Item 1. Business
Organization
WNC Housing Tax Credit Fund, VI, L.P., Series 5 (the "Partnership") was formed under the California Revised Limited Partnership Act on March 3, 1997 and commenced operations on August 29, 1997. The Partnership was formed to invest primarily in other limited partnerships or limited liability companies which will own and operate multifamily housing complexes that are eligible for low-income housing federal and, in certain cases, California income tax credits ("Low Income Housing Credit").
The general partner of the Partnership is WNC & Associates, Inc. ("Associates" or the "General Partner".) Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 66.8% of the outstanding stock of Associates. John B. Lester, Jr. was the original limited partner of the Partnership and owns, through the Lester Family Trust, 28.6% of the outstanding stock of Associates. Wilfred N. Cooper, Jr., President of Associates, owns 2.1% of the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates, as the Partnership has no employees of its own.
Pursuant to a registration statement filed with the Securities and Exchange Commission on June 23, 1997, the Partnership commenced a public offering of 25,000 units of Limited Partnership Interest ("Units"), at a price of $1,000 per Unit. As of the close of the public offering on July 9, 1998, the Partnership had received and accepted subscriptions for 25,000 Units in the amount of $24,918,175 net of volume and dealer discounts of $81,825. Holders of Units are referred to herein as "Limited Partners."
Description of Business
The Partnership's principal business objective is to provide its Limited Partners with Low Income Housing Credits. The Partnership's principal business therefore consists of investing as a limited partner or non-managing member in Local Limited Partnerships each of which will own and operate a multi-family housing complex (the "Housing Complex") which will qualify for the Low Income Housing Credit. In general, under Section 42 of the Internal Revenue Code, an owner of low-income housing can receive the Low Income Housing Credit to be used to reduce Federal taxes otherwise due in each year of a ten-year period. In general, under Section 17058 of the California Revenue and Taxation Code, an owner of low-income housing can receive the Low Income Housing Credit to be used against California taxes otherwise due in each year of a four-year period. The Housing Complex is subject to a fifteen-year compliance period (the "Compliance Period"), and under state law may have to be maintained as low income housing for 30 or more years.
In general, in order to avoid recapture of Low Income Housing Credits, the Partnership does not expect that it will dispose of its interests in Local Limited Partnerships ("Local Limited Partnership Interests") or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. Because of (i) the nature of the Housing Complexes, (ii) the difficulty of predicting the resale market for low-income housing 15 or more years in the future, and (iii) the ability of government lenders to disapprove of transfer, it is not possible at this time to predict whether the liquidation of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the Partnership's Agreement of Limited Partnership, as amended "by Supplements thereto" (the "Partnership Agreement"), will be able to be accomplished promptly at the end of the 15-year period. If a Local Limited Partnership is unable to sell its Housing Complex, it is anticipated that the local general partner ("Local General Partner") will either continue to operate such Housing Complex or take such other actions as the Local General Partner believes to be in the best interest of the Local Limited Partnership. Notwithstanding the preceding, circumstances beyond the control of the General Partner or the Local General Partners may occur during the Compliance Period, which would require the Partnership to approve the disposition of a Housing Complex prior to the end thereof, possibly resulting in recapture of Low Income Housing Credits.
As of March 31, 2001, the Partnership had invested in fifteen Local Limited Partnerships. Each of these Local Limited Partnerships owns a Housing Complex that is eligible for the federal Low Income Housing Credit. Certain Local Limited Partnerships may also benefit from government programs promoting low- or moderate-income housing.
The Partnership's investments in Local Limited Partnerships are subject to the risks incident to the management and ownership of low-income housing and to the management and ownership of multi-unit residential real estate. Some of these risks are that the Low Income Housing Credit could be recaptured and that neither the Partnership's investments nor the Housing Complexes owned by the Local Limited Partnerships will be 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 Local Limited Partnership Interests; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. The Housing Complexes are subject to mortgage indebtedness. If a Local Limited Partnership does not make its mortgage payments, the lender could foreclose resulting in a loss of the Housing Complex and Low Income Housing Credits. As a limited partner or non-managing member of the Local Limited Partnerships, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships, and will rely totally on the general partners or managing members of the Local Limited Partnerships for management of the Local Limited Partnerships. The value of the Partnership's investments will be subject to changes in national and local economic conditions, including unemployment conditions, which could adversely impact vacancy levels, rental payment defaults and operating expenses. This, in turn, could substantially increase the risk of operating losses for the Housing Complexes and the Partnership. In addition, each Local Limited Partnership is subject to risks relating to environmental hazards and natural disasters, which might be uninsurable. Because the Partnership's operations will depend on these and other factors beyond the control of the General Partner and the Local General Partners, there can be no assurance that the anticipated Low Income Housing Credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing the Low Income Housing Credit are complicated, and the use of credits can be limited. The only material benefit from an investment in Units may be the Low Income Housing Credits. There are limits on the transferability of Units, and it is unlikely that a market for Units will develop. All Partnership management decisions are made by the General Partner.
As a limited partner or non-managing member, the Partnership's liability for obligations of each Local Limited Partnership is limited to its investment. The Local General Partners of each Local Limited Partnership retain responsibility for developing, constructing, maintaining, operating and managing the Housing Complexes.
Item 2.
Item 2. Properties
Through its investments in Local Limited Partnerships, the Partnership holds limited partnership interests in the Housing Complexes. The following table reflects the status of the fifteen Housing Complexes as of the dates and for the periods indicated:
Item 3.
Item 3. Legal Proceedings
NONE
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
NONE
PART II.
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Item 5a.
(a) The Units are not traded on a public exchange but are being sold through a public offering. It is not anticipated that any public market will develop for the purchase and sale of any Unit. Units can be assigned only if certain requirements in the Partnership Agreement are satisfied.
(b) At March 31, 2001, there were 1,388 Limited Partners.
(c) The Partnership was not designed to provide cash distributions to Limited Partners in circumstances other than refinancing or disposition of its investments in Local Limited Partnerships.
(d) No unregistered securities were sold by the Partnership during the year ended March 31, 2001.
Item 6.
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
Selected results of operations, cash flows, and other information for the Partnership is as follows for the periods indicated:
Low Income Housing Credit per Unit was as follows for the years ended December 31:
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
With the exception of the discussion regarding historical information, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other discussions elsewhere in this Form 10-K contain forward looking statements. Such statements are based on current expectations subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied. Further, certain forward-looking statements are based upon assumptions about future events which may not prove to be accurate.
Risks and uncertainties inherent in forward looking statements include, but are not limited to, our future cash flows and ability to obtain sufficient financing, level of operating expenses, conditions in the low income housing tax credit property market and the economy in general, as well as legal proceedings. Historical results are not necessarily indicative of the operating results for any future period.
Subsequent written and oral forward looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by cautionary statements in this Form 10-K and in other reports we filed with the Securities and Exchange Commission. The following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included elsewhere in this filing.
