited Partnership manages the day to day operations of the entity. 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 agreement, of the operating profits and losses, taxable income and losses, and Low Income Housing Tax Credits of the Local Limited Partnership.

AsSelected offinancial ~~June~~information ~~30,~~for ~~2014 and March 31, 2014,~~ the ~~Partnership~~six ~~owns~~months aended ~~Local~~September ~~Limited Partnership interest in 1 Local Limited Partnership. As of June~~ 30, 2014 and ~~March~~2013 ~~31,~~from ~~2014,~~ the ~~Local~~unaudited ~~Limited~~combined ~~Partnership~~condensed ~~owns~~financial ~~one Housing Complex consisting of an aggregate of 56~~statements ~~apartment units. The Local General Partner~~ of the Local Limited ~~Partnership~~Partnerships ~~manages~~in ~~the~~which ~~day to day operations of~~ the ~~entity.~~partnership ~~Significant Local~~has ~~Limited~~invested ~~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 Low Income Housing Tax Credits of the Local Limited Partnership.~~follows:

~~Selected~~COMBINED ~~financial~~CONDENSED ~~information~~STATEMENTS ~~for~~OF ~~the three months ended June 30, 2014 and 2013 from the unaudited combined condensed financial statements of the Local Limited Partnership in which the Partnership has invested is as follows:~~OPERATIONS

COMBINED CONDENSED STATEMENTS OF OPERATIONS

	2014			2013

Revenue	$	300,000		$	431,000
Expenses:
Operating expenses		202,000			294,000
Interest expense		50,000			88,000
Depreciation and amortization		93,000			139,000

Total expenses		345,000			521,000

Net loss	$	(45,000	)		(90,000	)

Net loss allocable to the Partnership	$	(45,000	)	$	(88,000	)

Net loss recorded by the Partnership	$	-		$	-

	2014			2013
Revenue	$	150,000		$	281,000
Expenses:
Operating expenses		101,000			200,000
Interest expense		25,000			62,000
Depreciation and amortization		47,000			92,000
Total expenses		173,000			354,000
Net loss	$	(23,000	)		(73,000	)
Net loss allocable to the Partnership	$	(22,000	)		(72,000	)
Net loss recorded by the Partnership	$	-		$	-

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 may be required to sustain operations of such Local Limited Partnerships.

At times the Local Limited Partnership has incurred significant operating losses and/or has working capital deficiencies. In the event the Local Limited Partnership continues to incur significant operating losses, additional capital contributions by the Partnership may be required to sustain operations of the Local Limited Partnership. F-11

~~NOTE~~WNC 3CALIFORNIA -HOUSING ~~RELATED~~TAX ~~PARTY~~CREDITS ~~TRANSACTIONS~~III, L.P.

~~Under~~(A ~~the~~California ~~terms~~Limited ~~of the~~ Partnership ~~Agreement, the Partnership has paid or is obligated to the General Partner or its affiliates the following fees:~~)

~~(a)~~NOTES TO AnCONDENSED ~~annual~~FINANCIAL ~~asset~~STATEMENTS ~~management~~- fee 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 mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Fees of $6,272 and $12,729 were incurred during the three months ended June 30, 2014 and 2013, respectively. None of those fees was paid to the General Partner and/or its affiliates during the three months ended June 30, 2014 and 2013.CONTINUED

~~F-11~~For the Quarterly Period Ended September 30, 2014

~~WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.~~(Unaudited)

(ANOTE ~~California~~3 ~~Limited~~- ~~Partnership)~~RELATED PARTY TRANSACTIONS

~~NOTES~~Under TOthe ~~CONDENSED~~terms ~~FINANCIAL~~of ~~STATEMENTS~~the -Partnership ~~CONTINUED~~Agreement, the Partnership has paid or is obligated to the General Partner or its affiliates for the following items:

