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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March, 31, 2003
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 333-24111
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 6
California 33-0745418
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X .
---------- ----------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
1
Indicate by check mark whether the registrant is an accelerated filer.
Yes No X
----------- ---------------
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter.
INAPPLICABLE
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
NONE
2
PART I.
Item 1. Business
Organization
WNC Housing Tax Credit Fund VI, L.P., Series 6 (the "Partnership") is a
California Limited Partnership formed under the laws of the State of California
on March 3, 1997 and commenced operations on August 20, 1998. The Partnership
was formed to acquire limited partnership interests in other limited
partnerships or limited liability companies ("Local Limited Partnerships") which
own multi-family housing complexes that are eligible for Federal low income
housing tax credits (the "Low Income Housing Credit").
The general partner of the Partnership is WNC & Associates, Inc. ("Associates"
or the "General Partner"). The chairman and president own substantially all of
the outstanding stock of Associates. The business of the Partnership is
conducted primarily through the General Partner, as the Partnership has no
employees of its own.
Pursuant to a registration statement which was declared effective on June 23,
1997, a Prospectus dated June 23, 1997 and Supplements thereto, the Partnership
commenced a public offering of 25,000 units of limited partnership interest
("Units"), at a price of $1,000 per Unit. Since inception, the Partnership has
received and accepted subscriptions for 20,500 Units in the amount of
$20,456,595, net of dealer discounts of $16,100 and volume discounts of $27,305.
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 Complexes") 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. Each
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, dated March 3, 1997 as amended on August 29, 1997 ("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 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.
3
As of March 31, 2003, the Partnership had invested in fifteen Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is or is expected to be eligible for the Federal Low Income Housing Credit,
except for one Local Limited Partnership which owns three Housing Complexes.
Certain Local Limited Partnerships may also benefit from government programs
promoting low- or moderate-income housing.
Certain Risks and Uncertainties
An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:
The Low Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low Income Housing Credits and
the fractional recapture of Low Income Housing Credits already taken. In most
cases the annual amount of Low Income Housing Credits that an individual can use
is limited to the tax liability due on the person's last $25,000 of taxable
income. The Local Limited Partnerships may be unable to sell the Housing
Complexes at a profit. Accordingly, the Partnership may be unable to distribute
any cash to its investors. Low Income Housing Credits may be the only benefit
from an investment in the Partnership.
The Partnership has invested in a limited number of Local Limited Partnerships.
Such limited diversity means that the results of operation of each single
Housing Complex will have a greater impact on the Partnership. With limited
diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage indebtedness. If a Local Limited Partnership failed to
pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
Low Income Housing Credits, a fractional recapture of prior Low Income Housing
Credits, and a loss of the Partnership's investment in the Housing Complex would
occur. The Partnership is a limited partner or non-managing member of each Local
Limited Partnership. Accordingly, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships. The Partnership
will rely totally on the Local General Partners. Neither the Partnership's
investments in Local Limited Partnerships, nor the Local Limited Partnerships'
investments in Housing Complexes, are readily marketable. To the extent the
Housing Complexes receive government financing or operating subsidies, they may
be subject to one or more of the following risks: difficulties in obtaining
tenants for the Housing Complexes; difficulties in obtaining rent increases;
limitations on cash distributions; limitations on sales or refinancing of
Housing Complexes; limitations on transfers of interests in Local Limited
Partnerships; limitations on removal of Local General Partners; limitations on
subsidy programs; and possible changes in applicable regulations. Uninsured
casualties could result in loss of property and Low Income Housing Credits and
recapture of Low Income Housing Credits previously taken. The value of real
estate is subject to risks from fluctuating economic conditions, including
employment rates, inflation, tax, environmental, land use and zoning policies,
supply and demand of similar properties, and neighborhood conditions, among
others.
The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low Income Housing
Credits and tax losses allocable to the investors could be reduced if the IRS
were successful in such a challenge. The alternative minimum tax could reduce
tax benefits from an investment in the Partnership. Changes in tax laws could
also impact the tax benefits from an investment in the Partnership and/or the
value of the Housing Complexes.
No trading market for the Units exists or is expected to develop. Investors may
be unable to sell their Units except at a discount and should consider their
Units to be a long-term investment. Individual investors will have no recourse
if they disagree with actions authorized by a vote of the majority of Limited
Partners.
4
Exit Strategy
The IRS compliance period for low-income housing tax credit properties is
generally 15 years from occupancy following construction or rehabilitation
completion. WNC was one of the first in the industry to offer investments using
the tax credit. Now these very first programs are completing their compliance
period.
With that in mind, we are continuing our review of the Partnership's holdings,
with special emphasis on the more mature properties including those that have
satisfied the IRS compliance requirements. Our review will consider many factors
including extended use requirements on the property (such as those due to
mortgage restrictions or state compliance agreements), the condition of the
property, and the tax consequences to the investors from the sale of the
property.
Upon identifying those properties with the highest potential for a successful
sale, refinancing or syndication, we expect to proceed with efforts to liquidate
those properties. Our objective is to maximize the investors' return wherever
possible and, ultimately, to wind down those funds that no longer provide tax
benefits to investors. To date no properties in the Partnership have been
selected.
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:
5
---------------------------------- -----------------------------------------------
As of March 31, 2003 As of December 31, 2002
---------------------------------- -----------------------------------------------
Partnership's Original
Total Original Estimated Low Encumbrances
Investment in Amount of Income of Local
General Partner Local Limited Investment Number Housing Limited
Partnership Name Location Name Partnerships Paid to Date of Units Occupancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Central Missouri
Boonville Counties'Human
Associates I, Boonville, Development
L.P. Missouri Corporation $ 2,195,000 $ 2,195,000 48 100% $3,027,000 $ 785,000
Brighton The Piedmont
Ridge Edgefield, Foundation of
Apartments, South South Carolina,
L.P. Carolina Inc. 926,000 926,000 44 100% 1,302,000 969,000
Elderly Living
Development,
Cotton Mill Inc. and Quad Cities
Elderly Rock Redevelopment
Living Island, Resources,
Center, L.P. Illinois Inc. 1,040,000 1,040,000 31 90% 1,445,000 *
Country Club
Investors, Richmond, Mark-Dana
L.P. Virginia Corporation 305,000 305,000 97 92% 359,000 2,714,000
Desloge East Missouri
Associates I, Desloge, Action Agency,
L.P. Missouri Inc. 1,059,000 1,059,000 32 94% 1,629,000 592,000
Compass Square
Kechel Logansport, Development
Towers, L.P. Indiana Corporation 1,348,000 1,191,000 23 100% 1,258,000 259,000
Ottawa I, Oglesby, Michael K.