Financial Condition
The Partnership's assets at March 31, 2001 consisted primarily of $90,481 in cash, $256,649 in cash in escrow, $18,822 in amounts due from affiliate, and aggregate investments in the fifteen Local Limited Partnerships of $17,555,917. Liabilities at March 31, 2001 primarily consisted of $229,030 due to limited partnerships, $24,164 in annual asset management fees and $42,134 in advances and other payables due to the General Partner or affiliates.
Results of Operations
Year Ended March 31, 2001 Compared to Year Ended March 31, 2000. The Partnership's net loss for the year ended March 31, 2001 was $(2,163,000), reflecting an increase of $(377,000) from the $(1,786,000) of net loss experienced for the year ended March 31, 2000. The change is primarily due to an increase in equity in losses of limited partnerships of $(665,000) to $(1,804,000) for the year ended March 31, 2001 from $(1,139,000) for the year ended March 31, 2000. In addition, the change is due to a decrease in advances to a Local Limited Partnership written off totaling $229,015 during the year ended March 31, 2001, compared with advances of $402,243 to the same partnership in 2000 which were also written off in full. Furthermore, interest income decreased by $102,943 due to significant aggregate capital contributions paid to certain Local Limited Partnerships during the year ended March 31, 2000 resulting in a significantly lower average cash balance for the year ended March 31, 2001.
Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. The Partnership's net loss for the year ended March 31, 2000 was $(1,786,000), reflecting an increase of $1,841,000 from the $55,000 of net income experienced for the year ended December 31, 1998. The change is primarily due to an increase in equity in losses of limited partnerships of $1,029,000 to $(1,139,000) for the year ended March 31, 2000 from $(110,000) for the year ended December 31, 1998. In addition, during the year ended March 31, 2000, the Partnership wrote off advances of $402,000 to a Local Limited Partnership, realized loss increased by $188,000, interest income decreased by $156,000, amortization increased by $17,000 and other operating expenses increased by $48,000.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998. The Partnership's net loss for the three months ended March 31, 1999 was $(43,000), reflecting a decrease of $75,000 from the net income experienced for the three months ended March 31, 1998. The change is primarily due to a decrease in interest income of $39,000 to $14,000 for the three months ended March 31, 1999 from $53,000 for the three months ended March 31, 1998 and an increase in equity in losses of limited partnerships of $8,000 to $(22,000) for the three months ended March 31, 1999 from $(14,000) for the three months ended March 31, 1998. In addition, amortization expense increased by $8,000, asset management fees increased by $16,000 and other operating expenses increased by $3,000.
Cash Flows
Year Ended March 31, 2001 Compared to Year Ended March 31, 2000. The net decrease in cash during the year ended March 31, 2001 was $(484,000), compared to a net decrease in cash for the year ended March 31, 2000 of $(2,529,000). The change was primarily due to a decrease in cash used in investing activities related to purchase of Limited Partnership interests of approximately $1,593,000 together with a decrease in cash paid to a Local Limited Partnership of $115,000.
Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. The net decrease in cash during the year ended March 31, 2000 was $(2,529,000), compared to a net decrease in cash for the year ended December 31, 1998 of $(1,368,000). The change was primarily due to a decrease in cash provided by financing activities of $13,332,000. The decrease in cash provided by financing activities was due to a decrease in capital contributions of $14,517,000, a decrease in the collection of notes receivable of $632,000, offset by a decrease in offering expenses paid of $1,817,000. Net cash used in operating activities increased by $93,825. The increase in cash used in operating activities was due primarily to an increase in other expenses. The decrease in cash from financing activities and operating activities was offset by a decrease in cash used in investing activities of $12,667,000. The decrease in investing activities was primarily due to decrease in funds placed in escrow of $9,488,000, a decrease in investments in limited partnerships of $2,987,000, a decrease in capitalized acquisition costs and fees of $1,121,000, offset by a decrease in cash collected on loans receivable of $879,000, an increase in advances to Local Limited Partnership of $402,000 and an increase in marketable securities of $50,000.
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998. Net decrease in cash during the three months ended March 31, 1999 was $(419,000), compared to a net increase in cash for the three months ended March 31, 1998 of $2,723,000. The change was due primarily to a decrease in capital contributions of $5,411,000 and an increase in cash paid to the General Partner or affiliates of $18,000, offset by an increase in collections of notes receivable due from limited partners of $880,000, a decrease in offering expenses paid of $533,000, a decrease in investments in limited partnerships of $608,000 and a decrease in acquisition fees and costs of $266,000.
During the years ended March 31, 2001 and 2000, the three months ended March 31, 1999 and the year ended December 31, 1998, accrued payables, which consist of related party management fees and advances due to the General Partner, decreased by $58,000, decreased by $36,000, increased by $63,000 and decreased by $265,000, respectively.
The Partnership expects its future cash flows, together with its net available assets at March 31, 2001, to be sufficient to meet all currently foreseeable future cash requirements.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS --------------------------------------------------
To the Partners WNC Housing Tax Credit Fund VI, L.P., Series 5
We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund VI, L.P., Series 5 (a California Limited Partnership) (the "Partnership") as of March 31, 2001 and 2000, and the related statements of operations, partners' equity (deficit) and cash flows for the years ended March 31, 2001 and 2000, the three months ended March 31, 1999, and the year ended December 31, 1998. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. A significant portion of the financial statements of the limited partnerships in which the Partnership is a limited partner were audited by other auditors whose reports have been furnished to us. As discussed in Note 3 to the financial statements, the Partnership accounts for its investments in limited partnerships using the equity method. The portion of the Partnership's investment in limited partnerships audited by other auditors represented 84% and 83% of the total assets of the Partnership at March 31, 2001 and 2000, respectively. Our opinion, insofar as it relates to the amounts included in the financial statements for the limited partnerships which were audited by others, is based solely on the reports of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to above present fairly in all material respects, the financial position of WNC Housing Tax Credit Fund VI, L.P., Series 5 (a California Limited Partnership) as of March 31, 2001 and 2000, and the results of its operations and its cash flows for the years ended March 31, 2001 and 2000, the three months ended March 31, 1999, and the year ended December 31, 1998, in conformity with accounting principles generally accepted in the United States of America.
/s/ BDO SEIDMAN, LLP BDO SEIDMAN, LLP Orange County, California June 21, 2001
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
BALANCE SHEETS
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
STATEMENTS OF OPERATIONS
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
See accompanying notes to financial statements
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
STATEMENTS OF CASH FLOWS
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
STATEMENTS OF CASH FLOWS
See accompanying notes to financial statements
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - --------------------------------------------------- Organization - ------------ WNC Housing Tax Credit Fund VI, L.P., Series 5, a California Limited Partnership (the "Partnership"), was formed on March 3, 1997 under the laws of the State of California, and commenced operations on August 29, 1997. The Partnership was formed to invest primarily in other limited partnerships and limited liability companies (the "Local Limited Partnerships") which own and operate multi-family housing complexes (the "Housing Complex") that are eligible for low income housing credits. The local general partners (the "Local General Partners") of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complex.
