SecProbe.io

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                                     March 21, 2005

Steven Jacobs, Senior Staff Accountant
Securities and Exchange Commission
Division of Corporation Finance
Mail Stop 0409
450 Fifth Street, NW
Washington, D.C.  20549

         Re:      WNC California Housing Tax Credits III, L.P.
                  Form 10-K for the year ended March 31, 2004
                  Form 10-Q for the quarter ended June 30, 2004
                  File No.  0-23908

Dear Mr. Jacobs:

     The  registrant  is in receipt  of your  letter  dated  February  14,  2005
respecting the referenced  matters.  Responses to the comments  included in your
letter are set forth  below,  numbered to  correspond  to the  numbering  system
utilized in your letter.

1.   Please  be  advised  that,  based  on the  predictability  of  depreciation
expense,  interest expense and other historical trends, the registrant  believes
it is reasonable to anticipate that the registrant's  share of the Local Limited
Partnerships'  quarterly  operating  results  will be net  losses.  Once a Local
Limited Partnership's real estate operations are stabilized, the net loss of the
Local  Limited  Partnership  is relatively  consistent  from quarter to quarter.
Inasmuch  as  losses  are  anticipated  and  can be  estimated  with  reasonable
certainty   (historically,   this  has  proven  to  be  the  case  for  all  the
publicly-registered issuers sponsored by the sponsor), the registrant records an
estimate  of its share of a Local  Limited  Partnership's  loss and  reduces the
carrying amount of its investment by such estimated loss.  Adjustments,  if any,
from the estimated  amounts to the actual  amounts are made after receipt of the
subsequent   audited  annual   financial   statements  from  the  Local  Limited
Partnership.  Although not explicitly contemplated by paragraph 19(g) of APB 18,
the registrant  believes that the recording of estimated losses in such a manner
enables the registrant to more closely  report its  investment  balance and meet
the   objectives   of  APB  18  as   contemplated   in   paragraph  10  thereof.
Notwithstanding  the preceding,  if unaudited  quarterly results are reported to
the  registrant by a Local  Limited  Partnership  which are reliably  materially
different  from the  estimated  amounts,  the  differences  are  recorded by the
registrant  for the  quarter  in  which it  receives  such  unaudited  quarterly
financial statements.

2.   Please be advised  that the Local  Limited  Partnerships  have a  financial
structure  principally  consisting of non-recourse  mortgage  loan(s),  deferred
development fees and owner equity.  As set forth in the  registrant's  letter to
you dated  January 27, 2005,  inasmuch as the  registrant  determined  that each
Local  Limited  Partnership  was  operationally   viable  at  the  date  of  the
registrant's   investment   therein,  no  additional  sources  of  capital  were
contemplated  as necessary as of such date. The  registrant's  evaluation of the
adequacy  of equity was based  upon the  initial  cash  equity  provided  by the
registrant  and the Local General  Partner(s) to the Local Limited  Partnership,
which ranged from one-third to one-half of the development  cost of the project.
Regarding the adequacy of equity, paragraph 6 of FIN 46 (R) states, in part:

<PAGE>

Steven Jacobs, Senior Staff Accountant
March 21, 2005
Page 2

     The  initial  determination  of whether  an entity is a  variable  interest
     entity shall be made on the date at which an  enterprise  becomes  involved
     with the entity

Further, paragraph 5 states, in part:

     An entity shall be subject to consolidation  according to the provisions of
     this Interpretation if, by design, the conditions in a, b, or c exist.
                                                          ----------

The above is further clarified by footnote 5 to paragraph 5:

     The phrase by design  refers to entities  that meet the  conditions in this
                ---------
     paragraph because of the way they are structured.

     The  registrant  has  interpreted  the above to mean that the  adequacy  of
capital  is  measured  at the  date of the  registrant's  investment  in a Local
Limited  Partnership.  As noted  above,  at such date the  capital  of the Local
Limited  Partnership  was far in  excess  of the 10%  threshold  referred  to in
paragraph 9 of FIN 46(R). This level of capital was designed to be sufficient to
allow the Local Limited  Partnership to operate  without the need for additional
subordinated  financial support. In this regard, please be advised that deferral
of the developer fees for certain Local Limited Partnerships does not reduce the
level  of  capital  in  those  entities  to a level  that  would  be  considered
inadequate.

     The staff's comment appears to address the current equity of the registrant
in the  Local  Limited  Partnerships,  and not  the  equity  at the  date of its
investment in each Local Limited  Partnership.  The current partners' capital of
less than 10% as noted in the staff's letter that exists as of March 31, 2004 is
as designed,  and is the result of expected  losses,  consisting  principally of
depreciation  and interest  expense.  Such losses have reduced the  registrant's
equity  investments in Local Limited  Partnerships since the respective dates as
of which the registrant invested in the Local Limited Partnerships.