L.P. Illinois Moore 403,000 403,000 32 91% 592,000 1,481,000
Michael K. Moore
and Affordable
Preservation Pontiac and Housing
Partners I, Taylorville, Development
L.P. Illinois Fund, Inc. 514,000 514,000 60 93% 756,000 2,013,000
St. Susanne Southwind
Associates Mt. Vernon, Community
I, L.P. Missouri Development 255,000 255,000 16 100% 337,000 654,000
Summer Wood Camden, ACHR Housing
Ltd. Alabama Corporation 1,237,000 1,237,000 32 94% 1,707,000 947,000
* Results of Cotton Mill Elderly Living Center, L.P. have not been audited and thus have been excluded. See Note 3 to the
financial statements and report of independent certified public accountants.
6
---------------------------------- -----------------------------------------------
As of March 31, 2003 As of December 31, 2002
---------------------------------- -----------------------------------------------
Partnership's Original
Total Original Estimated Low Encumbrances
Investment in Amount of Income of Local
General Partner Local Limited Investment Number Housing Limited
Partnership Name Location Name Partnerships Paid to Date of Units Occupancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Trenton
Village MBL
Apartments, Trenton, Development,
L.P. Missouri Co. 1,018,000 1,018,000 32 94% 1,497,000 681,000
United Harold E.
Development Buehler, Sr.
Co., Memphis, and Jo
L.P. - 97.0. Tennessee Ellen Buehler 2,813,000 2,813,000 60 98% 4,107,000 1,280,000
Lutheran Social
Services of South
Wagner Dakota and
Partnership Wagner, Weinburg
99 Limited South Investments,
Partnership Dakota Inc. 245,000 208,000 26 92% 334,000 779,000
West Liberty
Family West Joe B. Curd,
Apartments, Liberty, Jr.and Janie
Ltd. Kentucky Sheets Curd 351,000 298,000 20 100% 474,000 1,211,000
West Mobile Apartment
County Developers,
Housing, Theodore, Inc. and
Ltd. Alabama Thomas H. Cooksey 1,858,000 1,858,000 55 95% 2,543,000 1,359,000
------------ ----------- ---- ---- ------------ -----------
$ 15,567,000 $15,320,000 608 96% $ 21,367,000 $15,724,000
============ =========== ==== ==== ============ ===========
7
--------------------------------------- ----------------------------------------------
For the year ended
December 31, 2002 Low Income Housing Credits
- -------------------------------------------------------------------- ----------------------------------------------
Credits Allocated Year to be First
Partnership Name Rental Income Net Income/(loss) to Partnership Available
- -------------------------------------------------------------------- ----------------------------------------------
Boonville Associates I, L.P. $ 163,000 $ (98,000) 99.97% 2001
Brighton Ridge Apartments
L.P. 242,000 (41,000) 98.989% 1999
Cotton Mill Elderly Living
Center, L.P. * * 99.98% 2000
Country Club Investors, L.P. 560,000 (48,000) 66.99% 1999
Desloge Associates I, L.P. 93,000 (54,000) 99.89% 1999
Kechel Towers, L.P. 96,000 (67,000) 99.98% 1999
Ottawa I, L.P. 143,000 (67,000) 99.98% 1999
Preservation Partners I,
L.P. 271,000 (72,000) 99.98% 1999
St. Susanne Associates I,
L.P. 69,000 (17,000) 99.98% 2000
Summer Wood Ltd. 77,000 (76,000) 99.98% 1999
Trenton Village Apartments,
L.P. 111,000 (16,000) 99.98% 1999
United Development Co. L.P.
97.0, L.P. 471,000 (79,000) 99.98% 1999
Wagner Partnership
99 Limited Partnership 95,000 (22,000) 99.98% 2001
West Liberty Family
Apartments, Ltd. 3,000 (6,000) 99.98% 2002
West Mobile County Housing,
Ltd. 209,000 (103,000) 99.98% 2000
------------ -----------
$ 2,603,000 $ (766,000)
============ ===========
* Results of Cotton Mill Elderly Living Center, L.P. have not been audited
and thus have been excluded. See Note 3 to the financial statements and
report of independent certified public accountants.
8
Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
PART II.
Item 5. Market for Registrant's Common Equity 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 and none exists. Units can be
assigned only if certain requirements in the Partnership Agreement are
satisfied.
b) At March 31, 2003, there were 1,026 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. The Limited Partners received no
Low Income Housing Credits in 1998.
d) No unregistered securities were sold by the Partnership during the year
ended March 31, 2003.
Item 5b.
NOT APPLICABLE
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
March 31 December 31
------------------------------------------------------------ ----------------------------
2003 2002 2001 2000 1999 1998
------------ ------------- ------------ ------------ ------------ ------------
ASSETS
Cash and cash equivalents $ 722,715 $ 751,327 $ 1,152,887 $ 4,501,538 $ 2,690,665 $ 372,505
Subscriptions receivable - - - - 893,370 1,030,915
Investments in limited
partnerships, net 13,763,028 14,585,268 15,439,696 13,829,634 7,748,624 6,440,762
Loans receivable - 50,000 50,000 154,878 - -
Other assets 7,436 2,059 170 31,378 1,043,530 50,000
------------ ------------- ------------ ------------ ------------ ------------
$ 14,493,179 $ 15,388,654 $ 16,642,753 $ 18,517,428 $ 12,376,189 $ 7,894,182
============ ============= ============ ============ ============ ============
LIABILITIES
Payables to limited partnerships $ 246,175 $ 246,185 $ 238,129 $ 1,252,287 $ 2,137,275 $ 1,734,427
Loan payable - - - - - 113,269
Accrued fees and expenses due to
general partner and affiliates 42,903 43,577 22,952 35,171 184,291 173,323
PARTNERS' EQUITY 14,204,101 15,098,892 16,381,672 17,229,970 10,054,623 5,873,163
------------ ------------- ------------ ------------ ------------ ------------
$ 14,493,179 $ 15,388,654 $ 16,642,753 $ 18,517,428 $ 12,376,189 $ 7,894,182
============ ============= ============ ============ ============ ============
9
Selected results of operations, cash flows and other information for the Partnership are as follows:
For the For the
three period from
months August 20,
For the years ended ended 1998 to
March 31 March 31 December 31
------------------------------------------------------------- ------------- -------------
2003 2002 2001 2000 1999 1998
----------- ------------- ------------ ------------ ------------- -------------
Net income(loss) from
operations $ (124,099) $ (146,542) $ (39,047) $ 97,572 $ (3,249) $ (1,501)
Equity in income(loss) of
limited partnerships (770,692) (1,136,238) (813,901) (520,281) 47,263 60,610
Other losses - - - (85,727) - -
----------- ------------- ------------ ------------ ------------- -------------
Net income (loss) $ (894,791) $ (1,282,780) $ (852,948) $ (508,436) $ 44,014 $ 59,109
=========== ============= ============ ============ ============= =============
Net income (loss)
allocated to:
General partner $ (8,948) $ (12,828) $ (8,529) $ (5,084) $ 440 $ 591
=========== ============= ============ ============ ============= =============
Limited partners $ (885,843) $ (1,269,952) $ (844,419) $ (503,352) $ 43,574 $ 58,518
=========== ============= ============ ============ ============= =============
Net income (loss) per
limited partner unit $ (43.21) $ (61.95) $ (41.19) $ (25.55) $ 4.26 $ 16.38
=========== ============= ============ ============ ============= =============
Outstanding weighted
limited partner units 20,500 20,500 20,500 19,697 10,218 3,573
=========== ============= ============ ============ ============= =============
For the For the
three period from
months August 20,
For the years ended ended 1998 to
March 31 March 31 December 31
------------------------------------------------------------- ------------- -------------
2003 2002 2001 2000 1999 1998
----------- ------------- ------------ ------------ ------------- -------------
Net cash provided by
(used in):
Operating activities $ (78,602) $ (76,258) $ 56,115 $ 28,533 $ 34,356 $ 1,554
Investing activities 49,990 (325,302) (3,403,846) (6,692,518) (1,914,981) (4,525,457)