The general partner is WNC & Associates, Inc. ("WNC") (the "General Partner"), a California corporation. Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 66.8% of the outstanding stock of WNC. John B. Lester was the original limited partner of the Partnership and owns, through the Lester Family Trust, 28.6% of the outstanding stock of WNC. Wilfred N. Cooper, Jr., President of WNC, owns 2.1% of the outstanding stock of WNC.
The Partnership shall continue in full force and effect until December 31, 2052, unless terminated prior to that date, pursuant to the partnership agreement or law.
The financial statements include only activity relating to the business of the Partnership, and do not give effect to any assets that the partners may have outside of their interests in the Partnership, or to any obligations, including income taxes, of the partners.
The partnership agreement authorized the sale of up to 25,000 units at $1,000 per Unit ("Units"). The offering of Units concluded on July 9, 1998 at which time 25,000 Units representing subscriptions in the amount of $24,918,175, net of discount of $54,595 for volume purchases and $27,230 for dealer discounts, had been accepted. 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 tax credits. The limited partners will be allocated the remaining 99% interest in proportion to their respective investments.
After the limited partners have received proceeds from a sale or refinancing equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and the General Partner has received proceeds equal to its capital contribution and a subordinated disposition fee (as described in Note 4) 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.
Change in Reporting Year End - ---------------------------- In 1999, the Partnership elected to change its year end for financial reporting purposes from December 31 to March 31. All financial information reflected in the financial statements and related footnotes has been adjusted for this change in year end except for the combined condensed financial information relating to the Local Limited Partnerships included in Note 3.
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- Risks and Uncertainties - ----------------------- The Partnership's investments in Local Limited Partnerships are subject to the risks incident to the management and ownership of low-income housing and to the management and ownership of multi-unit residential real estate. Some of these risks are that the low income housing credit could be recaptured and that neither the Partnership's investments nor the Housing Complexes owned by the Local Limited Partnerships will be 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 Local Limited Partnership Interests; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations. The Housing Complexes are or will be subject to mortgage indebtedness. If a Local Limited Partnership does not make its mortgage payments, the lender could foreclose resulting in a loss of the Housing Complex and low-income housing credits. As a limited partner of the Local Limited Partnerships, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships, and will rely totally on the Local General Partners of the Local Limited Partnerships for management of the Local Limited Partnerships. The value of the Partnership's investments will be subject to changes in national and local economic conditions, including unemployment conditions, which could adversely impact vacancy levels, rental payment defaults and operating expenses. This, in turn, could substantially increase the risk of operating losses for the Housing Complexes and the Partnership. In addition, each Local Limited Partnership is subject to risks relating to environmental hazards and natural disasters, which might be uninsurable. Because the Partnership's operations will depend on these and other factors beyond the control of the General Partner and the Local General Partners, there can be no assurance that the anticipated low income housing credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing the low income housing credit are complicated, and the use of credits can be limited. The only material benefit from an investment in Units may be the low income housing credits. There are limits on the transferability of Units, and it is unlikely that a market for Units will develop. All management decisions will be made by the General Partner.
Method of Accounting for Investments in Limited Partnerships - ------------------------------------------------------------ The Partnership accounts for its investments in limited partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships' results of operations and for any distributions received. The accounting policies of the Local Limited Partnerships' are consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and are being amortized over 30 years (see Note 3).
Losses from Local Limited Partnerships for the year ended December 31, 1998 have been recorded by the Partnership based on reported results provided by the Local Limited Partnerships. Losses from Local Limited Partnerships for the three months ended March 31, 1999 have been estimated by management of the Partnership. Losses from limited partnerships for the years ended March 31, 2001 and 2000 have been recorded by the Partnership based on nine months of reported results provided by the Local Limited Partnerships and on three months of results estimated by management of the Partnership. Losses from the limited partnerships allocated to the Partnership will not be recognized to the extent that the investment balance would be adjusted below zero.
Offering Expenses - ----------------- Offering expenses consist of underwriting commissions, legal fees, printing, filing and recordation fees, and other costs incurred in connection with selling limited partnership interests in the Partnership. The General Partner is obligated to pay all offering and organization costs in excess of 14.5% (including sales commissions) of the total offering proceeds. Offering expenses are reflected as a reduction of limited partners' capital and amounted to $3,557,441, $3,357,441, $3,248,440, and $3,183,115 as of March 31, 2001, 2000 and 1999 and December 31, 1998, respectively.
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued - -------------------------------------------------------------- Use of Estimates - ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
Cash and Cash Equivalents - ------------------------- The Partnership considers all highly liquid investments with remaining maturities of three months or less when purchased to be cash equivalents. As of March 31, 2001 and 2000, the Partnership had cash equivalents of $50,000 and $393,648, respectively. Of this amount, $50,000 and $375,000, respectively, consist of tax exempt instruments collateralized by tax exempt municipal bonds from various municipalities throughout the United States. These instruments generate tax exempt yields and generally have 35 day or less maturities.
Concentration of Credit Risk - ---------------------------- At March 31, 2001, the Partnership maintained cash balances at certain financial institutions in excess of the federally insured maximum.
Net (Loss) Income Per Limited Partner Unit - ------------------------------------------ Net (loss) income per limited partner unit is calculated pursuant to Statement of Financial Accounting Standards No. 128, Earnings Per Share. Net (loss) income per unit includes no dilution and is computed by dividing loss available to limited partners by the weighted average number of units outstanding during the period. Calculation of diluted net (loss) income per unit is not required.
Reporting Comprehensive Income - ------------------------------ In June 1997, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting Comprehensive Income. This statement establishes standards for reporting the components of comprehensive income and requires that all items that are required to be recognized under accounting standards as components of comprehensive income be included in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive income includes net income as well as certain items that are reported directly within a separate component of partners' equity and bypass net income. The Partnership adopted the provisions of this statement in 1998. For the periods presented, the Partnership has no elements of other comprehensive income, as defined by SFAS No. 130.
NOTE 2 - MARKETABLE SECURITIES - ------------------------------ Marketable securities are categorized as available-for-sale securities and summarized as follows:
Debt securities are those issued by a state agency which matured on July 1, 2000. Those securities were sold during the year ended March 31, 2001 at cost.
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS - --------------------------------------------
As of March 31, 2001 and 2000 the Partnership had acquired limited partnership interests in 15 and 14 Local Limited Partnerships, respectively, each of which owns one Housing Complex consisting of an aggregate of 624 and 614 apartment units, respectively. The respective general partners of the Local Limited Partnerships Manage the day-To-day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership. The Partnership, as a limited partner, is generally entitled to 99%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses and tax credits of the Local Limited Partnerships.