~~For~~ (a) An annual asset management fee equal to 0.5% of the ~~Quarterly~~Invested ~~Period~~Assets ~~Ended~~of ~~June~~the Partnership, as defined. “Invested Assets” means the sum of the Partnership’s investment in Local Limited Partnerships and the Partnership’s allocable share of mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Fees of $12,544 and $21,861 were incurred during the six months ended September 30, 2014 and 2013, respectively. The Partnership paid the General Partner and its affiliates $0 and $15,000 of those fees during the six months ended September 30, 2014 and 2013, respectively. (b) A subordinated disposition fee is an amount equal to 1% of the sales price of real estate sold. Payment of this fee is subordinated to the Limited Partners receiving a preferred return of 16% through December 31, 2003 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort. No such fees were earned during the periods presented. (c) The Partnership reimburses 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 $10,000 and $17,003 during the six months ended September 30, 2014 and 2013, respectively.

~~(Unaudited)~~The accrued fees and expenses due to the General Partner and affiliates consist of the following at:

NOTE 3 - RELATED PARTY TRANSACTIONS, continued

	September 30, 2014		March 31, 2014

Expenses paid by the General Partner or affiliates on behalf of the Partnership	$	145,388	$	95,301
Asset management fee payable		1,634,587		1,622,043
Total	$	1,779,975	$	1,717,344

~~(b)~~The General APartner ~~subordinated~~and/or ~~disposition~~its ~~fee~~affiliates indo annot ~~amount~~anticipate ~~equal~~that tothese 1%accrued offees ~~the~~will ~~sales~~be ~~price~~paid ofuntil ~~real~~such ~~estate~~time ~~sold.~~as ~~Payment~~capital ofreserves are ~~this~~in ~~fee~~excess isof ~~subordinated~~future toforeseeable ~~the~~working ~~Limited~~capital ~~Partners~~requirements ~~receiving a preferred return~~ of ~~16% through December 31, 2003 and 6% thereafter (as defined in~~ the Partnership ~~Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort~~. ~~No such fees were earned during the periods presented.~~

(c) The Partnership reimburses 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 paid were $10,000 and $14,562 during the three months ended June 30, 2014 and 2013, respectively.F-12

~~The~~Item ~~accrued~~2. ~~fees~~Management’s Discussion and ~~expenses~~Analysis ~~due~~of toFinancial ~~the~~Condition ~~General Partner~~ and ~~affiliates~~Results ~~consist~~ of ~~the following at:~~Operations

	June 30, 2014		March 31, 2014
Expenses paid by the General Partner or affiliates on behalf of the Partnership	$	92,370	$	95,301
Asset management fees payable		1,628,315		1,622,043
Total	$	1,720,685	$	1,717,344

Forward-Looking Statements

~~The~~With ~~General~~the ~~Partner~~exception of the discussion regarding historical information, this “Management’s Discussion and~~/or~~ ~~its~~Analysis ~~affiliates~~of doFinancial Condition ~~not~~and ~~anticipate~~Results ~~that~~of ~~these~~Operations” ~~accrued~~and ~~fees~~other ~~will~~discussions beelsewhere ~~paid~~in ~~until~~this ~~such~~Form ~~time~~10-Q ascontain ~~capital~~forward ~~reserves~~looking statements. Such statements are inbased ~~excess~~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 ~~foreseeable~~events ~~working~~which ~~capital~~may ~~requirements~~not ofprove ~~the~~to ~~Partnership~~be accurate.

~~F-12~~Risks and uncertainties inherent in forward looking statements include, but are not limited to, the Partnership’s 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.

~~Item~~Subsequent 2.written ~~Management’s~~and ~~Discussion~~oral ~~and~~forward ~~Analysis~~looking ofstatements ~~Financial~~attributable ~~Condition~~to the Partnership or persons acting on its behalf are expressly qualified in their entirety by cautionary statements in this Form 10-Q and ~~Results~~in ofother ~~Operations~~reports filed with the SEC.

~~Forward-Looking~~The ~~Statements~~following discussion and analysis compares the results of operations for the three and six months ended September 30, 2014 and 2013, and should be read in conjunction with the condensed unaudited financial statements and accompanying notes included within this report.