Financing activities - - (920) 8,474,858 4,198,785 4,896,408
----------- ------------- ------------ ------------ ------------- -------------
Net change in cash and
cash equivalents (28,612) (401,560) (3,348,651) 1,810,873 2,318,160 372,505
Cash and cash
equivalents, beginning
of period 751,327 1,152,887 4,501,538 2,690,665 372,505 -
----------- ------------- ------------ ------------ ------------- -------------
Cash and cash
equivalents,
end of period $ 722,715 $ 751,327 $ 1,152,887 $ 4,501,538 $ 2,690,665 $ 372,505
=========== ============= ============ ============ ============= =============
10
Low Income Housing Credit per Unit was as follows for the period ended December 31:
2002 2001 2000 1999 1998
-------------- -------------- --------------- -------------- -------------
Federal $ 101 $ 84 $ 72 $ 25 $ -
State - - - - -
-------------- -------------- --------------- -------------- -------------
Total $ 101 $ 84 $ 72 $ 25 $ -
============== ============== =============== ============== =============
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 Financial Statements and the Notes thereto included
elsewhere in this filing.
Critical Accounting Policies and Certain Risks and Uncertainties
The Partnership believes that the following discussion addresses the
Partnership's most significant accounting policies, which are the most critical
to aid in fully understanding and evaluating the Partnership's reported
financial results, and certain of the Partnership's risks and uncertainties.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially differ from those
estimates.
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 contributions made or distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by a comparison of the carrying
amount to future undiscounted net cash flows expected to be generated. If an
investment is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the investment exceeds
fair value. The accounting policies of the Local Limited Partnerships are
generally 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.
11
Equity in losses of the Local Limited Partnerships for each year ended March 31
have been recorded by the Partnership based on nine months of reported results
provided by the Local Limited Partnerships for each year ended December 31 and
on three months of results estimated by management of the Partnership for each
three-month period ended March 31. Management's estimate for the three-month
period is based on either actual unaudited results reported by the Local Limited
Partnerships or historical trends in the operations of the Local Limited
Partnerships. Equity in losses of the Local Limited Partnerships are 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 from the Local Limited Partnerships are accounted for as
a reduction of the investment balance. Distributions received after the
investment has reached zero are recognized as income.
Income Taxes
No provision for income taxes has been recorded in the financial statements as
any liability for income taxes is the obligation of the partners of the
Partnership.
Certain Risks and Uncertainties
An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:
The Low Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low Income Housing Credit s and
the fractional recapture of Low Income Housing Credits already taken. In most
cases the annual amount of Low Income Housing Credits that an individual can use
is limited to the tax liability due on the person's last $25,000 of taxable
income. The Local Limited Partnerships may be unable to sell the Housing
Complexes at a profit. Accordingly, the Partnership may be unable to distribute
any cash to its investors. Low Income Housing Credits may be the only benefit
from an investment in the Partnership.
The Partnership has invested in a limited number of Local Limited Partnerships.
Such limited diversity means that the results of operation of each single
Housing Complex will have a greater impact on the Partnership. With limited
diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage indebtedness. If a Local Limited Partnership failed to
pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
Low Income Housing Credits, a fractional recapture of prior Low Income Housing
Credits, and a loss of the Partnership's investment in the Housing Complex would
occur. The Partnership is a limited partner or non-managing member of each Local
Limited Partnership. Accordingly, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships. The Partnership
will rely totally on the Local General Partners. Neither the Partnership's
investments in Local Limited Partnerships, nor the Local Limited Partnerships'
investments in Housing Complexes, are readily marketable. To the extent the
Housing Complexes receive government financing or operating subsidies, they may
be subject to one or more of the following risks: difficulties in obtaining
tenants for the Housing Complexes; difficulties in obtaining rent increases;
limitations on cash distributions; limitations on sales or refinancing of
Housing Complexes; limitations on transfers of interests in Local Limited
Partnerships; limitations on removal of Local General Partners; limitations on
subsidy programs; and possible changes in applicable regulations. Uninsured
casualties could result in loss of property and Low Income Housing Credits and
recapture of Low Income Housing Credits previously taken. The value of real
estate is subject to risks from fluctuating economic conditions, including
employment rates, inflation, tax, environmental, land use and zoning policies,
supply and demand of similar properties, and neighborhood conditions, among
others.
12
The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low Income Housing
Credits and tax losses allocable to the investors could be reduced if the IRS
were successful in such a challenge. The alternative minimum tax could reduce
tax benefits from an investment in the Partnership. Changes in tax laws could
also impact the tax benefits from an investment in the Partnership and/or the
value of the Housing Complexes.
No trading market for the Units exists or is expected to develop. Investors may
be unable to sell their Units except at a discount and should consider their
Units to be a long-term investment. Individual investors will have no recourse
if they disagree with actions authorized by a vote of the majority of Limited
Partners.
To date, certain Local Limited Partnerships have incurred significant operating
losses and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partner may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired, and the loss and recapture of the related tax credits could occur.
Financial Condition
The Partnership's assets at March 31, 2003 consisted primarily of $723,000 in
cash, aggregate investments in fifteen Local Limited Partnerships of $13,763,000
and other assets of $7,000. Liabilities at March 31, 2003 primarily consisted of
$246,000 of estimated future capital contributions to the Local Limited
Partnerships and $43,000 of accrued fees and advances due to the General Partner
and affiliates.
Results of Operations
Year Ended March 31, 2003 Compared to Year Ended March 31, 2002. The
Partnerships net loss for the year ended March 31, 2003 was $(895,000),
reflecting a decrease of $388,000 from the net loss experienced for the year
ended March 31, 2002 of $(1,283,000). The decrease in net loss is due to a
decrease in the equity in losses of limited partnerships which decreased by
$366,000 due to an increase in occupancy as more of the Housing Complexes of the
fifteen local limited partnerships achieved stabilized occupancy, along with a
decrease in operating expense of $32,000, offset by a reduction in interest and
reporting fee income of $10,000.