The Partnership's investments in limited partnerships as reflected in the balance sheets at March 31, 2001 and 2000, are approximately $1,653,000 and $2,134,000, respectively, greater than the Partnership's combined equity at the preceding December 31 as shown in the Local Limited Partnerships' combined financial statements presented below. This difference is primarily due to acquisition, selection, and other costs related to the acquisition of the investments which have been capitalized in the Partnership's investment account and to capital contributions payable to the limited partnerships which were netted against partner capital in the Local Limited Partnerships' financial statements (see Note 5). The Partnership's investment is also lower than the Partnership's equity as shown in the Local Limited Partnership's combined financial statements due to the losses recorded by the Partnership for the three month period ended March 31.
Equity in losses of the Local Limited Partnerships is recognized in the financial statements until the related investment account is reduced to a zero balance. Losses incurred after the investment account is reduced to zero are not recognized. 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.
Distributions received by limited partners are accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized as income. As of March 31, 2001, no investment accounts in Local Limited Partnerships reached a zero balance.
The following is a summary of the equity method activity of the investments in limited partnerships for the periods presented:
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued - ------------------------------------------------------- The financial information from the individual financial statements of the Local Limited Partnerships include rental and interest subsidies. Rental subsidies are included in total revenues and interest subsidies are generally netted against interest expense. Approximate combined condensed financial information from the individual financial statements of the individual financial statements of the Local Limited Partnerships as of December 31 and for the years then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued - ------------------------------------------------------- COMBINED CONDENSED STATEMENTS OF OPERATIONS
Certain Local Limited Partnerships have incurred significant operating losses and have working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partner may be required to sustain the operations of such Local Limited Partnerships. If additional capital contributions are not made when they are required, the Partnership's investment in certain of such Local Limited Partnerships could be impaired, and the loss and recapture of the related tax credits could occur.
NOTE 4 - RELATED PARTY TRANSACTIONS - ----------------------------------- Under the terms of the Partnership Agreement, the Partnership has paid or is obligated to the General Partner or their affiliates for the following items:
Acquisition fees of up to 7% of the gross proceeds from the sale of Units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships. As of March 31, 2001 and 2000, the Partnership incurred acquisition fees of $1,750,000 and $1,750,000, respectively. Accumulated amortization of these capitalized costs were $176,494 and $118,154 as of March 31, 2001 and 2000, respectively.
Reimbursement of costs incurred by the General Partner in connection with the acquisition of Local Limited Partnerships. These reimbursements have not exceeded 1.5% of the gross proceeds. As of March 31, 2001 and 2000, the Partnership incurred acquisition costs of $185,734 and $185,734, respectively, which have been included in investments in limited partnerships. Accumulated amortization of these capitalized costs were $17,441 and $11,245, as of March 31, 2001 and 2000, respectively.
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
NOTE 4 - RELATED PARTY TRANSACTIONS, continued - ----------------------------------------------
An annual asset management fee not to exceed 0.2% of the invested assets (defined as the Partnership's capital contributions plus reserves of the Partnership of up to 5% of gross proceeds plus its allocable percentage of the mortgage debt encumbering the housing complexes) of the Local Limited Partnerships. Management fees of $69,869, $67,180, $16,795 and $66,382 were incurred during the years ended March 31, 2001 and 2000, the three months ended March 31, 1999, and the year ended December 31, 1998, respectively, of which $67,180, $92,882 were paid during the years ended March 31, 2001 and 2000, the three months ended March 31, 1999, and the year ended December 31, 1998, respectively.
A subordinated disposition fee in 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 12% through December 31, 2008 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.
The accrued fees and expenses due to General Partner and affiliates consisted of the following as of:
NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) - ---------------------------------------------------- The following is a summary of the quarterly operations for the years ended March 31, 2001 and 2000 (in thousands, except for per unit data).
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), continued - ---------------------------------------------------------------
NOTE 6 - PAYABLES TO LIMITED PARTNERSHIPS - ----------------------------------------- Payables to limited partnerships represent amounts which are due at various times based on conditions specified in the respective limited partnership agreements. These contributions are payable in installments and are generally due upon the limited partnerships achieving certain development and operating benchmarks (generally within two years of the Partnership's initial investment).
NOTE 7 - INCOME TAXES - --------------------- No provision for income taxes has been recorded in the accompanying financial statements as any liability for income taxes is the obligation of the partners of the Partnership.
NOTE 8 - SUBSCRIPTIONS AND NOTES RECEIVABLE - ------------------------------------------- During 1998, the Partnership received subscriptions for 15,166 Units which included promissory notes of $615,250, of which $576,650 was collected in 1999 prior to the issuance of the December 31, 1998 financial statements, leaving an unpaid balance of $38,600. As this balance was paid in 1999 prior to issuance of the March 31, 1999 financial statements it is reflected as capital contributed during the three months ended March 31, 1999.
In 1997, the Partnership had received promissory notes of $351,150 related to the sale of Units, of which the balance of $303,150 was collected in full in 1999. Promissory notes collected subsequent to year end and prior to the issuance of the financial statements are recorded as a capital contribution and an asset in the financial statements. Any unpaid balance as of the issuance of the 1998 financial statements was reflected as a reduction of partners' equity in the financial statements.
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 5 (A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2001 and 2000, For The Three Months Ended March 31, 1999 and For The Year Ended December 31, 1998
NOTE 9 - WRITE OFF OF ADVANCES TO A LOCAL LIMITED PARTNERSHIP - ------------------------------------------------------------- During the years ended March 31, 2001 and 2000 and subsequent to March 31,2001 and through the date of this report, the Partnership advanced cash in the amount of $631,258 to one of the Local Limited Partnerships in which it has a Limited Partnership interest. Of the $631,258 of advances, $402,243 was written off during the year ended March 31, 2000 and $229,015 was written during the year ended March 31, 2001. Advances were made to augment the Local Limited Partnership's cash flows which were not sufficient to support the operating costs of the property. Such advances have been expensed in full in the accompanying financial statements. Subsequent to year end, the respective property has continued to rent up and Section 8 certifications have been obtained for approximately 100% of the units. Such certifications should enable the property to charge market rents applicable to multi-family housing complexes and attain a positive cash flow.
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
NOT APPLICABLE
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers of its own. The following biographical information is presented for the directors and executive officers of Associates which has principal responsibility for the Partnership's affairs.
Directors and Executive Officers of WNC & Associates, Inc.
The directors of WNC & Associates, Inc. are Wilfred N. Cooper, Sr., who serves as Chairman of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N. Cooper, Jr. and Kay L. Cooper. The principal shareholders of WNC & Associates, Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.
