Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark
One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the
fiscal year ended March 31, 2017
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: 333-124115
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 13
(Exact name of registrant as specified in its charter)
California
|
20-2355224
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
17782
Sky Park Circle
|
92614-6404
|
Irvine,
CA
|
(Zip
Code)
|
(Address
of principal executive offices)
|
|
(714)
662-5565
(Telephone
number)
Securities
registered pursuant to Section 12(b) of the Act:
NONE
Securities
registered pursuant to section 12(g) of the Act:
UNITS
OF LIMITED PARTNERSHIP INTEREST
(Title
of Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act
Yes_____
No___X__
Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes_____
No ___X__
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required
to submit and post such files).
Yes X No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) 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.☒
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definition of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer___ Accelerated filer___ Non-accelerated
filer___X__ Smaller reporting
company_____
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes____
No__X__
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
PART 1.
Item 1. Business
Organization
WNC
Housing Tax Credit Fund VI, L.P., Series 13, a California Limited
Partnership (the "Partnership"), was formed on February 7, 2005
under the laws of the State of California, and commenced operations
on December 14, 2005. The Partnership was formed to invest
primarily in other limited partnerships or limited liability
companies (the “Local Limited Partnerships”) which own
multi-family housing complexes (“Housing Complexes”)
that are eligible for Federal low income housing tax credits ("Low
Income Housing Tax Credits"). The local general partners (the
“Local General Partners”) of each Local Limited
Partnership retain responsibility for maintaining, operating and
managing the Housing Complex. Each Local Limited Partnership is
governed by its agreement of limited partnership or operating
agreement (the “Local Limited Partnership
Agreement”).
The
general partner of the Partnership is WNC National Partners, LLC
(the "General Partner"). The general partner of the General Partner
is WNC & Associates, Inc. ("Associates"). The chairman and the
president of Associates own all of the outstanding stock of
Associates. The business of the Partnership is conducted primarily
through Associates, as the Partnership and the General Partner have
no employees of their own.
Pursuant
to a registration statement filed with the U.S. Securities and
Exchange Commission (the “SEC”) on April 18, 2005, the
Partnership commenced a public offering of 25,000 units of limited
partnership interest (“Partnership Units”) at a price
of $1,000 per Partnership Unit. The required minimum offering
amount of $1,400,000 was achieved by December 14, 2005. Total
subscriptions for 20,981 Partnership Units had been accepted,
representing $20,965,400, which is net of volume discounts of
$4,540 and dealer discounts of $11,060. Holders of Partnership
Units are referred to herein as “Limited Partners.” As
of March 31, 2017 and 2016, a total of 20,807 and 20,931
Partnership Units, respectively, remain outstanding. The General
Partner has a 0.1% 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 99.9% interest in proportion to their
respective investments. This offering was closed on September 21,
2006.
The
Partnership shall continue in full force and effect until December
31, 2070, unless terminated prior to that date, pursuant to the
Partnership Agreement (as defined below) or law.
Description of Business
The
Partnership's principal business objective is to provide its
Limited Partners with Low Income Housing Tax 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 Housing Complex
which will qualify for the Low Income Housing Tax Credits. In
general, under Section 42 of the Internal Revenue Code, an owner of
low income housing can receive the Low Income Housing Tax Credits
to be used to reduce Federal taxes otherwise due in each year of a
ten-year credit period. Each Housing Complex is subject to a
15-year compliance period (the “Compliance Period”),
and under state law may have to be maintained as low income housing
for 30 or more years.
3
As a
consequence of the provisions of tax law in effect for dispositions
of buildings prior to August 2008, in order to avoid recapture of
Low Income Housing Tax Credits, the Partnership expected that it
would not 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. That provision of
law was amended in 2008 (i) to provide that there would be no
recapture on sale of a Low Income Housing Tax Credit building
during the Compliance Period if it were reasonable to expect at the
time of sale that the building would continue to be operated as
qualified low income housing (see “Exit Strategy”
below) and (ii) to eliminate the possibility of posting a bond
against potential recapture. The Partnership is not seeking to sell
its Local Limited Partnership Interests. And, because of (i) the
nature of the Housing Complexes and the Local Limited Partnership
Interests, (ii) the difficulty of predicting the resale market for
low-income housing, (iii) the current economy, and (iv) the ability
of lenders to disapprove of transfer, it is not possible at this
time to predict when 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 February 7,
2005 (the "Partnership Agreement"), would occur. Furthermore, the
codification of the economic substance doctrine as part of 2010
legislation has created some uncertainty about the deductibility of
losses from low income housing that is not generating Low Income
Housing Tax Credits, and this could have an adverse effect on the
resale market for Housing Complexes and Local Limited Partnership
Interests. Until a Local Limited Partnership Interest or the
related Housing Complex is sold, it is anticipated that the Local
General Partner would continue to operate such Housing
Complex.
The Partnership originally invested in ten Local Limited
Partnerships, five of which have been sold or otherwise
disposed of as of March 31, 2017. Each
of these Local Limited Partnerships owns or owned a Housing Complex
that is eligible for the Federal Low Income Housing Tax Credits.
Certain Local Limited Partnerships may also benefit from additional
government programs promoting low or moderate income
housing.
Exit Strategy
The
Compliance Period for a Housing Complex is generally 15 years
following construction or rehabilitation completion. Associates was
one of the first in the industry to offer syndicated investments in
Low Income Housing Tax Credits. The initial programs have completed
their Compliance Periods. Upon the sale of a Local Limited
Partnership Interest or Housing Complex after the end of the
Compliance Period, there would be no recapture of Low Income
Housing Tax Credits. A sale prior to the end of the Compliance
Period must satisfy the reasonable belief test outlined above to
avoid recapture.