Year Ended March 31, 2002 Compared to Year Ended March 31, 2001. The
Partnerships net loss for the year ended March 31, 2002 was $(1,283,000),
reflecting an increase of $(430,000) from the net loss experienced for the year
ended March 31, 2001 of $(853,000). The increase in net loss is due to an
increase in the equity in losses of limited partnerships which increased by
$(322,000) due the maturity in the rent-up of the fourteen local limited
partnerships in operation and by a reduction in interest and reporting fee
income of $99,000 along with an increase in operating expense of $9,000.
Liquidity and Capital Resources
Year Ended March 31, 2003 Compared to Year Ended March 31, 2002. The net
decrease in cash during the year ended March 31, 2001 was $(29,000), compared to
a net decrease in cash for the year ended March 31, 2001 of $(402,000). This
change of $373,000 was primarily due to a decline in investing activities
related to purchase of Limited Partnership interests of $335,000, a decline in
distribution received from limited partnerships of $10,000 and the receipt of
cash as a result of the repayment of a loan receivable in the amount of $50,000.
13
Year Ended March 31, 2002 Compared to Year Ended March 31, 2001. The net
decrease in cash during the year ended March 31, 2001 was $(402,000), compared
to a net decrease in cash for the year ended March 31, 2001 of $(3,349,000).
This change of $2,947,000 was primarily due to a decline in investing activities
related to purchase of Limited Partnership interests of approximately $3,079,000
offset by an increase of $132,000 in cash used in operating activities.
The Partnership expects its future cash flows, together with its net available
assets at March 31, 2003, to be sufficient to meet all future cash requirements.
Other Matters
As of June 4, 2003, the Partnership had not obtained audited financial
statements for one of its investments, Cotton Mill Elderly Living Center, L.P.
("Cotton Mill") as of and for the years ended December 31, 2002 and 2001. As a
result of this limitation in scope, the Partnership's Independent Certified
Public Accountants have qualified their report with respect to their audit of
the Partnership's 2003 and 2002 financial statements. Furthermore, the
Partnership has not included the financial information of Cotton Mill in the
combined condensed financial statements presented elsewhere herein. The
Partnership's investment in Cotton Mill totaled $719,000 (unaudited) and
$770,000 (unaudited) at March 31, 2003 and 2002, respectively. The Partnership's
estimated interest in the losses from operations of Cotton Mill, which have been
recorded, totaled $(51,000) (unaudited) and $(244,000) (unaudited) for the years
ended March 31, 2003 and 2002, respectively. Such losses are shown as a
reconciling item in the combined condensed statements of operations (see Note
3).
Future Contractual Cash Obligations
The following table summarizes our future contractual cash obligations as of March 31, 2003:
2004 2005 2006 2007 2008 Thereafter Total
--------- --------- --------- --------- --------- ------------ ------------
Asset Management Fees $ 96,888 $ 63,893 $ 63,893 $ 63,893 $ 63,893 $ 2,683,506 $ 3,035,966
Capital Contributions
Payable to Lower Tier
Partnerships 246,175 - - - - - 246,175
--------- --------- --------- --------- --------- ------------ ------------
Total contractual cash
obligations $ 343,063 $ 63,893 $ 63,893 $ 63,893 $ 63,893 $ 2,683,506 $ 3,282,141
========= ========= ========= ========= ========= ============ ============
(1) Asset Management Fees are payable annually until termination of the
Partnership, which is to occur no later than 2052. The estimate of the fees
payable included herein assumes the retention of the Partnership's interest
in all Housing Complexes until 2052. Amounts due to the General Partner as
of March 31, 2003 have been included in the 2004 column.
For additional information on our Asset Management Fees and Capital
Contributions Payable to Lower Tier Partnerships, see Notes 3, 4 and 6 to the
financial statements included elsewhere herein.
Exit Strategy
The IRS compliance period for low-income housing tax credit properties is
generally 15 years from occupancy following construction or rehabilitation
completion. Associates was one of the first in the industry to offer investments
using the tax credit. Now these very first programs are completing their
compliance period.
With that in mind, we are continuing our review of the Partnership's holdings,
with special emphasis on the more mature properties including those that have
satisfied the IRS compliance requirements. Our review will consider many factors
including extended use requirements on the property (such as those due to
mortgage restrictions or state compliance agreements), the condition of the
property, and the tax consequences to the investors from the sale of the
property.
Upon identifying those properties with the highest potential for a successful
sale, refinancing or syndication, we
14
expect to proceed with efforts to liquidate those properties. Our objective is
to maximize the investors' return wherever possible and, ultimately, to wind
down those funds that no longer provide tax benefits to investors. To date no
properties in the Partnership have been selected.
Impact of New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations", which requires that the fair value of a liability for
an asset retirement obligation be recognized in the period in which it is
incurred with the associated asset retirement costs being capitalized as a part
of the carrying amount of the long-lived asset. SFAS No. 143 also includes
disclosure requirements that provide a description of asset retirement
obligations and reconciliation of changes in the components of those
obligations. The statement is effective for fiscal years beginning after June
15, 2002. The Partnership does not expect the adoption of SFAS No. 143 to have a
material effect on the Partnership's financial position or results of
operations.
In August 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of
Long-Lived Assets," which addresses accounting and financial reporting for the
impairment or disposal of long-lived assets. This standard was effective for the
Partnership's financial statements beginning January 1, 2002. The implementation
of SFAS No. 144 did not have a material impact on the Partnership's financial
position or results of operations.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 rescinded three previously issued statements and amended SFAS No.
13, "Accounting for Leases." The statement provides reporting standards for debt
extinguishments and provides accounting standards for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
The statement is effective for certain lease transactions occurring after May
15, 2002 and all other provisions of the statement shall be effective for
financial statements issued on or after May 15, 2002. The implementation of SFAS
No. 145 did not have a material impact on the Partnership's financial position
or results of operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which updates accounting and reporting
standards for personnel and operational restructurings. The Partnership adopted
SFAS No. 146 for exit, disposal or other restructuring activities initiated
after December 31, 2002. The adoption of SFAS No. 146 did not have a material
effect on the Partnership's financial position or results of operations.
In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." The adoption of FIN 45 did not have a
material impact on the Partnership's financial position or results of
operations.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment to SFAS No. 123." SFAS
No. 148 provides alternative methods of transition for a voluntary change to the
fair value based method on accounting for stock-based employee compensation. The
implementation of SFAS No. 148 is not expected to have a material effect on the
Partnership's financial position or results of operations.