Wilfred N. Cooper, Sr., age 70, is the founder, Chairman, Chief Executive Officer and a Director of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a general partner in some of the programs previously sponsored by the Sponsor. Mr. Cooper has been involved in real estate investment and acquisition activities since 1968. Previously, during 1970 and 1971, he was founder and principal of Creative Equity Development Corporation, a predecessor of WNC & Associates, Inc., and of Creative Equity Corporation, a real estate investment firm. For 12 years prior to that, Mr. Cooper was employed by Rockwell International Corporation, last serving as its manager of housing and urban developments where he had responsibility for factory-built housing evaluation and project management in urban planning and development. Mr. Cooper is a Director of the National Association of Home Builders (NAHB) and a National Trustee for NAHB's Political Action Committee, a Director of the National Housing Conference (NHC) and a member of NHC's Executive Committee and a Director of the National Multi-Housing Council (NMHC). Mr. Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree.
John B. Lester, Jr., age 67, is Vice-Chairman, a Director, a member of the Acquisition Committee of WNC & Associates, Inc., and a Director of WNC Capital Corporation. Mr. Lester has 27 years of experience in engineering and construction and has been involved in real estate investment and acquisition activities since 1986 when he joined the Sponsor. Previously, he was Chairman of the Board and Vice President or President of E & L Associates, Inc., a provider of engineering and construction services to the oil refinery and petrochemical industries, which he co-founded in 1973. Mr. Lester graduated from the University of Southern California in 1956 with a Bachelor of Science degree in Mechanical Engineering.
Wilfred N. Cooper, Jr., age 38, is President, Chief Operating Officer, a Director and a member of the Acquisition Committee of WNC & Associates, Inc. He is President of, and a registered principal with, WNC Capital Corporation, a member firm of the NASD, and is a Director of WNC Management, Inc. He has been involved in investment and acquisition activities with respect to real estate since he joined the Sponsor in 1988. Prior to this, he served as Government Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of the Advisory Board for LIHC Monthly Report, a Director of NMHC and an Alternate Director of NAHB. He graduated from The American University in 1985 with a Bachelor of Arts degree.
David N. Shafer, age 49, is Executive Vice President, a Director, General Counsel, and a member of the Acquisition Committee of WNC & Associates, Inc., and a Director and Secretary of WNC Management, Inc. Mr. Shafer has been involved in real estate investment and acquisition activities since 1984. Prior to joining the Sponsor in 1990, he was practicing law with a specialty in real estate and taxation. Mr. Shafer is a Director and President of the California Council of Affordable Housing and a member of the State Bar of California. Mr. Shafer graduated from the University of California at Santa Barbara in 1978 with a Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris Doctor degree (cum laude) and from the University of San Diego in 1986 with a Master of Law degree in Taxation.
Thomas J. Riha, age 46, became Chief Financial Officer effective January 2001. Prior to his appointment as Chief Financial Officer he was Vice President - Asset Management and a member of the Acquisition Committee of WNC & Associates, Inc. and a Director and Chief Executive Officer of WNC Management, Inc. Mr. Riha has been involved in acquisition and investment activities with respect to real estate since 1979. Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty Advisor, a real estate acquisition and management company, last serving as Vice President - Operations. Mr. Riha graduated from the California State University, Fullerton in 1977 with a Bachelor of Arts degree (cum laude) in Business Administration with a concentration in Accounting and is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants.
Sy P. Garban, age 55, is Vice President - Institutional Investments of WNC & Associates, Inc. and has been employed by the Sponsor since 1989. Mr. Garban has been involved in real estate investment activities since 1978. Prior to joining the Sponsor he served as Executive Vice President of MRW, Inc., a real estate development and management firm. Mr. Garban is a member of the International Association of Financial Planners. He graduated from Michigan State University in 1967 with a Bachelor of Science degree in Business Administration.
N. Paul Buckland, age 38, is Vice President - Acquisitions and a member of the Acquisition Committee of WNC & Associates, Inc. He has been involved in real estate acquisitions and investments since 1986 and has been employed with WNC & Associates, Inc. since 1994. Prior to that, he served on the development team of the Bixby Ranch that constructed apartment units and Class A office space in California and neighboring states, and as a land acquisition coordinator with Lincoln Property Company where he identified and analyzed multi-family developments. Mr. Buckland graduated from California State University, Fullerton in 1992 with a Bachelor of Science degree in Business Finance.
David Turek, age 46, is Vice President - Originations of WNC & Associates, Inc. He has been involved with real estate investment and finance activities since 1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to 1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where he was responsible for on-site feasibility studies and due diligence analyses of Tax Credit properties. From 1990 to 1995, he was involved in the development of conventional and tax credit multi-family housing. He is a Director with the Texas Council for Affordable Rural Housing and graduated from Southern Methodist University in 1976 with a Bachelor of Business Administration degree.
Kay L. Cooper, age 64, is a Director of WNC & Associates, Inc. Mrs. Cooper was the founder and sole proprietor of Agate 108, a manufacturer and retailer of home accessory products, from 1975 until 1998. She is the wife of Wilfred N. Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B. Lester, Jr. Ms. Cooper graduated from the University of Southern California in 1958 with a Bachelor of Science degree.
Item 11.
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the terms of the Partnership Agreement the Partnership is obligated to the General Partner or its affiliates for the following fees:
(a) Organization and Offering Expenses. The Partnership accrued or paid the General Partner or its affiliates as of March 31, 2001, 2000 and 1999 and December 31, 1998 approximately $3,357,000, $3,357,000, $3,248,000 and $3,183,000, respectively, for selling commissions and other fees and expenses of the Partnership's offering of Units. Of the total accrued or paid, approximately $2,607,000, $2,607,000, $2,498,000 and $2,433,000, respectively, was paid or to be paid to unaffiliated persons participating in the Partnership's offering or rendering other services in connection with the Partnership's offering.
(b) Acquisition Fees. Acquisition fees in an amount equal to 7.0% of the gross proceeds of the Partnership's Offering ("Gross Proceeds"). As of March 31, 2001, 2000 and 1999 and December 31, 1998, the aggregate amount of acquisition fees paid or accrued was approximately $1,750,000, $1,750,000, $1,747,300 and $1,670,800, respectively.
(c) Acquisition Expense. The Partnership reimbursed the General Partner or its affiliates as of March 31, 2001, 2000 and 1999 and December 31, 1998 for acquisition expense, not to exceed 1.5% of the Gross Proceeds, expended by such persons on behalf of the Partnership in the amounts $186,000, $186,000, $170,000 and $169,000, respectively.
(d) Annual Asset Management Fee. An annual asset management fee in an amount equal to 0.2% of the Invested Assets of the Partnership. "Invested Assets" is defined as the sum of the Partnership's Investment in Local Limited Partnerships and the Partnership's allocable share of the amount of the mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Fees of $70,000, $67,000, $17,000 and $66,000 were incurred for the years ended March 31, 2001 and 2000, the three months ended March 31, 1999 and the year ended December 31, 1998. The Partnership paid the General Partner or its affiliates $67,000, $93,000, $36,000 and $0 of those fees during the years ended March 31, 2001 and 2000, the three months ended March 31, 1999 and the year ended December 31, 1998, respectively.