The
following table reflects the end of the ten-year credit period and
the fifteen-year Compliance Period of each remaining Housing
Complex:
Local Limited Partnership Name
|
Expected last
year of credit delivery
|
15-year Expiration Date
|
|
|
|
Crestview Housing, L.P.
|
2022
|
2022
|
Davenport Housing VII, L.P.
|
2020
|
2024
|
FDI-Country Square, LTD
|
2017
|
2021
|
FDI-Park Place, LTD
|
2017
|
2021
|
Head Circle, L.P.
|
2016
|
2020
|
|
|
|
4
With
that in mind, the General Partner is continuing its review of the
Housing Complexes, with special emphasis on the more mature Housing
Complexes such as any that have satisfied the IRS compliance
requirements. The review considers many factors, including extended
use requirements (such as those due to mortgage restrictions or
state compliance agreements), the condition of the Housing
Complexes, Partnership cash flow, and the tax consequences to the
Limited Partners from the sale of the Housing
Complexes.
During
the year ended March 31, 2011, the Partnership sold two Local
Limited Partnerships, Fernwood Meadows, L.P.
(“Fernwood”) and Sierra’s Run, L.P.,
(“Sierra’s Run”), in order to generate sufficient
equity to complete the purchase of additional Low Income Housing
Tax Credits for Davenport VII, L.P.
(“Davenport”).
Fernwood
and Sierra’s Run will complete their Compliance Periods in
2022; therefore there is a risk of tax credit recapture. The
maximum exposure of recapture (excluding the interest and penalties
related to the recapture) is $177,508 and $170,246, respectively,
for Fernwood and Sierra’s Run, which equates to $16.57 per
Partnership Unit in the aggregate. Under the circumstances,
the General Partner believes there is a reasonable expectation that
each Local Limited Partnership will continue to be operated as
qualified low income housing for the balance of its Compliance
Period, and, accordingly, does not anticipate that there will be
any recapture.
Upon
identifying those Housing Complexes with the highest potential for
a successful sale, refinancing or re-syndication, the Partnership
expects to proceed with efforts to liquidate them or the applicable
Local Limited Partnership Interests. The objective is to wind down
the Partnership after Low Income Housing Tax Credits are no longer
available. Local Limited Partnership Interests may be disposed of
at any time by the General Partner in its discretion.
As of
March 31, 2016, the underlying Housing complexes of Pleasant
Village Limited Partnership (“Pleasant Village”) and
Grove Village Limited Partnership (“Grove Village”)
were sold resulting in the termination of the Partnership’s
Local Limited Partnership interest. The Partnership also gifted its
Local Limited Partnership interest in 909 4th YMCA Limited Partnership to an
unrelated nonprofit corporation. There was no risk of tax credit
recapture to the investors for all three of the
dispositions.
The
proceeds from the disposition of any Housing Complex will be used
first to pay debts and other obligations per the applicable Local
Limited Partnership Agreement. Any remaining proceeds will then be
paid to the partners of the Local Limited Partnership, including
the Partnership, in accordance with the terms of the applicable
Local Limited Partnership Agreement.
The
sale of a Housing Complex may be subject to other restrictions and
obligations. Accordingly, there can be no assurance that a Local
Limited Partnership will be able to sell its Housing Complex. Even
if it does so, there can be no assurance that any amounts of cash
will be distributed to the Limited Partners, as the proceeds first
would be used to pay Partnership obligations and to fund reserves.
Similarly, there can be no assurance that the Partnership will be
able to sell its Local Limited Partnership Interests, or that cash
therefrom would be available for distribution to the Limited
Partners.
Item 1A. Risk Factors
Set
forth below are the risks the Partnership believes are the most
significant to the Limited Partners. The Partnership and the Local
Limited Partnerships operate in a continually changing business
environment and, therefore, new risks emerge from time to time.
This section contains some forward-looking statements. For an
explanation of the qualifications and limitations on
forward-looking statements, see Item 7.
(a)
Risks
arising from the Internal Revenue Code rules governing Low Income
Housing Tax Credits
Low Income Housing Tax Credits might not be
available. If a Housing Complex does not satisfy the
requirements of Internal Revenue Code Section 42, then the Housing
Complex will not be eligible for Low Income Housing Tax
Credits.
5
Low Income Housing Tax Credits might be less
than anticipated. The Local General Partners will calculate
the amount of the Low Income Housing Tax Credits. No opinion of
counsel will cover the calculation of the amount of Low Income
Housing Tax Credits. The IRS could challenge the amount of the Low
Income Housing Tax Credits claimed for any Housing Complex under
any of a number of provisions set forth in Internal Revenue Code
Section 42. A successful challenge by the IRS would decrease the
amount of the Low Income Housing Tax Credits from the amount paid
for by the Partnership.
Low Income Housing Tax Credits may be
recaptured if Housing Complexes are not owned and operated for 15
years. Housing Complexes must comply with Internal Revenue
Code Section 42 for the 15-year Compliance Period. Low Income
Housing Tax Credits will be recaptured with interest to the extent
that a Housing Complex is not rented as low income housing or in
some other way does not satisfy the requirements of Internal
Revenue Code Section 42 during the Compliance Period.
For
these purposes, disposition includes transfer by way of
foreclosure. It will be up to the Partnership to determine whether
to post a bond. There is no obligation under the agreements with
the Local Limited Partnerships that the Local Limited Partnerships
must do so.