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." The adoption of FIN 46 did not
have a material impact on the Partnership's financial position or results of
operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NOT APPLICABLE
Item 8. Financial Statements and Supplementary Data
15
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 6
We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund
VI, L.P., Series 6 (a California Limited Partnership) (the "Partnership") as of
March 31, 2003 and 2002, and the related statements of operations, partners'
equity (deficit) and cash flows for the years ended March 31, 2003, 2002 and
2001. 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 investments in limited partnerships audited by other auditors
represented 75% and 77% of the total assets of the Partnership at March 31, 2003
and 2002, respectively, and 90%, 79% and 98% of the Partnership's equity in
losses of limited partnerships for the years ended March 31, 2003, 2002 and
2001, 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.
Except as discussed in the following paragraph, 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.
As more thoroughly discussed in Note 3 to the financial statements, the
Partnership was unable to obtain audited financial statements for one of its
investments, Cotton Mill Elderly Living Center, L.P. ("Cotton Mill"), as of and
for the years ended December 31, 2002 and 2001. The Partnership's investment in
Cotton Mill totaled $719,000 (unaudited) and $770,000 (unaudited) as of March
31, 2003 and 2002, respectively. The results of operations recorded by the
Partnership with respect to its investment in Cotton Mill during the years ended
March 31, 2003 and 2002 reflected net losses of $(51,000) (unaudited) and
$(244,000) (unaudited), respectively.
In our opinion, except for the effects of such adjustments and disclosures, if
any, as might have been determined to be necessary had an audit of the 2002 and
2001 financial statements of Cotton Mill been obtained, 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 6 (a California Limited
Partnership) as of March 31, 2003 and 2002, and the results of its operations
and its cash flows for the years ended March 31, 2003, 2002, and 2001, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ BDO SEIDMAN, LLP
Costa Mesa, California
June 4, 2003
16
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
BALANCE SHEETS
March 31
----------------------------------
2003 2002
-------------- -------------
ASSETS
Cash and cash equivalents $ 722,715 $ 751,327
Investments in limited partnerships, net (Notes 3 and 4) 13,763,028 14,585,268
Loan receivable (Note 2) - 50,000
Other assets 7,436 2,059
-------------- -------------
$ 14,493,179 $ 15,388,654
============== =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships (Note 6) $ 246,175 $ 246,185
Accrued fees and advances due to General Partner and
affiliate (Note 4) 42,903 43,577
-------------- -------------
Total liabilities 289,078 289,762
-------------- -------------
Commitments and contingencies
Partners' equity (deficit)
General partner (62,437) (53,489)
Limited partners (25,000 units authorized; 20,500 units
issued and outstanding) 14,266,538 15,152,381
-------------- -------------
Total partners' equity 14,204,101 15,098,892
-------------- -------------
$ 14,493,179 $ 15,388,654
============== =============
See report of independent certified public accountants and accompanying notes to financial statements
17
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For the Years Ended
March 31
---------------------------------------------------------
2003 2002 2001
-------------- ----------------- ----------------
Interest income $ 10,418 $ 32,552 $ 118,871
Reporting fee income 13,343 1,250 13,885
-------------- ----------------- ----------------
Total income 23,761 33,802 132,756
-------------- ----------------- ----------------
Operating expenses:
Amortization (Notes 3 and 4) 51,548 51,548 51,548
Management fees (Note 4) 63,893 59,808 58,310
Other 32,419 68,988 61,945
-------------- ----------------- ----------------
Total operating expenses 147,860 180,344 171,803
-------------- ----------------- ----------------
Income (loss) from operations (124,099) (146,542) (39,047)
Other expenses and losses:
Equity in losses of limited
partnerships (Note 3) (770,692) (1,136,238) (813,901)
-------------- ----------------- ----------------
Total other expenses and losses (770,692) (1,136,238) (813,901)
-------------- ----------------- ----------------
Net loss $ (894,791) (1,282,780) $ (852,948)
============== ================= ================
Net loss allocated to:
General partner $ (8,948) $ (12,828) $ (8,529)
============== ================= ================
Limited partners $ (885,843) $ (1,269,952) $ (844,419)
============== ================= ================
Net loss per limited partner unit $ (43.21) $ (61.95) $ (41.19)
============== ================= ================
Outstanding weighted limited partner
units 20,500 20,500 20,500
============== ================= ================
See report of independent certified public accountants and accompanying notes to financial statements
18
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended March 31, 2003, 2002 and 2001
General Limited Total
Partner Partners
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2000 $ (32,128) $ 17,262,098 $ 17,229,970
Collection of notes receivable - 5,000 5,000
Offering expenses (4) (346) (350)
Net loss (8,529) (844,419) (852,948)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2001 (40,661) 16,422,333 16,381,672
Net loss (12,828) (1,269,952) (1,282,780)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2002 (53,489) 15,152,381 15,098,892
Net loss (8,948) (885,843) (894,791)
--------------- --------------- ---------------
Partners' equity (deficit) at March 31, 2003 $ (62,437) $ 14,266,538 $ 14,204,101
=============== =============== ===============
See report of independent certified public accountants and accompanying notes to financial statements
19
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Years Ended
March 31
--------------------------------------------------
2003 2002 2001
--------------- ------------- -------------
Cash flows from operating activities:
Net loss $ (894,791) $ (1,282,780) $ (852,948)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Amortization 51,548 51,548 51,548
Equity in losses of limited partnerships 770,692 1,136,238 813,901
Change in other assets (5,377) (1,889) 31,208
Change in accrued fees and expenses due to
general partner and affiliates (674) 20,625 12,406
--------------- ------------- -------------
Net cash (used in) provided by operating
activities (78,602) (76,258) 56,115
--------------- ------------- -------------
Cash flows from investing activities:
Investments in limited partnerships, net (10) (335,137) (3,487,688)
Loans receivable, net 50,000 - 104,878
Accrued and unpaid acquisition fees and
advances due to affiliate of general partner - - (19,055)
Distributions from limited partnerships - 9,835 (1,981)
--------------- ------------- -------------
Net cash provided by (used in) investing
activities 49,990 (325,302) (3,403,846)
--------------- ------------- -------------
Cash flows from financing activities:
Subscriptions receivable - - 5,000
Offering expenses - - (5,920)
--------------- ------------- -------------
Net cash used in financing activities - - (920)
--------------- ------------- -------------
Net change in cash and cash equivalents (28,612) (401,560) (3,348,651)
Cash and cash equivalents, beginning of period 751,327 1,152,887 4,501,538
--------------- ------------- -------------
Cash and cash equivalents, end of period/year $ 722,715 $ 751,327 $ 1,152,887
=============== ============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Interest paid $ - $ 34,336 $ 17,633
=============== ============= =============
Taxes paid $ 800 $ 800 $ 800
=============== ============= =============
See report of independent certified public accountants and accompanying notes to financial statements
20
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------
Organization
- ------------
WNC Housing Tax Credit Fund VI, L.P., Series 6 (the "Partnership") was formed on
March 3, 1997 under the laws of the State of California, and commenced
operations on August 20, 1998. Prior to August 20, 1998, the Partnership was
considered a development-stage enterprise. The Partnership was formed to invest
primarily in other limited partnerships ("the Local Limited Partnerships") which
own and operate multi-family housing complexes (the "Housing Complexes") that
are eligible for low income housing tax credits. The local general partners (the
"Local General Partners") of each Local Limited Partnership retain
responsibility for developing, constructing, maintaining, operating and managing
the Housing Complex.