(e) Operating Expenses. The Partnership reimbursed the General Partner or its affiliates for operating expenses of approximately $55,000, $83,000, $0 and $4,500 during the years ended March 31, 2001 and 2000, the three months ended March 31, 1999 and the year ended December 31, 1998, respectively, expended by such persons on behalf of the Partnership.
(f) Subordinated Disposition Fee. A subordinated disposition fee in an amount equal to 1% of the sale price received in connection with the sale or disposition of an Apartment Complex or Local Limited Partnership Interest. Subordinated disposition fees will be subordinated to the prior return of the Limited Partners' capital contributions and payment of the Return on Investment to the Limited Partners. "Return on Investment" means an annual, cumulative but not compounded, "return" to the Limited Partners (including Low Income Housing Credits) as a class on their adjusted capital contributions commencing for each Limited Partner on the last day of the calendar quarter during which the Limited Partner's capital contribution is received by the Partnership, calculated at the following rates: (i) 12% through December 31, 2008, and (ii) 6% for the balance of the Partnerships term. No disposition fees have been paid.
(g) Interest in Partnership. The General Partner will receive 1% of the Low Income Housing Credits. The General Partner was allocated Low Income Housing Credits of $21,257, $1,190 and $441 for the years ended December 31, 2000, 1999 and 1998, respectively. The General Partners are also entitled to receive 1% of cash distributions. There were no distributions of cash to the General Partner during the years ended March 31, 2001 and 2000, the three months ended March 31, 1999 or the year ended December 31, 1998.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners ----------------------------------------------- No person is known to own beneficially in excess of 5% of the outstanding Units.
(b) Security Ownership of Management -------------------------------- Neither the General Partner, its affiliates, nor any of the officers or directors of the General Partner or its affiliates own directly or beneficially any Units in the Partnership.
(c) Changes in Control ------------------ The management and control of the General Partner may be changed at any time in accordance with its organizational documents, without the consent or approval of the Limited Partners. In addition, the Partnership Agreement provides for the admission of one or more additional and successor General Partners in certain circumstances.
First, with the consent of any other General Partners and a majority-in-interest of the Limited Partners, any General Partner may designate one or more persons to be successor or additional General Partners. In addition, any General Partner may, without the consent of any other General Partner or the Limited Partners, (i) substitute in its stead as General Partner any entity which has, by merger, consolidation or otherwise, acquired substantially all of its assets, stock or other evidence of equity interest and continued its business, or (ii) cause to be admitted to the Partnership an additional General Partner or Partners if it deems such admission to be necessary or desirable so that the Partnership will be classified a partnership for
Federal income tax purposes. Finally, a majority-in-interest of the Limited Partners may at any time remove the General Partner of the Partnership and elect a successor General Partner.
Item 13.
Item 13. Certain Relationships and Related Transactions
The General Partner manages all of the Partnership's affairs. The transactions with the General Partner are primarily in the form of fees paid by the Partnership for services rendered to the Partnership and the General Partner's interest in the Partnership, as discussed in Item 11 and in the notes to the Partnership's financial statements.
PART IV.
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof: -----------------------------------------------
Report of Independent Certified Public Accountants Balance Sheets, March 31, 2001 and 2000 Statements of Operations for the years ended March 31, 2001 and 2000, the three months ended March 31, 1999 and the year ended December 31, 1998 Statements of Partners' Equity for the years ended March 31, 2001 and 2000, the three months ended March 31, 1999 and the year ended December 31, 1998 Statements of Cash Flows for the years ended March 31, 2001 and 2000, the three months ended March 31, 1999 and the year ended December 31, 1998 Notes to Financial Statements
(a)(2) Financial statement schedules included in Part IV hereof: -------------------------------------------------------- Report of Independent Certified Public Accountants on Financial Statement Schedules Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K. ------------------- 1. None
(c) Exhibits. -------- 3.1 Agreement of Limited Partnership dated as of March 3, 1997 included as Exhibit 3.1 to the Form 10-K filed for the year ended December 31, 1997, is hereby incorporated herein as Exhibit 3.1.
3.2 First Amendment to Agreement of Limited Partnership dated August 29, 1997 included as Exhibit 3.2 to the Form 10-K filed for the year ended December 31, 1997, is hereby incorporated as Exhibit 3.2.
10.1 Amended and Restated Agreement of Limited Partnership of Chillicothe Plaza Apts., L.P. filed as exhibit 10.1 to the current report on Form 8-K dated November 11, 1997, is herein incorporated by reference as Exhibit 10.1.
10.2 Amended and Restated Agreement of Spring Valley Terrace Apartments, L.L.C. filed as Exhibit 10.3 to Post-effective Amendment No. 1 to Registration statement, is herein incorporated by reference as Exhibit 10.2.
10.3 Amended and Restated Agreement of Limited Partnership of El Reno Housing Associates Limited Partnership filed as Exhibit 10.1 to the current report on Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit 10.3.
10.4 Second Amended and Restated Agreement of Limited Partnership of Hughes Villas Limited Partnership filed as Exhibit 10.2 to the current report on Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit 10.4.
10.5 First Amendment to Second Amended and Restated Agreement of Limited Partnership of Hughes Villas Limited Partnership filed as Exhibit 10.3 to the current report on Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of Mark Twain Senior Community Limited Partnership filed as Exhibit 10.3 to the current report on Form 8-K dated January 15, 1998, is herein incorporated by reference as Exhibit 10.6.
10.7 Amended and Restated Agreement of Limited Partnership of Bradley Villas, L.P. filed as Exhibit 10.1 to Form 8-K dated April 1, 1998 is herein incorporated as Exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Murfreeburo Villas filed as Exhibit 10.5 to Form 8-K dated April 1, 1998 is herein incorporated as Exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership of United Development Co., L.P. - 97-2 filed as Exhibit 10.3 to Form 8-K dated April 30, 1998 is herein incorporated as Exhibit 10.9.
10.10 Second Amended and Restated Agreement of Limited Partnership of United Development Co., L.P. - 97-2 filed as Exhibit 10.2 to Form 8-K dated April 30, 1998 is herein incorporated as Exhibit 10.10.
10.11 Second Amended and Restated Agreement of Limited Partnership of United Development Co., L.P. - 97-1 filed as Exhibit 10.3 to Form 8-K dated April 30, 1998 is herein incorporated as Exhibit 10.11.
10.12 Second Amended and Restated Agreement of Limited Partnership of Concord Apartment Partners, L.P. filed as Exhibit 10.1 to Form 8-K dated May 31, 1998 is herein incorporated as Exhibit 10.12.
10.13 Amended and Restated Agreement of Limited Partnership of Mansur Wood Living Center, L.P. filed as Exhibit 10.1 to Form 8-K dated September 19, 1998 is herein incorporated as Exhibit 10.13.