There
can be no assurance that recapture will not occur. If it does,
recapture will be a portion of all Low Income Housing Tax Credits
taken in prior years for that Housing Complex, plus interest.
During the first 11 years of the Compliance Period, non-compliance
results in one-third of the Low Income Housing Tax Credits up to
that point for the particular Housing Complex being recaptured,
plus interest. Between years 12 and 15, the recapture is phased out
ratably.
Sales of Housing Complexes are subject to
limitations which may impact a Local Limited Partnership’s
ability to sell its Housing Complex. Each Local Limited
Partnership executes an extended low income housing commitment with
the state in which the Housing Complex is located. The extended low
income housing commitment states the number of years that the Local
Limited Partnership and any subsequent owners must rent the Housing
Complex as low income housing. Under Federal law, the commitment
must be for at least 30 years. The commitment, actually agreed to,
may be significantly longer than 30 years. In prioritizing
applicants for Low Income Housing Tax Credits, most states give
additional points for commitment periods in excess of 30 years. On
any sale of the Housing Complex during the commitment period, the
purchaser would have to agree to continue to rent the Housing
Complex as low income housing for the duration of the commitment
period. This requirement reduces the potential market, and possibly
the sales price, for the Housing Complexes. The sale of a Housing
Complex may be subject to other restrictions. For example, Federal
Lenders or subsidizers may have the right to approve or disapprove
a purchase of a Housing Complex. Accordingly, there can be no
assurance that a Local Limited Partnership will be able to sell its
Housing Complex. Even if it does so, there can be no assurance that
any amount of cash will be distributed to the Limited Partners. The
Partnership would first use sale proceeds to pay obligations of the
Partnership. As a result, a material portion of the Low Income
Housing Tax Credits may represent a return of the money originally
invested in the Partnership.
As part
of the recently enacted health care legislation, Congress has
codified the economic substance doctrine. Because of its recent
enactment, the full reach of this provision is unclear. Inasmuch as
Housing Complexes might offer no benefit to a purchaser other than
tax benefits, it is possible that the economic substance doctrine
could be interpreted to limit deduction of tax losses from Housing
Complexes, which would be expected to have a significant adverse
effect on the sale value of the Housing Complexes and the Local
Limited Partnership Interests.
Limited Partners can only use Low Income
Housing Tax Credits in limited amounts. The ability of an
individual or other non-corporate Limited Partner to claim Low
Income Housing Tax Credits on his individual tax return is limited.
For example, an individual Limited Partner can use Low Income
Housing Tax Credits to reduce his tax liability on:
●
an unlimited amount
of passive income, which is income from entities such as the
Partnership, and
●
$25,000 in income
from other sources.
However,
the use of Low Income Housing Tax Credits by an individual against
these types of income is subject to ordering rules, which may
further limit the use of Low Income Housing Tax Credits. Some
corporate Limited Partners are subject to similar and other
limitations. They include corporations which provide personal
services, and corporations which are owned by five or fewer
shareholders.
6
Any
portion of a Low Income Housing Tax Credit which is allowed to a
Limited Partner under such rules is then aggregated with all of the
Limited Partner’s other business credits. The aggregate is
then subject to the general limitation on all business credits.
That limitation provides that a Limited Partner can use business
credits to offset the Limited Partner’s annual tax liability
equal to $25,000 plus 75% of the Limited Partner’s tax
liability in excess of $25,000. However, there may be limits on the
use business credits to offset any alternative minimum tax. All of
these concepts are extremely complicated.
(b)
Risks
related to investment in Local Limited Partnerships and Housing
Complexes
Because the Partnership has few investments,
each investment will have a great impact on the Partnership’s
results of operations. Any single Housing Complex
experiencing poor operating performance, impairment of value or
recapture of Low Income Housing Tax Credits will have a significant
impact upon the Partnership as a whole.
The failure to pay mortgage debt could result
in a forced sale of a Housing Complex. Each Local Limited
Partnership leverages the Partnership’s investment therein by
incurring mortgage debt. A Local Limited Partnership’s
revenues could be less than its debt payments and taxes and other
operating costs. If so, the Local Limited Partnership would have to
use working capital reserves, seek additional funds, or suffer a
forced sale of its Housing Complex, which could include a
foreclosure. The same results could occur if government subsidies
ceased. Foreclosure would result in a loss of the
Partnership’s capital invested in the Housing Complex.
Foreclosure could also result in a recapture of Low Income Housing
Tax Credits, and a loss of Low Income Housing Tax Credits for the
year in which the foreclosure occurs. If the Housing Complex is
highly-leveraged, a relatively slight decrease in the rental
revenues could adversely affect the Local Limited
Partnership’s ability to pay its debt service requirements.
Mortgage debt may be repayable in a self-amortizing series of equal
installments or with a large balloon final payment. Balloon
payments maturing prior to the end of the anticipated holding
period for the Housing Complex create the risk of a forced sale if
the debt cannot be refinanced. There can be no assurance that
additional funds will be available to any Local Limited Partnership
if needed on acceptable terms or at all.
The Partnership does not control the Local
Limited Partnerships and must rely on the Local General
Partners. The Local General Partners will make all
management decisions for the Local Limited Partnerships and the
Housing Complexes. The Partnership has very limited rights with
respect to management of the Local Limited Partnerships. The
Partnership will not be able to exercise any control with respect
to Local Limited Partnership business decisions and operations.
Consequently, the success of the Partnership will depend on the
abilities of the Local General Partners.