3.   Please be advised  that the  registrant  believes  that (i) the  investment
activities  of  the  Local  Limited  Partnerships  are  made  on  behalf  of the
registrant,  and (ii) the registrant does not hold disproportionately few voting
rights.  Because  the Local  Limited  Partnerships  are  structured  as  limited
partnerships or limited liability  companies,  voting rights are not dictated by
ownership  interests  (as they would be for corporate  shares);  rather they are
governed by limited  partnership  agreements or operating  agreements  where the
respective  rights of the  partners  or  members  are set forth in  detail.  The
ownership  interests of the Local General  Partner and the registrant do dictate
the  allocation  of the  primary  financial  benefits of the  investment  in the
tax-advantaged  Local Limited  Partnerships;  the governing agreement of a Local
Limited  Partnership  dictates the rights of the Local  General  Partner and the
registrant  (as the  partners  or  members  thereof)  in  making  operating  and

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Steven Jacobs, Senior Staff Accountant
March 21, 2005
Page 3

financial decisions. The primary financial benefits are the expected tax credits
and tax losses  (primarily  from  depreciation  and interest  expense)  that are
allocated based solely upon the ownership interests (usually, 0.01% to the Local
General Partner and 99.9% to the registrant).  That is, 99.9% of the tax credits
generated by the Local Limited  Partnership will be allocated to the registrant.
The registrant believes that the rights granted to it in the governing agreement
of a Local Limited  Partnership are proportionate  with its investment  therein,
and  the  expected  returns  from  tax  benefits,  and  at  the  same  time  are
representative of the limited liability of its ownership interest.

     For a Local Limited  Partnership,  the management  authority (as opposed to
voting  rights)  that are given to the Local  General  Partner  are more akin to
day-to-day  management of the property than to determining its the Local Limited
Partnership's  "activities." The management authority given to the Local General
Partner  is  primarily  of the type  given to  management  agents,  and  entails
maintaining  and operating  the apartment  complex,  setting  budgets,  managing
tenants,  hiring  vendors and the like.  If the Local  General  Partner does not
perform these  management  functions to the  satisfaction of the registrant,  by
engaging and supervising a competent property manager,  the governing  agreement
provides voting rights to the registrant, enabling the registrant to replace the
management  agent  and,  in  certain  situations,  the  Local  General  Partner.
Activities  and  major  decisions  of the  Local  Limited  Partnership,  such as
obtaining financing, sale of the property, major improvements,  admission of new
owners or even sale of general partner  interests,  can only be conducted by the
affirmative vote of the registrant,  and are not controlled by the Local General
Partner.  Accordingly,  the registrant believes that the Local General Partner's
day-to-day management authority does not lead to a determination that the voting
rights,  ownership rights and other  significant  controls of the registrant are
subordinate to those of the Local General Partner.  The existence of veto rights
or other  protective  rights  and the  absence of voting  rights do not  require
treatment of the entity as a variable  interest  entity if the owners as a group
control the entity and the entity investment meets the other requirements of the
Interpretation.

     Furthermore,  the registrant does not interpret the provisions of paragraph
5.c. to require absolute proportionality between benefits and voting control. As
indicated in paragraph 5.c. itself and in footnote 11 thereto,  the provision is
intended  to prevent a primary  beneficiary  from  avoiding  consolidation  of a
variable  interest  entity by organizing the entity with  nonsubstantive  voting
interests. To the contrary, in the case of the registrant,  the interests of the
Local  General  Partner and the  registrant  as the owners of the Local  Limited
Partnership  are designed to be reflective  of their rights to receive  benefits
and to absorb losses.  The rights retained by the registrant are substantive and
include voting  rights,  ownership  rights and other  significant  controls,  as
described previously. Because of the significance of its initial investment, the
registrant does not allow the Local General Partner to manage the entity in ways
that would  endanger the quality of the  registrant's  investment.  Accordingly,
significant restraints are placed on the authority of the Local General Partner.

     The registrant believes that the aggregate of the participation rights held
by the registrant is proportional to the allocation of, and responsibility  for,
losses and  benefits and does not  represent an attempt to avoid  consolidation.
The use of the equity method relies  primarily on the nature of the registrant's

<PAGE>

Steven Jacobs, Senior Staff Accountant
March 21, 2005
Page 4

investment  combined  with the fact that the  Local  General  Partner  does have
substantive rights regarding  operational  management.  The registrant  believes
this result (the equity method of accounting) is representative of the substance
of its investment in Local Limited Partnerships.

     As previously noted, the registrant has a lower share in any residual value
upon sale of an apartment  complex.  This  concession is made as a result of the
registrant's  investment  objective:  the registrant  invests in a Local Limited
Partnership  to obtain tax benefits and does not make its  investments to obtain
cash flows.  To the extent  residual  cash flows are  realized,  it is the Local
General Partner who benefits/suffers therefrom. However, the realization of such
cash flows is unlikely due to the design of the Local Limited  Partnerships  and
restriction of disposition of the underlying property by statute. In addition to
the limited  probability of such cash flows,  their  realization is projected so
far into the future as to make their present value nominal.

     The  registrant  has  therefore  determined  there  is no  disproportionate
sharing of economic interest relative to voting interests, as contemplated under
paragraph 5.c. Based upon that criteria,  the registrant believes that the Local
Limited Partnerships are not VIEs.

4.   Please be advised that, in future filings  beginning with the annual report
on Form 10-K for the year ending March 31, 2005, the registrant will include all
columns required by Rule 12-28 of Regulation S-X at a minimum.

     Please  contact  the  undersigned  if you have  any  further  questions  or
comments in these regards.

                               Very truly yours,

                               /s/ Thomas J. Riha
                               ------------------
                               Thomas J. Riha,
                               Senior Vice President - Chief Financial Officer,
                               WNC & Associates, Inc.

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