~~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-Q 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~~The ~~and~~Partnership’s ~~uncertainties~~assets ~~inherent~~at inSeptember ~~forward looking statements include~~30, ~~but~~2014 ~~are~~consisted ~~not~~of ~~limited to~~$10,000 ~~the~~in ~~Partnership’s future~~ cash ~~flows~~ and ~~ability to obtain sufficient financing~~$93,000 ~~level of operating expenses, conditions~~ in ~~the~~other ~~Low~~assets. ~~Income~~Liabilities ~~Housing~~at ~~Tax Credit~~September ~~property~~30, ~~market~~2014, ~~and~~consisted ~~the~~of ~~economy in general~~$1,780,000 asof ~~well~~accrued asfees ~~legal~~and ~~proceedings.~~expenses ~~Historical~~due ~~results~~to ~~are not necessarily indicative of~~ the ~~operating~~General ~~results~~Partner ~~for~~and ~~any future period~~affiliates.

~~Subsequent~~Results ~~written~~of 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-Q and in other reports filed with the Securities and Exchange Commission.Operations

Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013. The Partnership’s net loss for the ~~following~~three ~~discussion~~months ~~and~~ended ~~analysis~~September ~~compares~~30, 2014 was $27,000, reflecting an increase of $20,000 from the ~~results~~$7,000 of ~~operations~~net loss for the three months ended September 30, 2013. The increase in net loss was primarily due to a decrease of $12,000 in distribution income for the three months ended ~~June~~September 30, 2014. ~~and~~Those ~~2013~~fees can vary depending on when the Local Limited Partnerships’ cash flow will allow for the payment. Gain on sale of Local Limited Partnerships decreased by $8,000 during the three months ended September 30, 2014. The number of disposition and ~~should~~gains recorded vary from period to period depending on the economic conditions and the bemarket ~~read~~for the properties in ~~conjunction~~the ~~with~~specific location. There was also a $3,000 decrease in asset management fees for the ~~condensed~~three ~~unaudited~~months ended ~~financial~~September ~~statements~~30, 2014. There fees are calculated based on the invested assets. As Local Limited Partnerships are sold, the Invested Assets decrease, thereby decreasing the asset management fees incurred by the Partnership. The legal and ~~accompanying~~accounting ~~notes~~expenses decreased ~~included~~by ~~within~~$1,000 ~~this~~for ~~report~~the three months ended September 30, 2014 due to the timing of the work performed. The write off of other assets increased by $2,000 during the three months ended September 30, 2014. Capitalized costs from potential disposition of Local Limited Partnership were expensed due to the length of time it has taken to dispose of the properties.

~~Financial~~Six ~~Condition~~Months Ended September 30, 2014 Compared to Six Months Ended September 30, 2013. The Partnership’s net loss for the six months ended September 30, 2014 was $26,000, reflecting a decrease of $1,000 from the $27,000 net loss for the six months ended September 30, 2013. There was an increase of $1,000 in distribution income during the six months ended September 30, 2014 compared to the six months ended September 30, 2013. Local Limited Partnerships pay distribution income to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. Gain on sale of Local Limited Partnerships decreased by $8,000 during the six months ended September 30, 2014, as discussed above. There was also a $9,000 decrease in asset management fees for the six months ended September 30, 2014. These fees are calculated based on the invested assets, which decreased due to the dispositions of Local Limited Partnerships. There was a $6,000 decrease in legal and accounting fees for the six months ended September 30, 2014 due to the timing of the accounting work performed. The write off of other assets increased by $7,000 during the six months ended September 30, 2014. Capitalized costs from potential disposition of Local Limited Partnership were expensed due to the length of time it has taken to dispose of the properties.