Housing Complexes subsidized by other
government programs are subject to additional rules which may make
it difficult to operate and sell Housing Complexes. Some or
all of the Housing Complexes receive or may receive government
financing or operating subsidies in addition to Low Income Housing
Tax Credits. The following are risks associated with some such
subsidy programs:
●
Obtaining tenants
for the Housing Complexes. Government regulations limit the types
of people who can rent subsidized housing. These regulations may
make it more difficult to rent the residential units in the Housing
Complexes.
●
Obtaining rent
increases. In many cases rents can only be increased with the prior
approval of the subsidizing agency.
●
Limitations on cash
distributions. The amount of cash that may be distributed to owners
of subsidized Housing Complexes is less than the amount that could
be earned by the owners of non-subsidized Housing
Complexes.
●
Limitations on sale
or refinancing of the Housing Complexes. A Local Limited
Partnership may be unable to sell its Housing Complex or to
refinance its mortgage loan without the prior approval of the
lender or state allocating agency. The lender or state allocating
agency may withhold such approval in the discretion of the lender
or state allocating agency. Approval may be subject to conditions,
including the condition that the purchaser continues to operate the
property as affordable housing for terms which could be as long as
30 years or more. In addition, any prepayment of a mortgage may
result in the assessment of a prepayment penalty.
7
●
Limitations on
transfers of interests in Local Limited Partnerships. The
Partnership may be unable to sell its interest in a Local Limited
Partnership without the prior approval of the lender or state
allocating agency. The lender or state allocating agency may
withhold such approval in the discretion of the lender or state
allocating agency. Approval may be subject to
conditions.
●
Limitations on
removal and admission of Local General Partners. The Partnership
may be unable to remove a Local General Partner from a Local
Limited Partnership except for cause, such as the violation of the
rules of the lender or state allocating authority. Regulations may
prohibit the removal of a Local General Partner or permit removal
only with the prior approval of the lender. Regulations may also
require approval of the admission of a successor Local General
Partner even upon the death or other disability of a Local General
Partner.
●
Limitations on
subsidy payments. Subsidy payments may be fixed in amount and
subject to annual legislative appropriations. The rental revenues
of a Housing Complex, when combined with the maximum committed
subsidy, may be insufficient to meet obligations. Congress or the
state legislature, as the case may be, may fail to appropriate or
increase the necessary subsidy. In those events, the mortgage
lender could foreclose on the Housing Complex unless a workout
arrangement could be negotiated.
●
Possible changes in
applicable regulations. Legislation may be enacted which adversely
revises provisions of outstanding mortgage loans. Such legislation
has been enacted in the past.
●
Limited Partners
may not receive distributions if Housing Complexes are sold. There
is no assurance that Limited Partners will receive any cash
distributions from the sale or refinancing of a Housing Complex.
The price at which a Housing Complex is sold may not be high enough
to pay the mortgage and other expenses at the Local Limited
Partnership and Partnerships levels which must be paid at such
time. If that happens, a Limited Partner’s return would be
derived only from the Low Income Housing Tax Credits and tax
losses. Similar risks apply to sales of Local Limited Partnership
Interests.
Uninsured casualties could result in losses
and recapture. There are casualties, which are either
uninsurable or not economically insurable. These include
earthquakes, floods, wars and losses relating to hazardous
materials or environmental matters. If a Housing Complex
experienced an uninsured casualty, the Partnership could lose both
its invested capital and anticipated profits in such property. Even
if the casualty were an insured loss, the Local Limited Partnership
might be unable to rebuild the destroyed property. A portion of
prior Low Income Housing Tax Credits could be recaptured and future
Low Income Housing Tax credits could be lost if the Housing Complex
was not restored within a reasonable period of time. Any liability
judgments against the Local Limited Partnership could exceed
available insurance proceeds or otherwise materially and adversely
affect the Local Limited Partnership. The cost of liability and
casualty insurance has increased in recent years. Casualty
insurance has become more difficult to obtain and may require large
deductible amounts.
Housing Complexes without financing or
operating subsidies may be unable to pay operating expenses.
If a Local Limited Partnership were unable to pay operating
expenses, one result could be a forced sale of its Housing Complex.
If a forced sale occurs during the Compliance Period for a Housing
Complex, a partial recapture of Low Income Housing Tax Credits
could occur. In this regard, some of the Local Limited Partnerships
may own Housing Complexes which have no subsidies other than Low
Income Housing Tax Credits. Those Housing Complexes do not have the
benefit of below-market-interest-rate financing or operating
subsidies which often are important to the feasibility of low
income housing. Those Housing Complexes rely solely on rents to pay
expenses. However, in order for any Housing Complex to be eligible
for Low Income Housing Tax Credits, it must restrict the rent which
may be charged to tenants. Over time, the expenses of a Housing
Complex will increase. If a Local Limited Partnership cannot
increase its rents, it may be unable to pay increased operating
expenses.
The Partnership’s investment protection
policies will be worthless if the net worth of the Local General
Partners is not sufficient to satisfy their obligations.
There is a risk that the Local General Partners will be unable to
perform their financial obligations to the Partnership. The General
Partner has not established a minimum net worth requirement for the
Local General Partners. Rather, at the time of the
Partnership’s investment, each Local General Partner
demonstrated a net worth which the General Partner believed was
appropriate under the circumstances. The assets of the Local
General Partners are likely to consist primarily of real estate
holdings and similar assets. The fair market value of these types
of assets is difficult to estimate. These types of assets cannot be
readily liquidated to satisfy the financial guarantees and
commitments which the Local General Partners make to the
Partnership. Moreover, other creditors may have claims on these
assets. No escrow accounts or other security arrangements will be
established to ensure performance of a Local General
Partner’s obligations. The cost to enforce a Local General
Partner’s obligations may be high. If a Local General Partner
does not satisfy its obligations the Partnership may have no
remedy, or the remedy may be limited to removing the Local General
Partner as general partner of the Local Limited
Partnership.