10.14 Amended and Restated Agreement of Apartment Housing of Theodore, LTD filed as Exhibit 10.23 to Post-Effective Amendment No 3 to Registration Statement dated May 1, 1998 is herein incorporated as Exhibit 10.14.
10.15 Amended and Restated Agreement of Limited Partnership of Enhance, L.P. filed as Exhibit 10.15 to Form 10-K dated November 13, 2000 is herein incorporated as Exhibit 10.15.
10.16 Second Amended and Restated Agreement of Limited Partnership of Austin Gateway, Ltd.
21.1 Financial Statements of Mansur Wood Elderly Living Center, L.P., for the year ended December 31, 1998 together with auditor's report thereon; a significant subsidiary of the Partnership, filed as exhibit 21.1 to Form 10-K dated August 5, 1999 is herein incorporated by reference as Exhibit 21.1.
21.2 Financial Statements for Mansur Wood Elderly Living Center, L.P., for the year ended December 31, 1999 together with auditor's report thereon; a significant subsidiary of the Partnership, filed as exhibit 21.2 to Form 10-K dated November 13, 2000 is herein incorporated by reference as exhibit 21.2.
21.3 Financial Statements for Mansur Wood Elderly Living Center, L.P., for the year ended December 31, 2000 together with auditor's report thereon; a significant subsidiary of the Partnership.
(d) Financial statement schedules follow, as set forth in subsection (a)(2) hereof. -------
Report of Independent Certified Public Accountants on Financial Statement Schedules
To the Partners WNC Housing Tax Credit Fund VI, L.P., Series 5
The audits referred to in our report dated June 21, 2001, relating to the 2001, 2000, 1999 and 1998 financial statements of WNC Housing Tax Credit Fund VI, L.P., Series 5 (the "Partnership"), which is contained in Item 8 of this Form 10-K, included the audit of the accompanying financial statement schedules. The financial statement schedules are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statement schedules based upon our audits.
In our opinion, such financial statement schedules present fairly, in all material respects, the financial information set forth therein.
/s/ BDO SEIDMAN, LLP Orange County, California BDO SEIDMAN, LLP June 21, 2001
WNC Housing Tax Credit Fund VI, L.P., Series 5 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
WNC Housing Tax Credit Fund VI, L.P., Series 5 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
WNC Housing Tax Credit Fund VI, L.P., Series 5 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2001
WNC Housing Tax Credit Fund VI, L.P., Series 5 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2000
WNC Housing Tax Credit Fund VI, L.P., Series 5 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2000
WNC Housing Tax Credit Fund VI, L.P., Series 5 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 2000
WNC Housing Tax Credit Fund VI, L.P., Series 5 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 1999
WNC Housing Tax Credit Fund VI, L.P., Series 5 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 1999
WNC Housing Tax Credit Fund VI, L.P., Series 5 Schedule III Real Estate Owned by Local Limited Partnerships March 31, 1999
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 5
By: WNC & Associates, Inc. General Partner
By: /s/ Wilfred N. Cooper, Jr. ------------------------- Wilfred N. Cooper, Jr. President Chief Operating Officer of WNC & Associates, Inc.
Date: July 12, 2001
By: /s/ Thomas J. Riha ------------------- Thomas J. Riha Vice-President Chief Financial Officer of WNC & Associates, Inc.
Date: July 12, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Wilfred N. Cooper, Sr. -------------------------- Wilfred N. Cooper, Sr. Chairman of the Board of WNC & Associates, Inc.
Date: July 12, 2001
By: /s/ John B. Lester, Jr. ----------------------- John B. Lester, Jr. Director of WNC & Associates, Inc.
Date: July 12, 2001
By: /s/ David N. Shafer - ------------------------ David N Shafer Director of WNC & Associates, Inc.
Date: July 12, 2001
MANSUR WOOD LIVING CENTER, L.P. (An Illinois Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
(TOGETHER WITH independent AUDITOR'S REPORT)
MANSUR WOOD LIVING CENTER, L.P. (An Illinois Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
T A B L E O F C O N T E N T S
INDEPENDENT AUDITOR'S REPORT
FINANCIAL STATEMENTS
Balance Sheets Exhibit A
Statements of Operations Exhibit B
Statements of Partners' Equity Exhibit C
Statements of Cash Flows Exhibit D
NOTES TO THE FINANCIAL STATEMENTS - ---------------------------------
Schedules of Project Operating Expenses Schedule I
INDEPENDENT AUDITOR'S REPORT ----------------------------
To The Partners MANSUR WOOD LIVING CENTER, L.P. (An Illinois Limited Partnership)
We have audited the accompanying balance sheets of MANSUR WOOD LIVING CENTER, L.P. (An Illinois Limited Partnership) as of December 31, 2000 and 1999, and the related statements of operations, partners' equity and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MANSUR WOOD LIVING CENTER, L.P. as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles.
/s/ FRIDUSS, LUKEE, SCHIFF & CO., P.C. Certified Public Accountants
Chicago, Illinois February 16, 2001
MANSUR WOOD LIVING CENTER, L.P.
BALANCE SHEETS
See notes to the financial statements.
MANSUR WOOD LIVING CENTER, L.P.
BALANCE SHEETS
See notes to the financial statements.
MANSUR WOOD LIVING CENTER, L.P.
STATEMENTS OF OPERATIONS
See notes to the financial statements.
See notes to the financial statements.
See notes to the financial statements.
See notes to the financial statements.
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 1 - ORGANIZATION
Mansur Wood Living Center, L.P. ("the Partnership") was formed as a limited partnership under the laws of the State of Illinois on April 21, 1998, for the purpose of constructing and operating a rental housing project. The project consists of 115 units located in Carbon Cliff, Illinois, and will operate under the name of Mansur Wood Living Center.
The project is expected to qualify for the Low-Income Housing Tax Credit established by the Tax Reform Act of 1986.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Partnership's significant accounting policies consistently applied in the preparation of the accompanying financial statements follows:
CAPITALIZATION AND DEPRECIATION
Land, building and improvements are recorded at cost. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. Interest expense capitalized in 2000 and 1999 amounts to $146,589 and $13,125, respectively.
Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives. The estimated service life of the assets for depreciation purposes may be different than their actual economic useful lives.
Estimated Life Method -------------- ------- Land - None Building and Improvements 27.5 Years Straight-Line Furniture and Equip Various MACRS
RENTAL INCOME AND PREPAID RENTS - ------------------------------- Rental income is recognized for apartment rentals as it accrues.