The general partner is WNC & Associates, Inc. ("WNC" or the "General Partner").
The chairman and president own substantially all the outstanding stock of WNC.
The business of the Partnership is conducted primarily through WNC, as the
Partnership has no employees of its own.
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"). As of March 31, 2003 and 2002, 20,500 units, representing
subscriptions in the amount of $20,456,595, net of discounts of $27,305 for
volume purchases and dealer discounts of $16,100 had been accepted. The General
Partner has a 1% interest in operating profits and losses, taxable income and
losses, cash available for distribution from the Partnership and tax credits of
the Partnership. The limited partners will be allocated the remaining 99% of
these items 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.
21
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------
Risks and Uncertainties
- -----------------------
An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:
The Low Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low Income Housing Credits and
the fractional recapture of Low Income Housing Credits already taken. In most
cases the annual amount of Low Income Housing Credits that an individual can use
is limited to the tax liability due on the person's last $25,000 of taxable
income. The Local Limited Partnerships may be unable to sell the Housing
Complexes at a profit. Accordingly, the Partnership may be unable to distribute
any cash to its investors. Low Income Housing Credits may be the only benefit
from an investment in the Partnership.
The Partnership has invested in a limited number of Local Limited Partnerships.
Such limited diversity means that the results of operation of each single
Housing Complex will have a greater impact on the Partnership. With limited
diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage indebtedness. If a Local Limited Partnership failed to
pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
Low Income Housing Credits, a fractional recapture of prior Low Income Housing
Credits, and a loss of the Partnership's investment in the Housing Complex would
occur. The Partnership is a limited partner or non-managing member of each Local
Limited Partnership. Accordingly, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships. The Partnership
will rely totally on the Local General Partners. Neither the Partnership's
investments in Local Limited Partnerships, nor the Local Limited Partnerships'
investments in Housing Complexes, are readily marketable. To the extent the
Housing Complexes receive government financing or operating subsidies, they may
be subject to one or more of the following risks: difficulties in obtaining
tenants for the Housing Complexes; difficulties in obtaining rent increases;
limitations on cash distributions; limitations on sales or refinancing of
Housing Complexes; limitations on transfers of interests in Local Limited
Partnerships; limitations on removal of Local General Partners; limitations on
subsidy programs; and possible changes in applicable regulations. Uninsured
casualties could result in loss of property and Low Income Housing Credits and
recapture of Low Income Housing Credits previously taken. The value of real
estate is subject to risks from fluctuating economic conditions, including
employment rates, inflation, tax, environmental, land use and zoning policies,
supply and demand of similar properties, and neighborhood conditions, among
others.
The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low Income Housing
Credits and tax losses allocable to the investors could be reduced if the IRS
were successful in such a challenge. The alternative minimum tax could reduce
tax benefits from an investment in the Partnership. Changes in tax laws could
also impact the tax benefits from an investment in the Partnership and/or the
value of the Housing Complexes.
No trading market for the Units exists or is expected to develop. Investors may
be unable to sell their Units except at a discount and should consider their
Units to be a long-term investment. Individual investors will have no recourse
if they disagree with actions authorized by a vote of the majority of Limited
Partners.
22
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------
Exit Strategy
- -------------
The IRS compliance period for low-income housing tax credit properties is
generally 15 years from occupancy following construction or rehabilitation
completion. WNC was one of the first in the industry to offer investments using
the tax credit. Now these very first programs are completing their compliance
period.
With that in mind, the Partnership is continuing to review the Partnership's
holdings, with special emphasis on the more mature properties including those
that have satisfied the IRS compliance requirements. The Partnership's review
will consider many factors including extended use requirements on the property
(such as those due to mortgage restrictions or state compliance agreements), the
condition of the property, and the tax consequences to the investors from the
sale of the property.
Upon identifying those properties with the highest potential for a successful
sale, refinancing or syndication, the Partnership expects to proceed with
efforts to liquidate those properties. The Partnership's objective is to
maximize the investors' return wherever possible and, ultimately, to wind down
those funds that no longer provide tax benefits to investors. To date no
properties in the Partnership have been selected.
Method of Accounting For Investments in Local 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 contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by a comparison of the carrying
amount to future undiscounted net cash flows expected to be generated. If an
investment is considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the investment exceeds
fair value. The accounting policies of the Local Limited Partnerships are
generally consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of the
investment and amortized over 30 years (see Note 3).
Equity in losses from Local Limited Partnerships for the years ended March 31,
2003, 2002 and 2001 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. Management's
estimate for the three-month period is based on either actual unaudited results
reported by the Local Limited Partnerships or historical trends in the
operations of the Local Limited Partnerships. Equity in losses of Local Limited
Partnerships allocated to the Partnership will not be recognized to the extent
that the investment balance would be adjusted below zero. As soon as the
investment balance reaches zero, the related costs of acquiring the investment
are accelerated to the extent of losses available.
23
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with the selling of
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
$2,817,761 at the end of all periods presented.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially differ from those
estimates.
Cash and Cash Equivalents
- -------------------------
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. The
Partnership had no cash equivalents at the end of all periods presented.
Concentration of Credit Risk
- ----------------------------
At March 31, 2003, the Partnership maintained cash balances at a certain
financial institution in excess of the federally insured maximum.
Net Income Per Limited Partner Unit
- -----------------------------------
Net income per limited partner unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net income per unit
includes no dilution and is computed by dividing income available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net income per unit is not required.
Reporting Comprehensive Income
- ------------------------------
The Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting
Comprehensive Income established standards for the reporting and display of
comprehensive income (loss) and its components in a full set of general-purpose
financial statements. The Partnership had no items of other comprehensive income
during the years ended March 31, 2003, 2002 and 2001, as defined by SFAS No.
130.
New Accounting Pronouncements
- -----------------------------
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations", which requires that the fair value of a liability for
an asset retirement obligation be recognized in the period in which it is
incurred with the associated asset retirement costs being capitalized as a part
of the carrying amount of the long-lived asset. SFAS No. 143 also includes
disclosure requirements that provide a description of asset retirement
obligations and reconciliation of changes in the components of those
obligations. The statement is effective for fiscal years beginning after June
15, 2002. The Partnership does not expect the adoption of SFAS No. 143 to have a
material effect on the Partnership's financial position or results of
operations.