8
Fluctuating economic conditions can reduce the
value of real estate. The Partnership’s principal
business objective is providing its Limited Partners with Low
Income Housing Tax Credits, not the generation of gains from the
appreciation of real estate held by the Local Limited Partnerships.
In its financial statements, the Partnership has carried its
investments in Local Limited Partnerships at values equal to or
less than the sum of the total amount of the remaining future Low
Income Housing Tax Credits estimated to be allocated to the
Partnership and the estimated residual value to the Partnership of
its interests in the Local Limited Partnerships. During the years
ended March 31, 2017, 2016 and 2015, the Partnership had reduced
the carrying amount to $0 with respect to zero, one and three of
its remaining investments, respectively.
Any
investment in real estate is subject to risks from fluctuating
economic conditions. These conditions can adversely affect the
ability to realize a profit or even to recover invested capital.
Among these conditions are:
●
the general and
local job market,
●
the availability
and cost of mortgage financing,
●
monetary
inflation,
●
tax, environmental,
land use and zoning policies,
●
the supply of and
demand for similar properties,
●
neighborhood
conditions,
●
the availability
and cost of utilities and water.
For each of the years ended March 31, 2017, 2016 and 2015, a loss
in value of an investment in a Local Limited Partnership, other
than a temporary decline, is recorded by the Partnership in its
financial statements as an impairment loss. Impairment is measured
by comparing the Partnership’s carrying amount in the
investment to the sum of the total amount of the remaining future
Low Income Housing Tax Credits estimated to be allocated to the
Partnership and any estimated residual value to the Partnership.
For the years ended March 31, 2017, 2016 and 2015, impairment loss
related to investments in Local Limited Partnerships was $702,972,
$1,052,460 and $728,957, respectively.
If a loan made to a Local Limited Partnership
is not repaid, the amount of capital available for investment would
be reduced. The Partnership has or may make a loan to a
Local Limited Partnership before the Partnership's acquisition of
an interest therein. If the Partnership doesn't invest in the Local
Limited Partnership, the Local Limited Partnership might not repay
the loan. If the Local Limited Partnership doesn't repay the loan,
the amount of capital available for investment in Local Limited
Partnerships would be reduced.
(c)
Tax
risks other than those relating to tax credits
In
addition to the risks pertaining specifically to Low Income Housing
Tax Credits, there are other Federal income tax risks. Additional
Federal income tax risks associated with the ownership of
Partnership Units and the operations of the Partnership and the
Local Limited Partnerships include, but are not limited to, the
following:
No opinion of counsel as to certain
matters. No legal opinion is obtained regarding
matters:
●
the determination
of which depends on future factual circumstances,
●
which are peculiar
to individual Limited Partners, or
●
which are not
customarily the subject of an opinion.
The
more significant of these matters include:
●
allocating purchase
price among components of a property, particularly as between
buildings and fixtures, the cost of which is depreciable, and the
underlying land, the cost of which is not depreciable,
●
characterizing
expenses and payments made to or by the Partnership or a Local
Limited Partnership,
●
identifying the
portion of the costs of any Housing Complex which qualify for
historic and other tax credits, and
●
applying to any
specific Limited Partner the limitation on the use of tax credits
and tax losses. Limited Partners must determine for themselves the
extent to which they can use tax credits and tax
losses.
9
There
can be no assurance, therefore, that the IRS will not challenge
some of the tax positions adopted by the Partnership. The courts
could sustain an IRS challenge. An IRS challenge, if successful,
could have a detrimental effect on the Partnership’s ability
to realize its investment objectives.
Passive activity rules will limit deduction of
the Partnership’s losses and impose tax on interest
income. The Internal Revenue Code imposes limits on the
ability of most investors to claim losses from investments in real
estate. An individual may claim these so-called passive losses only
as an offset to income from investments in real estate or rental
activities. An individual may not claim passive losses as an offset
against other types of income, such as salaries, wages, dividends
and interest. These passive activity rules will restrict the
ability of most Limited Partners to use losses from the Partnership
as an offset of non-passive income.
The Partnership may earn interest income on
its reserves and loans. The passive activity rules generally
will categorize interest as portfolio income, and not passive
income. Passive losses cannot be used as an offset to portfolio
income. Consequently, a Limited Partner could pay tax liability on
portfolio income from the Partnership.
At risk rules might limit deduction of the
Partnership’s losses. If a significant portion of the
financing used to purchase Housing Complexes does not consist of
qualified nonrecourse financing, the “at risk” rules
will limit a Limited Partner’s ability to claim Partnership
losses to the amount the Limited Partner invests in the
Partnership. The “at risk” rules of the Internal
Revenue Code generally limit a Limited Partner’s ability to
deduct Partnership losses to the sum of:
●
the amount of cash
the Limited Partner invests in the Partnership, and
●
the Limited
Partner’s share of Partnership qualified nonrecourse
financing.
Qualified
nonrecourse financing is non-convertible, nonrecourse debt which is
borrowed from a government, or with exceptions, any person actively
and regularly engaged in the business of lending
money.