The Partnership’s assets at June 30, 2014 consisted of $10,000 in cash and $61,000 in other assets. Liabilities at June 30, 2014, consisted of $1,721,000 of accrued fees and expenses due to the General Partner and affiliates.3

~~Results~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

~~Three~~Liquidity Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013. The Partnership’s net income for the three months ended June 30, 2014 was $1,000, reflecting an increase of $21,000 from the $(20,000) net loss for the three months ended June 30, 2013. The increase in net income was partially due to an increase of $14,000 in reporting fees with an offset of a $(1,000) decrease in distribution income for the three months ended June 30, 2014. Those fees can vary depending on when the Local Limited Partnership’s cash flow will allow for payment. There was also a $6,000 decrease in asset management fees for the three months ended June 30, 2014. These fees are calculated based on the Invested Assets. As Local Limited Partnerships are sold, the Invested Assets decrease, thereby decreasing the asset management fees incurred by the Partnership. The legal and ~~accounting~~Capital expenses decreased by $5,000 for the three months ended June 30, 2014 due to the timing of the work performed. The write off of other assets increased by $(5,000) during the three months ended June 30, 2014. Capitalized costs from potential disposition of Local Limited Partnership were expensed due to the length of time it has taken to dispose of the properties.Resources

~~Liquidity~~Six Months Ended September 30, 2014 Compared to Six Months Ended September 30, 2013. The net cash provided during the six months ended September 30, 2014 was $4,000 compared to net cash used during the six months ended September 30, 2013 of $6,000. During the six months ended September 30, 2014, the Partnership paid $0, and ~~Capital~~$10,000 ~~Resources~~to the General Partner or an affiliate for accrued asset management fees and reimbursement of operating expenses paid on behalf of the Partnership, respectively, compared to $15,000 and $17,000, respectively, paid during the six months ended September 30, 2013 . Each quarter the Partnership evaluates the cash position and determines how much of operating expenses reimbursements and accrued asset management fess will be paid to the General Partner or affiliates. In addition, during the six months ended September 30, 2013, the Partnership received $8,000 in net cash proceeds from the disposition of two of its Local Limited Partnerships compared to $0 for the six months ended September 30, 2014.

~~Three~~During ~~Months Ended June 30, 2014 Compared to Three Months Ended June 30, 2013. Net cash provided during~~ the ~~three~~six months ended ~~June~~ September 30, 2014 ~~was~~accrued $4payables,~~000~~ ~~compared~~which toconsist ~~net~~primarily ~~cash used during the three months ended June 30, 2013~~ of ~~$(11,000).~~asset ~~During~~management ~~the~~fees ~~three~~to ~~months ended June 30, 2014~~ the ~~Partnership reimbursed the~~ General Partner or ~~affiliate $(10~~affiliates,~~000)~~ ofincreased ~~operating~~by ~~expenses paid on behalf of the Partnership compared to~~ $~~(15~~63,000). ofThe ~~reimbursements~~General ~~during~~Partner ~~the~~does ~~three~~not ~~months~~anticipate ~~ended~~that ~~June~~these ~~30,~~accrued ~~2013.~~fees ~~During~~will ~~the~~be ~~three~~paid ~~months ended June 30, 2013 the Partnership received $3,000~~ in ~~prepaid~~full ~~sales proceeds from the disposition of one of its Local Limited~~until ~~Partnerships compared to no~~ such ~~receipts~~time ~~during~~as ~~the~~capital ~~three~~reserves ~~months~~are ~~ended~~in ~~June~~excess ~~30,~~of ~~2014.~~future ~~Distribution~~foreseeable ~~income~~working ~~decreased~~capital byrequirements ~~$(1,000), and~~of ~~reporting fees increased by $14,000 for~~ the ~~three months ended June 30, 2013. Local Limited Partnerships pay distributions and reporting fees to the~~ Partnership ~~when the Local Limited Partnerships’ cash flow will allow for payment~~.

3The Partnership expects its future cash flows, together with its net available assets at September 30, 2014, to be insufficient to meet all currently foreseeable future cash requirements. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through November 30, 2015.