24
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------
In August 2001, the FASB issued SFAS No. 144, "Impairment or Disposal of
Long-Lived Assets," which addresses accounting and financial reporting for the
impairment or disposal of long-lived assets. This standard was effective for the
Partnership's financial statements beginning January 1, 2002. The implementation
of SFAS No. 144 did not have a material impact on the Partnership's financial
position or results of operations.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
SFAS No. 145 rescinded three previously issued statements and amended SFAS No.
13, "Accounting for Leases." The statement provides reporting standards for debt
extinguishments and provides accounting standards for certain lease
modifications that have economic effects similar to sale-leaseback transactions.
The statement is effective for certain lease transactions occurring after May
15, 2002 and all other provisions of the statement shall be effective for
financial statements issued on or after May 15, 2002. The implementation of SFAS
No. 145 did not have a material impact on the Partnership's financial position
or results of operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities," which updates accounting and reporting
standards for personnel and operational restructurings. The Partnership adopted
SFAS No. 146 for exit, disposal or other restructuring activities initiated
after December 31, 2002. The adoption of SFAS No. 146 did not have a material
effect on the Partnership's financial position or results of operations.
In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." The adoption of FIN 45 did not have a
material impact on the Partnership's financial position or results of
operations.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an Amendment to SFAS No. 123." SFAS
No. 148 provides alternative methods of transition for a voluntary change to the
fair value based method on accounting for stock-based employee compensation. The
implementation of SFAS No. 148 is not expected to have a material effect on the
Partnership's financial position or results of operations.
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." The adoption of FIN 46 did not
have a material impact on the Partnership's financial position or results of
operations.
NOTE 2 - LOAN RECEIVABLE
- ------------------------
Loans receivable represent amounts loaned by the Partnership to certain Local
Limited Partnerships in which the Partnership may invest. These loans are
generally applied against the first capital contribution due if the Partnership
ultimately invests in such entities. In the event that the Partnership does not
invest in such entities, the loans are to be repaid with interest at a rate
which is equal to the rate charged to the holder (11.5% and 11.5% at March 31,
2003 and 2002, respectively). A loan receivable with a balance of $50,000 at
March 31, 2002 was due from one Local Limited Partnership, in which an interest
was not acquired. As of March 31, 2003, the loan had been repaid.
25
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of March 31, 2003, the Partnership had acquired Limited Partnership interests
in fifteen Local Limited Partnerships, respectively, each of which owns one
Housing Complex, except for one Local Limited Partnership which owns three
Housing Complexes, consisting of an aggregate of 608 apartment units. The
respective Local General Partners of the Local Limited Partnerships manage the
day-to-day operations of the entities. Significant Local Limited Partnership
business decisions require approval from the Partnership. The Partnership, as a
limited partner, is generally entitled to 99.9%, 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.
As of June 4, 2003, the Partnership had not obtained audited financial
statements for one of its investments, Cotton Mill Elderly Living Center, L.P.
("Cotton Mill"), as of and for the years ended December 31, 2002 and 2001. As a
result, the Partnership has not included the financial information of Cotton
Mill in the combined condensed financial statements presented herein. The
Partnership's investment in Cotton Mill totaled $719,000 (unaudited) and
$770,000 (unaudited) at March 31, 2003 and 2002, respectively. The Partnership's
estimate of its interest in the loss from operations of Cotton Mill, which have
been recorded, totaled $(51,000) (unaudited) and $(244,000) (unaudited) for the
years ended March 31, 2003 and 2002, respectively. Such losses are shown as a
reconciling item in the combined condensed statements of operations.
The Partnership's investment in Local Limited Partnerships as reflected in the
balance sheets at March 31, 2003 and 2002 are approximately $2,120,000 and
$2,193,000, respectively, greater than the Partnership's equity at the preceding
December 31 as shown in the Local Limited Partnerships' combined financial
statements presented below. This difference is primarily due to acquisition,
selection, and other costs related to the acquisition of the investments which
have been capitalized in the Partnership's investment account, and capital
contributions payable to the limited partnerships which were netted against
partner capital in the Local Limited Partnership's financial statements (see
Note 6). The Partnership's investment is also lower than the Partnership's
equity as shown in the Local Limited Partnership's combined financial statements
due to the estimated losses recorded by the Partnership for the three month
period ended March 31 and due to the exclusion of the Cotton Mill from the
combined condensed financial information.
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.
26
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
Distributions from the Local 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, 2003, no investment
accounts in Local Limited Partnerships had reached a zero balance.
Following is a summary of the equity method activity of the investments in the
Local Limited Partnerships for the periods presented:
For The Years Ended
March 31,
-------------------------------------------------------
2003 2002 2001
------------- -------------- --------------
Investments per balance sheet, beginning
of period $ 14,585,268 $ 15,439,696 $ 13,829,634
Capital contributions paid, net - 298,125 2,403,096
Capital contributions to be paid - 52,605 36,689
Equity in losses of limited partnerships (770,692) (1,136,238) (813,901)
Tax credit adjustments - (7,537) 33,745
Amortization of paid acquisition fees and
costs (51,548) (51,548) (51,548)
Distributions received from limited
partnerships - (9,835) 1,981
------------- -------------- --------------
Investment per balance sheet, end of period $ 13,763,028 $ 14,585,268 $ 15,439,696
============= ============== ==============
The financial information from the individual financial statements of the
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted in
interest expense. Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships as of December
31 and for the years then ended is as follows:
(Combined condensed financial information for Cotton Mill Elderly Living Center
has been excluded from the presentation below).