Tax liability on sale of a Housing Complex or
Local Limited Partnership Interest may exceed the cash available
from the sale. When a Local Limited Partnership sells a
Housing Complex it will recognize gain. Such gain is equal to the
difference between:
●
the sales proceeds
plus the amount of indebtedness secured by the Housing Complex,
and
●
the adjusted basis
for the Housing Complex. The adjusted basis for a Housing Complex
is its original cost, plus capital expenditures, minus
depreciation.
Similarly,
when the Partnership sells an interest in a Local Limited
Partnership the Partnership will recognize gain. Such gain is equal
to the difference between:
●
the sales proceeds
plus the Partnership’s share of the amount of indebtedness
secured by the Housing Complex, and
●
the adjusted basis
for the interest. The adjusted basis for an interest in a Local
Limited Partnership is the amount paid for the interest, plus
income allocations and cash distributions, less loss
allocations.
Accordingly,
gain will be increased by the depreciation deductions taken during
the holding period for the Housing Complex. In some cases, a
Limited Partner could have a tax liability from a sale greater than
the cash distributed to the Limited Partner from the
sale.
Alternative minimum tax liability could reduce
a Limited Partner’s tax benefits. If a Limited
Partner pays alternative minimum tax, the Limited Partner could
suffer a reduction in benefits from an investment in the
Partnership. The application of the alternative minimum tax is
personal to each Limited Partner. Tax credits may not be
utilized to reduce alternative minimum tax liability.
10
IRS could audit the returns of the
Partnership, the Local Limited Partnerships or the Limited
Partners. The IRS can audit the Partnership or a Local
Limited Partnership at the entity level with regard to issues
affecting the entity. The IRS does not have to audit each Limited
Partner in order to challenge a position taken by the Partnership
or a Local Limited Partnership. Similarly, only one judicial
proceeding can be filed to contest an IRS determination. A contest
by the Partnership of any IRS determination might result in high
legal fees.
An audit of the Partnership or a Local Limited
Partnership also could result in an audit of a Limited
Partner. An audit of a Limited Partner’s tax returns
could result in adjustments both to items that are related to the
Partnership and to unrelated items. The Limited Partner could then
be required to file amended tax returns and pay additional tax plus
interest and penalties.
A successful IRS challenge to tax allocations
of the Partnership or a Local Limited Partnership would reduce the
tax benefits of an investment in the Partnership. Under the
Internal Revenue Code, a partnership’s allocation of income,
gains, deductions, losses and tax credits must have substantial
economic effect. Substantial economic effect is a highly-technical
concept. The fundamental principle is two-fold. If a partner will
benefit economically from an item of partnership income or gain,
that item must be allocated to him so that he bears the correlative
tax burden. Conversely, if a partner will suffer economically from
an item of partnership deduction or loss, that item must be
allocated to him so that he bears the correlative tax benefit. If a
partnership’s allocations do not have substantial economic
effect, then the partnership’s tax items are allocated in
accordance with each partner’s interest in the partnership.
The IRS might challenge the allocations made by the
Partnership:
●
between the Limited
Partners and the General Partner,
●
among the Limited
Partners, or
●
between the
Partnership and a Local General Partner.
If any
allocations were successfully challenged, a greater share of the
income or gain or a lesser share of the losses or tax credits might
be allocated to the Limited Partners. This would increase the tax
liability or reduce the tax benefits to the Limited
Partners.
Tax liabilities could arise in later years of
the Partnership. After a period of years following
commencement of operations by a Local Limited Partnership, the
Local Limited Partnership may generate profits rather than losses.
A Limited Partner would have tax liability on his share of such
profits unless he could offset the income with:
●
unused passive
losses from the Partnership or other investments, or
●
current passive
losses from other investments.
In such
circumstances, the Limited Partner would not receive a cash
distribution from the Partnership with which to pay any tax
liability.
IRS challenge to tax treatment of expenditures
could reduce losses. The IRS may contend that fees and
payments of the Partnership or a Local Limited
Partnership:
●
should be
deductible over a longer period of time or in a later
year,
●
are excessive and
may not be capitalized or deducted in full,
●
should be
capitalized and not deducted, or
●
may not be included
as part of the basis for computing tax credits.
Any
such contention by the IRS could adversely impact, among other
things:
●
the eligible basis
of a Housing Complex used to compute Low Income Housing Tax
Credits,
●
the adjusted basis
of a Housing Complex used to compute depreciation,
●
the correct
deduction of fees,
●
the amortization of
organization and offering expenses and start-up
expenditures.
11
If the
IRS were successful in any such contention, the anticipated Low
Income Housing Tax Credits and losses of the Partnership would be
reduced, perhaps substantially.
Changes in tax law might reduce the value of
Low Income Housing Tax Credits. Although all Low Income
Housing Tax Credits are allocated to a Housing Complex at
commencement of the 10-year credit period, there can be no
assurance that future legislation may not adversely affect an
investment in the Partnership. For example, legislation could
reduce or eliminate the value of Low Income Housing Tax Credits. In
this regard, before 1986, the principal tax benefit of an
investment in low income housing was tax losses. These tax losses
generally were used to reduce an investor’s income from all
sources on a dollar-for-dollar basis. Investments in low income
housing were made in reliance on the availability of such tax
benefits. However, tax legislation enacted in 1986 severely
curtailed deduction of such losses.
New administrative or judicial interpretations
of the law might reduce the value of Low Income Housing Tax
Credits. Many of the provisions of the Internal Revenue Code
related to low income housing and real estate investments have not
been interpreted by the IRS in regulations, rulings or public
announcements, or by the courts. In the future, these provisions
may be interpreted or clarified by the IRS or the courts in a
manner adverse to the Partnership or the Local Limited
Partnerships. The IRS constantly reviews the Federal tax rules, and
can revise its interpretations of established concepts. Any such
revisions could reduce or eliminate tax benefits associated with an
investment in the Partnership.