~~Item~~Recent 2.Accounting ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued~~Changes

~~During~~In January 2014, the ~~three~~FASB ~~months~~issued ~~ended~~an ~~June~~amendment ~~30,~~to ~~2014~~the ~~accrued~~accounting ~~payables,~~and ~~which~~disclosure ~~consist~~requirements ~~primarily~~for ofinvestments ~~related~~in ~~party~~qualified ~~asset~~affordable housing ~~management~~projects. ~~fees~~The ~~due~~amendments toprovide ~~the~~guidance on accounting for investments by a reporting entity in flow-through limited ~~General~~liability ~~Partner~~entities that manage or ~~affiliates,~~invest ~~increased~~in byaffordable ~~$3,000~~housing projects that qualify for the low-income housing tax credit. The amendments ~~General~~permit ~~Partner~~reporting ~~does~~entities ~~not~~to ~~anticipate~~make ~~that~~an ~~these~~accounting ~~accrued~~policy ~~fees~~election ~~will~~to beaccount ~~paid~~ for their investments in ~~full~~qualified ~~until~~affordable housing ~~such~~projects ~~time~~using asthe ~~capital~~proportional ~~reserves~~amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in ~~excess~~proportion to the tax credits and other tax benefits received, and recognizes the net investment performance in the income statement as a component of ~~future~~income ~~foreseeable~~tax ~~working~~expense ~~capital~~(benefit). ~~requirements~~The amendments are effective for interim and annual periods beginning after December 15, 2014 and should be applied retrospectively to all periods presented. Early adoption is permitted. The adoption of this update is not expected to materially affect the ~~partnership~~Partnership’s financial statements.

The Partnership expects its future cash flows, together with its net available assets at June 30, 2014, to be insufficient to meet all currently foreseeable future cash requirements. However, Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through July 31, 2015.4

Item 3. Quantitative and Qualitative Disclosures About Market Risks

NOT APPLICABLE

Item 4. Controls and Procedures

(a)	Disclosure controls and procedures
	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 Partnership’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 not effective to ensure that material information required to be disclosed in the Partnership’s periodic report filings with SEC is recorded, processed, summarized and reported within the time period specified by the SEC’s rules and forms, consistent with the definition of “disclosure controls and procedures” under the Securities Exchange Act of 1934.
	The Partnership must rely on the Local Limited Partnerships to provide the Partnership with certain information necessary to the timely filing of the Partnership’s periodic reports. Factors in the accounting at the Local Limited Partnerships have caused delays in the provision of such information during past reporting periods, and resulted in the Partnership’s inability to file its periodic reports in a timely manner.
	Once the Partnership has received the necessary information from the Local Limited Partnerships, the Chief Executive Officer and the Chief Financial Officer of Associates believe that the material information required to be disclosed in the Partnership’s periodic report filings with SEC is effectively recorded, processed, summarized and reported, albeit not in a timely manner. Going forward, the Partnership will use the means reasonably within its power to impose procedures designed to obtain from the Local Limited Partnerships the information necessary to the timely filing of the Partnership’s periodic reports.
(b)	Changes in internal controls
	There were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended June 30, 2014 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.
	There were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended September 30, 2014 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

Part II. Other Information

Part II.	Other Information

Item 1.	Legal Proceedings

	The Partnership is a limited partner in Colonial Village Roseville, a California limited partnership (“Colonial Roseville”). Colonial Roseville owns and operates an apartment complex. Project GO, Incorporated (“Project GO”) is the general partner of Colonial Roseville.

	Notwithstanding its prior indications to the contrary, Project GO refused to accept an offer to buy its general partner interest in Colonial Roseville, and in Colonial Village Auburn, a California limited partnership (“Colonial Auburn”), the limited partnership interest in which is owned by another investment fund sponsored by Associates. Rather, Project GO engaged counsel to issue threatening letters to the Partnership. Consequently, the Partnership and the WNC investment fund that owns the limited partner interest in Colonial Auburn have commenced litigation against Project GO.