COMBINED CONDENSED BALANCE SHEETS
2002 2001
---------------- ----------------
ASSETS
Buildings and improvements (net of accumulated depreciation
for 2002 and 2001 of $3,988,000 and $2,815,000,
respectively) $ 29,015,000 $ 28,712,000
Land 1,414,000 1,414,000
Construction in progress - 170,000
Due from affiliates 170,000 447,000
Other assets 1,352,000 1,312,000
---------------- ----------------
$ 31,951,000 $ 32,055,000
================ ================
27
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED CONDENSED BALANCE SHEETS, Continued
2002 2001
---------------- ----------------
LIABILITIES AND PARTNERS' EQUITY
Mortgage and construction loans payable $ 15,724,000 $ 14,816,000
Due to affiliates 1,600,000 1,791,000
Other liabilities 402,000 463,000
---------------- ----------------
17,726,000 17,070,000
---------------- ----------------
PARTNERS' CAPITAL
WNC Housing Tax Credit Fund VI, L.P., Series 6 11,643,000 12,392,000
Other partners 2,582,000 2,593,000
---------------- ----------------
14,225,000 14,985,000
---------------- ----------------
$ 31,951,000 $ 32,055,000
================ ================
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2002 2001 2000
----------------- ----------------- -------------------
Revenues $ 2,690,000 $ 2,385,000 $ 2,131,000
----------------- ----------------- -------------------
Expenses:
Operating expenses 1,666,000 1,569,000 1,300,000
Interest expense 607,000 610,000 602,000
Depreciation and amortization 1,183,000 1,086,000 981,000
----------------- ----------------- -------------------
Total expenses 3,456,000 3,265,000 2,883,000
----------------- ----------------- -------------------
Net loss $ (766,000) $ (880,000) $ (752,000)
================= ================= ===================
Net loss allocable to the Partnership, before
equity in losses of Cotton Mill $ (748,000) $ (862,000) $ (734,000)
================= ================= ===================
Net loss recorded by the Partnership, before
equity in income (losses) of Cotton Mill $ (720,000) $ (892,000) $ (789,000)
Net loss of Cotton Mill recorded by the
Partnership (unaudited) (51,000) (244,000) (25,000)
----------------- ----------------- -------------------
Net loss recorded by the Partnership $ (771,000) $ (1,136,000) $ (814,000)
================= ================= ===================
28
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
Certain Local Limited Partnerships have incurred significant operating losses
and/or have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General 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 its 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, 2003 and
2002, the Partnership incurred acquisition fees of $1,435,000.
Accumulated amortization of these capitalized costs was $193,710 and
$145,874 for March 31, 2003 and 2002, respectively.
Reimbursement of costs incurred by an affiliate of 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, 2003 and 2002, the Partnership incurred acquisition costs
of $111,334, which have been included in investments in limited
partnerships. Accumulated amortization was $14,812 and $11,100 as of
March 31, 2003 and 2002, respectively.
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
$63,893, $59,808 and $58,310, were incurred during the years ended
March 31, 2003, 2002 and 2001, respectively, of which $65,110, $40,548
and $53,904, were paid during the years ended March 31, 2003, 2002 and
2001, 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 the General Partner and affiliates consist
of the following:
March 31
--------------------------------
2003 2002
------------- ---------------
Asset management fee payable $ 32,995 $ 34,212
Reimbursement for expenses paid by the General partner or
an affiliate 9,908 9,365
------------- ---------------
$ 42,903 $ 43,577
============= ===============
29
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ----------------------------------------------------
The following is a summary of the quarterly operations for the years ended March
31, 2003 and 2002:
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2003
----
Income $ 3,000 $ 3,000 $ 2,000 $ 16,000
Operating expenses (36,000) (38,000) (37,000) (37,000)
Equity in losses of limited
partnerships (265,000) (265,000) (176,000) (65,000)
Net loss (298,000) (300,000) (211,000) (86)000)
Loss available to limited partners (295,000) (297,000) (209,000) (85,000)
Loss per limited partnership unit (14) (15) (10) (4)
2002
----
Income $ 15,000 $ 5,000 $ 9,000 $ 4,000
Operating expenses (51,000) (42,000) (36,000) (51,000)
Equity in losses of limited
partnerships (190,000) (189,000) (281,000) (476,000)
Net loss (226,000) (226,000) (308,000) (523,000)
Loss available to limited partners (224,000) (223,000) (306,000) (517,000)
Loss per limited partnership unit (11) (11) (15) (25)
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2003, 2002 and 2001
NOTE 6 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the Local Limited Partnership agreements.
These contributions are payable in installments and are generally due upon the
limited partnerships achieving certain operating and development 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.
31
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NOT APPLICABLE
PART III.
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors, (b) Identification of Executive Officers, (c)
---------------------------------------------------------------------------
Identification of Certain Significant Employees, (d) Family Relationships,
---------------------------------------------------------------------------
and (e) Business Experience
---------------------------
The Partnership has no directors, executive officers or employees of its own.
The following biographical information is presented for the directors, executive
officers and significant employees of Associates, which has principal
responsibility for the Partnership's affairs.
Associates is a California corporation which was organized in 1971. Its officers
and significant employees are:
Wilfred N. Cooper, Sr. Chairman of the Board
Wilfred N. Cooper, Jr. President and Chief Executive Officer
David N. Shafer, Esq. Executive Vice President and Director of Asset Management
Sylvester P. Garban Senior Vice President - Institutional Investments
David C. Turek Senior Vice President - Originations
Thomas J. Riha, CPA Vice President - Chief Financial Officer
Michael J. Gaber Vice President - Acquisitions
Diemmy T. Tran Vice President - Portfolio Management
J. Brad Hurlbut Director of Syndications
In addition to Wilfred N. Cooper, Sr., the directors of Associates are Wilfred
N. Cooper, Jr., David N. Shafer, and Kay L. Cooper. The principal shareholder of
Associates is a trust established by Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., age 72, is the founder and Chairman of the Board of
Directors of Associates, a Director of WNC Capital Corporation, and a general
partner in some of the partnerships previously sponsored by Associates. Mr.
Cooper has been actively involved in the affordable housing industry since 1968.
Previously, during 1970 and 1971, he was founder and a principal of Creative
Equity Development Corporation, a predecessor of Associates, and of Creative
Equity Corporation, a real estate investment firm. For 12 years before that, Mr.
Cooper was employed by Rockwell International Corporation, last serving as its
manager of housing and urban developments where he had responsibility for
factory-built housing evaluation and project management in urban planning and
development. He has testified before committees of the U.S. Senate and the U.S.
House of Representatives. Mr. Cooper is a Life Director of the National
Association of Home Builders and a National Trustee for NAHB's Political Action
Committee, and the Chairman of NAHB's Multifamily Council. He is a Director of
the National Housing Conference and a member of NHC's Executive Committee, and a
founder and Director of the California Housing Consortium. He is the husband of
Kay Cooper and the father of Wilfred N. Cooper, Jr. Mr. Cooper graduated from
Pomona College in 1956 with a Bachelor of Arts degree.
Wilfred N. Cooper, Jr., age 40, is President, Chief Executive Officer, Secretary
and a Director and a member of the Acquisition Committee of Associates. He is
President of, and a registered principal with, WNC Capital Corporation, and is a
Director of WNC Management, Inc. He has been involved in real estate investment
and acquisition activities since 1988 when he joined Associates. Previously, he
served as a Government Affairs Assistant with Honda North America in Washington,
D.C. Mr. Cooper is a member of the Editorial Advisory Boards of Affordable
----------
Housing Finance and LIHC Monthly Report, a Steering Member of the Housing Credit
- --------------- -------------------
Group of the National Association of Home Builders, an Alternate Director of
NAHB, a member of the Advisory Board of the New York State Association for
Affordable Housing and a member of the Urban Land Institute. He is the son of
Wilfred Cooper, Sr. and Kay Cooper. Mr. Cooper graduated from The American
University in 1985 with a Bachelor of Arts degree.
32
David N. Shafer, age 50, is Executive