State income tax laws may adversely affect the
Limited Partners. A Limited Partner may be required to file
income tax returns and be subject to tax and withholding in each
state or local taxing jurisdiction in which: a Housing Complex is
located, the Partnership or a Local Limited Partnership engages in
business activities, or the Limited Partner is a resident.
Corporate Limited Partners may be required to pay state franchise
taxes.
The tax treatment of particular items under
state or local income tax laws may vary materially from the Federal
income tax treatment of such items. Nonetheless, many of the
Federal income tax risks associated with an investment in the
Partnership may also apply under state or local income tax law. The
Partnership may be required to withhold state taxes from
distributions or income allocations to Limited Partners in some
instances.
(d)
Risks
related to the Partnership and the Partnership
Agreement
The Partnership may be unable to timely
provide financial reports to the Limited Partners which would
adversely affect their ability to monitor Partnership
operations. Historically, the Partnership has been unable to
timely file and provide investors with all of its required periodic
reports. In some instances, the delay has been
substantial. Each
Local General Partner is required to retain independent public
accountants and to report financial information to the Partnership
in a timely manner. There cannot be any assurance that the Local
General Partners will satisfy these obligations. If not, the
Partnership would be unable to provide to the Limited Partners in a
timely manner its financial statements and other reports. That
would impact the Limited Partners’ ability to monitor
Partnership operations. The Partnership’s failure to meet its
filing requirements under the Securities Exchange Act of 1934 could
reduce the liquidity for the Partnership Units due to the
unavailability of public information concerning the Partnership.
The failure to file could also result in sanctions imposed by the
SEC. Any defense mounted by the Partnership in the face of such
sanctions could entail legal and other fees, which would diminish
cash reserves.
Lack of liquidity of investment. There
is no public market for the purchase and sale of Partnership Units,
and it is unlikely that one will develop. Accordingly, Limited
Partners may not be able to sell their Partnership Units promptly
or at a reasonable price. Partnership Units should be considered as
a long-term investment because the Partnership is unlikely to sell
any Local Limited Partnership Interests for at least 15 years.
Partnership Units cannot be transferred to tax-exempt or foreign
entities, or through a secondary market. The General Partner can
deny effectiveness of a transfer if necessary to avoid adverse tax
consequences from the transfer. The General Partner does not
anticipate that any Partnership Units will be redeemed by the
Partnership.
The Limited Partners will not control the
Partnership and must rely totally on the General Partner.
The General Partner will make all management decisions for the
Partnership. Management decisions include exercising powers granted
to the Partnership by a Local Limited Partnership. Limited Partners
have no right or power to take part in Partnership
management.
12
Individual
Limited Partners will have no recourse if they disagree with
actions authorized by a vote of the majority. The Partnership
Agreement grants to Limited Partners owning more than 50% of the
Partnership Units the right to:
●
remove the General
Partner and elect a replacement general partner,
●
amend the
Partnership Agreement,
●
terminate the
Partnership.
Accordingly,
a majority-in-interest of the Limited Partners could cause any such
events to occur, even if Limited Partners owning 49% of the
Partnership Units opposed such action.
Limitations on liability of the General
Partner to the Partnership. The ability of Limited Partners
to sue the General Partner and its affiliates is subject to
limitations. The Partnership Agreement limits the liability of the
General Partner and its affiliates to the Limited Partners. The
General Partner and its affiliates will not be liable to the
Limited Partners for acts and omissions: performed or omitted in
good faith, and performed or omitted in a manner which the General
Partner reasonably believed to be within the scope of its authority
and in the best interest of the Limited Partners, provided such
conduct did not constitute negligence or misconduct.
Therefore,
Limited Partners may be less able to sue the General Partner and
its affiliates than would be the case if such provisions were not
included in the Partnership Agreement.
Associates and its affiliates are serving as
the general partners of many other partnerships. Depending
on their corporate area of responsibility, the officers of
Associates initially devote approximately 5% to 50% of their time
to the Partnership. These individuals spend significantly less time
devoted to the Partnership after the investment of the
Partnership’s capital in Local Limited
Partnerships.
The interests of Limited Partners may conflict
with the interests of the General Partner and its
affiliates. The General Partner and its affiliates are
committed to the management of more than 100 other limited
partnerships that have investments similar to those of the
Partnership. The General Partner and its affiliates receive
substantial compensation from the Partnership. The General Partner
decides how the Partnership’s investments in Housing
Complexes are managed, and when the investments will be sold. The
General Partner may face a conflict in these circumstances because
the General Partner’s share of fees and cash distributions
from the transaction may be more or less than their expected share
of fees if a Housing Complex was not sold. The Partnership has not
developed any formal process for resolving conflicts of interest.
However, the General Partner is subject to a fiduciary duty to
exercise good faith and integrity in handling the affairs of the
Partnership, and that duty will govern its actions in all such
matters. Furthermore, the manner in which the Partnership can
operate and sell investments is subject to substantial restrictions
as outlined in the Partnership Agreement.
The
Partnership’s accrued payables consist primarily of the asset
management fees payable to the General Partner and the capital
contributions payable to Local Limited Partnerships. The asset
management fees payable increased by approximately $68,000,
$112,000 and $156,000, for the years ended March 31, 2017, 2016 and
2015, respectively. The payables due to the Local Limited
Partnerships decreased by approximately $0, $130,000 and $99,000
for the years ended March 31, 2017, 2016 and 2015, respectively.