	On September 3, 2013, Associates, the Partnership and the other investment fund sponsored by Associates filed with the Superior Court of California, County of Placer, a Verified Complaint naming as defendants Project GO, Colonial Roseville, and Colonial Auburn. The following as causes of action were included therein: breach of contract for failure to sell Project GO’s general partner interests and for failure to dissolve Colonial Roseville and Colonial Auburn, dissolution of Colonial Roseville and Colonial Auburn, breach of fiduciary duty, accounting, and appointment of receiver, and intentional interference. On October 24, 2013, Project GO filed a motion to purchase the Colonial Roseville LP interest pursuant to California Corporations Code Section 15908.02. Under this provision of California law, when one partner sues for dissolution, the other may seek a court order enabling the defendant to purchase the interest of the plaintiff at fair market value as determined by three appraisers. Project GO’s motion to pursue this remedy was approved by court order. In accordance with the court order, each of Project GO and the Partnership submitted for the court’s consideration the names of three appraisers. Project GO also posted a bond with the court. The court has selected one appraiser from each of the two lists and has identified a third appraiser. The three appraisers have been charged by the court with determining a fair market value for the Colonia Roseville and the Colonial Auburn LP interests.

	The provisions of California Corporations Code Section 15908.02(d), (e) and (f) provide as follows:

	(d) The court shall appoint three disinterested appraisers to appraise the fair market value of the partnership interests owned by the moving parties, and shall make an order referring the matter to the appraisers so appointed for the purpose of ascertaining that value. The order shall prescribe the time and manner of producing evidence, if evidence is required. The award of the appraisers or a majority of them, when confirmed by the court, shall be final and conclusive upon all parties. The court shall enter a decree that shall provide in the alternative for winding up and dissolution of the limited partnership unless payment is made for the partnership interests within the time specified by the decree. If the purchasing parties do not make payment for the partnership interests within the time specified, judgment shall be entered against them and the surety or sureties on the bond for the amount of the expenses, including attorneys’ fees, of the moving parties. Any member aggrieved by the action of the court may appeal therefrom.

	(e) If the purchasing parties desire to prevent the winding up and dissolution of the limited partnership, they shall pay to the moving parties the value of their partnership interests ascertained and decreed within the time specified pursuant to this section, or, in the case of an appeal, as fixed on appeal. On receiving that payment or the tender thereof, the moving parties shall transfer their partnership interests to the purchasing parties.

~~Item 1. Legal Proceedings~~6

~~The Partnership~~(f) isFor athe ~~limited~~purposes ~~partner~~of inthis ~~Colonial~~section, ~~Village~~the ~~Roseville,~~valuation adate ~~California~~shall ~~limited~~be ~~partnership~~the ~~(“Colonial~~date ~~Roseville”)~~upon which the action for judicial dissolution was commenced. ~~Colonial~~ ~~Roseville~~However, ~~owns~~the court may, upon the hearing of a motion by any party, and ~~operates~~for angood ~~apartment~~cause ~~complex~~shown, designate some other date as the valuation date. ~~Project~~In GOlight of the foregoing statute, ~~Incorporated~~the (“following alternative courses of action could result. The Partnership has been informed by counsel that these are the most likely alternatives. The actual result will depend on the court and on actions taken by Project GO”) isand the ~~general partner~~Partnership ofas ~~Colonial~~the ~~Roseville~~court action progresses.

~~Notwithstanding its~~● ~~prior~~Following ~~indications to~~ the ~~contrary~~appraisal process, Project GO ~~refused~~purchases tothe ~~accept~~Partnership’s anColonial ~~offer~~Roseville toLP ~~buy~~Interest for its ~~general~~appraised ~~partner~~value ~~interest~~established inby ~~Colonial~~court ~~Roseville, and~~order. in● ~~Colonial~~Following ~~Village~~the ~~Auburn~~appraisal process, aProject ~~California~~GO ~~limited~~does ~~partnership~~not ~~(“Colonial~~purchase ~~Auburn”),~~the interest of the ~~limited~~Partnership. ~~partnership~~Funds ~~interest in~~from ~~which~~the isbond ~~owned~~are bypaid ~~another~~to ~~investment~~the ~~fund~~Partnership ~~sponsored~~to bycover ~~Associates.~~all ~~Rather,~~or ~~Project~~part GOof ~~engaged~~its ~~counsel~~legal tocosts. ~~issue~~The ~~threatening letters~~court toenters an order requiring the ~~Partnership~~dissolution of Colonial Roseville. ~~Consequently,~~Colonial ~~the~~Roseville ~~Partnership~~winds ~~and~~up ~~the~~its ~~WNC~~affairs ~~investment~~under ~~fund~~California ~~that~~law ~~owns~~by ~~the~~selling ~~limited~~its ~~partner~~apartment ~~interest~~complex. ~~in Colonial~~● ~~Auburn~~The ~~have~~court ~~commenced~~action ~~litigation~~is ~~against~~resolved ~~Project~~by GOsettlement.