MANSUR WOOD LIVING CENTER, L.P. ------------------------------- NOTES TO THE FINANCIAL STATEMENTS ---------------------------------
DECEMBER 31, 2000 AND 1999 --------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) - ------------------------------------------
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE - --------------------------------------------------- In April 1998, Statement of Position (SOP) No. 98-5 Reporting on the Costs of Start-Up Activities was issued. This SOP provides guidance on the financial reporting of start-up costs and organization costs, and requires that these costs be expensed as incurred effective for fiscal years beginning after December 15, 1998. As of January 1, 2000, the unamortized organization costs were written off and accounted for as a cumulative effect of a change in accounting principle. This change did not have a material effect on prior periods. The effect of this change was to increase the 2000 loss by $13,893.
AMORTIZATION ------------ Mortgage costs are amortized over the term of the mortgage loan using the straight-line method.
INCOME TAXES ------------ No provision or benefit for income taxes has been included in these financial statements since taxable income passes through to, and is reportable by, the partners individually.
ESTIMATES --------- The preparation of financial statements in conformity with generally accepted accounting principles 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 differ from those estimates.
NOTE 3 - CASH ----
The Partnership maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Partnership has not experienced any losses in such accounts. The Partnership believes it is not exposed to any significant credit risk on cash.
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 4 - PARTNERS' CAPITAL CONTRIBUTIONS -------------------------------
The Partnership has one General Partner, Elderly Living Development, Inc. which has a 1% interest and one Limited Partner, WNC Housing Tax Credit Fund VI, L.P. Series 5, which has a 98.99% interest and one Special Limited Partner, WNC Housing, L.P., which has a .01% interest.
NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES - ---------------------------------------------------------
The General Partner will be entitled to a development fee in the amount of $1,350,000, of which $560,731 and $789,269 has been earned, and $46,000 and $789,269 had been paid in 2000 and 1999, respectively.
The apartment project is managed by Heartland Mgt., Inc., an affiliate of the General Partner. Management fees earred in 2000 and 1999 amount to $12,690 and $-0-, respectively. Mangement fees paid in 2000 and 1999 amount to $ 10,685 and $-0-,respevtively. During 2000 and 1999, Heartland Mgt., Inc. had advanced salaries and benefits for the project. The amounts due to Heartland Mgt., Inc. for salaries and benefits at December 31, 2000 and 1999 amount to $11,100 and $27,513, respectively.
MANSUR WOOD LIVING CENTER, L.P.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES - (Continued) ------------------------------------------------ The Partnership is to pay the Managing General Partner, Elderly Living Development, Inc. an incentive management fee equal to 70% of the net operating income remaining after reduction for the payments made for the partnership reporting fee, developer fee, and operating loans. This fee is payable 75 days after year-end. If the fee is not paid in any given year it cannot be accrued in the subsequent year. Incentive management fee earned for 2000 and 1999 amounts to $-0- and $-0-.
The Partnership is to pay a fee to the Limited Partner in the amount of $5,000 a year for monitoring the operations of the Partnership and for services in connection with the Partnership's accounting matters. The fee is payable within 75 days after the year end from net operating income. The balance due WNC Housing Tax Credit Fund VI, Series 5 at December 31, 2000 and 1999 amounts to $10,000 and $5,000.
The project's general contractor was Twin Rivers Construction Company, an affiliate of the General Partner. Construction costs earned by Twin Rivers Construction Company in 2000 and 1999 amount to $2,342,696 and $6,516,654, respectively. Construction costs paid to Twin Rivers Construction Company in 2000 and 1999 amount to $2,590,559 and $6,259,781, respectively. The amount due to Twin Rivers Construction Company at December 31, 2000 and 1999 amounts to $9,010 and $382,689, respectively.
During 2000, Heartland Park Elderly Living Center, L.P., an affiliate of the General Partner, had paid operating expenses on behalf of the Partnership in the amount of $2,028. The amount due Heartland Park Elderly Living Center, L.P. at December 31, 2000 amounts to $2,028.
The Partnership Agreement provides for various obligations of the General Partner, including its obligation to provide funds for any development and operating deficits.
Amounts due related parties at December 31, 2000 and 1999 is as follows:
2000 1999 ----- ------
Salaries and Benefits $ 11,100 $ 27,513 Developer Fees 514,731 - Management Fees 2,005 - Construction Cost 9,010 382,689 Operating Advance 2,028 - Partnership Reporting Fee 10,000 5,000 ------------ ------------ $ 548,874 $ 415,202 ============ ============
MANSUR WOOD LIVING CENTER, L.P. ------------------------------- NOTES TO THE FINANCIAL STATEMENTS --------------------------------- DECEMBER 31, 2000 AND 1999 --------------------------
NOTE 7 - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS - ---------------------------------------------------------
All profits and losses are allocated 1% to the General Partner, 98.99% to the Limited Partner and .01% to the Special Limited Partner.
However, for 1999, the General Partner and Limited Partners have agreed, in writing, to allocate 100% of the interest income earned on the construction escrow (Note 10) to the General Partner. In conjunction with this allocation, the General Partner is permitted to receive, as a distribution, an amount sufficient to cover any tax liability incurred as a result of this allocation.
Distributable cash flow, as defined by the Partnership Agreement, is distributable 50% to the General Partner and 50% to the Limited Partners.
Gain, if any, from a sale or exchange or other disposition of the property owned by the Partnership is allocable as follows:
1. To all partners having negative balances in their capital accounts prior to the distribution of any sale or refinancing proceeds, an amount of such gain to increase their negative balance to zero.
2. 98.99% to the Limited Partner and .01% to the Special Limited Partner until the Limited Partners have received amounts equal to their gross capital contributions.
3. To the General Partner until the General Partner has received amounts equal to its gross capital contribution.
4. The remainder of such gain, if any, 50% to the Limited Partners and 50% to the General Partner.
NOTE 8 - CAPITALIZED COSTS ----------------- The costs incurred to obtain financing and fees relating to organization, as well as certain start-up costs, of the project partnership have been capitalized and will be amortized as described below beginning in the first year of operations:
MANSUR WOOD LIVING CENTER, L.P. ------------------------------- NOTES TO THE FINANCIAL STATEMENTS --------------------------------- DECEMBER 31, 2000 AND 1999 --------------------------
NOTE 8 - CAPITALIZED COSTS - (Continued) -------------------------------
NOTE 9 - RESTRICTED ESCROW DEPOSITS AND RESERVES ---------------------------------------
According to the partnership, loan and other regulatory agreements, the Partnership is required to maintain the following escrow deposits and reserves; real estate tax and insurance escrow, working capital escrow and operating maintenance reserve. The escrow deposits and reserves will be funded when construction is complete and apartment lease-up begins. The project was completed during 2000. As of December 31, 2000, none of these escrows were funded.
NOTE 10 - construction escrow
Releases from the construction escrow are restricted based on the performance of certain events as described in the Partnership Agreement.
NOTE 11 -RECLASSIFICATIONS
Certain amounts at December 31, 1999 have been reclassified to conform with the December 31, 2000 financial statement presentation. Actual results are the same as last year.
See independent auditor's report.