~~On September 3~~Accordingly, ~~2013, Associates,~~ the ~~Partnership~~ultimate ~~and~~resolution ~~the~~is ~~other~~at ~~investment~~present ~~fund sponsored by Associates filed with the Superior Court of California~~uncertain, ~~County of Placer, a Verified Complaint naming as defendants Project GO, Colonial Roseville,~~ and Colonial Auburn. The following as causes of action were included therein: breach of contract for failure to sell Project GO’s general partner interests and for failure to dissolve Colonial Roseville and Colonial Auburn, dissolution of Colonial Roseville and Colonial Auburn, breach of fiduciary duty, accounting, and appointment of receiver, and intentional interference. On October 24, 2013, Project GO filed a motion to purchase the ~~Colonial~~resolution ~~Roseville~~may LPbe ~~interest~~some ~~pursuant~~time toin ~~California Corporations Code Section 15908~~coming.~~02.~~ ~~Under this~~No ~~provision~~estimate of ~~California law, when one partner sues for dissolution, the other may seek~~ a ~~court~~timetable ~~order~~can ~~enabling~~be ~~the~~provided ~~defendant to purchase the interest of the plaintiff~~ at ~~fair market value as determined by three appraisers. Project GO’s motion to pursue~~ this ~~remedy was approved by court order~~time. In accordance with the court order, each of Project GO and the Partnership submitted for the court’s consideration the names of three appraisers. Project GO also posted a bond with the court. The court has selected one appraiser from each of the two lists and has identified a third appraiser. The three appraisers have been charged by the court with determining a fair market value for the Colonia Roseville and the Colonial Auburn LP interests.

The provisions of California Corporations Code Section 15908.02(d), (e) and (f) provide as follows:

Item 1A.	Risk Factors

	No material changes in risk factors as previously disclosed in the Partnership’s Form 10-K.

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

	NONE

Item 3.	Defaults Upon Senior Securities

	NONE

Item 4.	Mine Safety Disclosures

	NOT APPLICABLE

Item 5.	Other Information

	NONE

(d) The court shall appoint three disinterested appraisers to appraise the fair market value of the partnership interests owned by the moving parties, and shall make an order referring the matter to the appraisers so appointed for the purpose of ascertaining that value. The order shall prescribe the time and manner of producing evidence, if evidence is required. The award of the appraisers or a majority of them, when confirmed by the court, shall be final and conclusive upon all parties. The court shall enter a decree that shall provide in the alternative for winding up and dissolution of the limited partnership unless payment is made for the partnership interests within the time specified by the decree. If the purchasing parties do not make payment for the partnership interests within the time specified, judgment shall be entered against them and the surety or sureties on the bond for the amount of the expenses, including attorneys' fees, of the moving parties. Any member aggrieved by the action of the court may appeal therefrom.7

(e) If the purchasing parties desire to prevent the winding up and dissolution of the limited partnership, they shall pay to the moving parties the value of their partnership interests ascertained and decreed within the time specified pursuant to this section, or, in the case of an appeal, as fixed on appeal. On receiving that payment or the tender thereof, the moving parties shall transfer their partnership interests to the purchasing parties.

Item 6.	Exhibits

31.1	Certification of the Principal 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 Principal 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 Certification of the Chief Executive Officer. (filed herewith)

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

101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Balance Sheets at September 30, 2014 and March 31, 2014, (ii) the Condensed Statements of Operations for the three and six month periods ended September 30, 2014 and September 30, 2013, (iii) the Condensed Statements of Partners’ Deficit for the six months ended September 30, 2014 (iv) the Condensed Statements of Cash Flows for the six months ended September 30, 2014 and September 30, 2013 and (iv) the Notes to Condensed Financial Statements.

	Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.

(f) For the purposes of this section, the valuation date shall be the date upon which the action for judicial dissolution was commenced. However, the court may, upon the hearing of a motion by any party, and for good cause shown, designate some other date as the valuation date.8

In light of the foregoing statute, the following alternative courses of action could result. The Partnership has been informed by counsel that these are the most likely alternatives. The actual result will depend on the court and on actions taken by Project GO and the Partnership as the court action progresses.SIGNATURES

●Pursuant to ~~Following~~ the ~~appraisal~~requirements ~~process,~~of ~~Project GO purchases~~ the ~~Partnership’s~~Securities ~~Colonial~~Exchange ~~Roseville~~Act LPof ~~Interest for its appraised value established by court order. ● Following the appraisal process~~1934, ~~Project GO does not purchase~~ the ~~interest~~registrant ofhas ~~the~~duly ~~Partnership.~~caused ~~Funds~~this ~~from~~report ~~the bond are paid~~ to ~~the~~be ~~Partnership~~signed toon ~~cover all or part of~~ its ~~legal~~behalf by ~~costs. The court enters an order requiring~~ the ~~dissolution~~undersigned, ofthereunto ~~Colonial~~duly ~~Roseville~~authorized. ~~Colonial Roseville winds up its affairs under California law by selling its apartment complex. ● The court action is resolved by settlement.~~

~~Accordingly,~~WNC CALIFORNIA ~~the~~HOUSING ~~ultimate~~TAX ~~resolution~~CREDITS ~~is at present uncertain~~III, ~~and the resolution may be some time in coming~~L. ~~No estimate of a timetable can be provided at this time~~P.

~~Item 1A~~By: WNC California Housing Tax Credit Partners III, L.P. ~~Risk~~General ~~Factors~~Partner By: /s/ Wilfred N. Cooper Jr. Wilfred N. Cooper, Jr. President and Chief Executive Officer of WNC & Associates, Inc.

NoDate: November ~~material~~13, ~~changes in risk factors as previously disclosed in the Partnership’s Form 10-K.~~2014

~~Item 2~~By: /s/ Melanie R. ~~Unregistered~~ ~~Sales~~Wenk ofMelanie ~~Equity~~R. ~~Securities~~Wenk ~~and~~Senior ~~Use~~Vice President – Chief Financial Officer of ~~Proceeds~~WNC & Associates, Inc.

~~NONE~~Date: November 13, 2014

~~Item 3. Defaults Upon Senior Securities~~9

NONE

Item 4. Mine Safety Disclosures

NOT APPLICABLE

Item 5. Other Information

NONE

Item 6. Exhibits

31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14 or 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 or 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of. (filed herewith)
32.1	Section 1350 Certification of the Chief Executive Officer. (filed herewith)
32.2	Section 1350 Certification of the Chief Financial Officer. (filed herewith)
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Balance Sheets at June 30, 2014 and March 31, 2014, (ii) the Condensed Statements of Operations for the three months ended June 30, 2014 and June 30, 2013, (iii) the Condensed Statement of Partners’ Deficit for the three months ended June 30, 2014, (iv) the Condensed Statements of Cash Flows for the three months ended June 30, 2014 and June 30, 2013 and (v) the Notes to Condensed Financial Statements.
	Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.

SIGNATURES

Pursuant to the requirements 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 III, L.P.

By:	WNC California Tax Credits Partners III, L.P. General Partner
By:	/s/ Wilfred N. Cooper Jr.
	Wilfred N. Cooper, Jr.
	President and Chief Executive Officer of WNC & Associates, Inc.
Date: September 17, 2014
By:	/s/ Melanie R. Wenk
	Melanie R. Wenk
	Vice President – Chief Financial Officer of WNC & Associates, Inc.
Date: September 17, 2014

Filing Compare · WNC CALIFORNIA HOUSING TAX CREDITS III LP