The Partnership’s future contractual cash obligations consist
of its obligations to pay future annual asset management fees and
the payables due to the Local Limited Partnerships. The future
annual asset management fees will equal approximately $68,000 per
year through the termination of the Partnership, which must occur
no later than December 31, 2070. Though the amounts payable to the
General Partner and/or its affiliates are contractually currently
payable, the Partnership anticipates that the General Partner
and/or its affiliates will not require the payment of these
contractual obligations until capital reserves are in excess of the
aggregate of the existing contractual obligations and anticipated
future foreseeable obligations of the Partnership. The Partnership
would be adversely affected should the General Partner and/or its
affiliates demand current payment of the existing contractual
obligations and or suspend services for this or any other
reason.
Associates has
agreed to continue providing advances sufficient enough to fund the
operations and working capital requirements of the Partnership
through June 30, 2018.
13
Item 1B. Unresolved Staff Comments
Not
Applicable
Item 2. Properties
Through
its investments in Local Limited Partnerships, the Partnership
holds indirect ownership interests in the Housing Complexes. The
following table reflects the status of the Housing Complexes as of
the dates or for the periods indicated:
|
|
|
|
|
As of March 31, 2017
|
As of December 31, 2016
|
|||
Local Limited
Partnership Name
|
|
Location
|
|
General Partner Name
|
Partnership’s Total Investment in Local Limited
Partnerships
|
Amount of Investment Paid to Date
|
Number of Units
|
Estimated
Aggregate Low Income Housing Tax
Credits (1)
|
Mortgage Balances of Local Limited Partnership
|
Crestview
Housing, L.P.
|
|
Bigfork,
Montana
|
|
American
Covenant Senior Housing Foundation, Inc.
|
$1,895,000
|
$1,895,000
|
24
|
$2,268,000
|
$663,000
|
|
|
|
|
|
|
|
|||
Davenport
Housing VII, L.P.
|
|
Davenport,
Iowa
|
|
Shelter
Resource Corporation
|
4,744,000
|
4,499,000
|
20
|
6,029,000
|
508,000
|
|
|
|
|
|
|
|
|||
FDI-Country
Square, LTD.
|
|
Lone
Star, Texas
|
|
Fieser
Holdings, Inc.
|
605,000
|
605,000
|
24
|
823,000
|
543,000
|
|
|
|
|
|
|
|
|||
FDI-Park
Place, LTD.
|
|
Bellville,
Texas
|
|
Fieser
Holdings, Inc.
|
758,000
|
758,000
|
40
|
1,068,000
|
1,027,000
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|||
Head
Circle, L.P.
|
|
Ruleville,
Mississippi
|
|
SEMC,
Inc.
|
464,000
|
464,000
|
38
|
657,000
|
1,315,000
|
|
|
|
|
|
|
|
|||
|
|
$8,466,000
|
$8,221,000
|
146
|
$10,845,000
|
$4,056,000
|
(1)
Represents
aggregate anticipated Low Income Housing Tax Credits to be received
over the 10 year credit period if the Housing Complexes are
retained and rented in compliance with credit rules for the
Compliance Period. Approximately 77% of the anticipated Low Income
Housing Tax Credits have been received from the Local Limited
Partnerships.
14
|
For the year ended December 31, 2016
|
||
Local Limited
Partnership Name
|
Rental Income
|
Net Income (Loss)
|
Low Income Housing Tax Credits Allocated to
Partnership
|
|
|
|
|
Crestview
Housing, L.P.
|
$132,000
|
$(52,000)
|
99.98%
|
|
|
|
|
Davenport
Housing VII, L.P.
|
118,000
|
(192,000)
|
99.98%
|
|
|
|
|
FDI-Country
Square, LTD.
|
149,000
|
10,000
|
99.98%
|
|
|
|
|
FDI-Park
Place, LTD.
|
224,000
|
(11,000)
|
99.98%
|
|
|
|
|
Head
Circle, L.P.
|
273,000
|
(53,000)
|
99.98%
|
|
|
|
|
|
|
|
|
|
$896,000
|
$(298,000)
|
|
15
WNC Housing Tax Credit Fund VI, L.P., Series 13
|
|
|
|||||
|
|
|
Occupancy
Rates
As of
December 31,
|
||||
Local Limited Partnership Name
|
Location
|
General Partner Name
|
2016
|
2015
|
2014
|
2013
|
2012
|
|
|
|
|
|
|
|
|
909 4th
YMCA, L.P.
|
Seattle,
Washington
|
YMCA
of Greater Seattle
|
N/A
|
N/A
|
85%
|
80%
|
100%
|
|
|
|
|
|
|
||
Crestview
Housing, L.P.
|
Bigfork,
Montana
|
American
Covenant Senior Housing Foundation, Inc.
|
100%
|
100%
|
96%
|
96%
|
100%
|
|
|
|
|
|
|
||
Davenport
Housing VII, L.P.
|
Davenport,
Iowa
|
Shelter
Resource Corporation
|
100%
|
100%
|
100%
|
100%
|
100%
|
|
|
|
|
|
|
||
FDI-Country
Square, LTD.
|
Lone
Star, Texas
|
Fieser
Holdings, Inc.
|
96%
|
100%
|
100%
|
88%
|
100%
|
|
|
|
|
|
|
||
FDI-Park
Place, LTD.
|
Bellville,
Texas
|
Fieser
Holdings, Inc.
|
90%
|
85%
|
83%
|
85%
|
75%
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
Grove
Village, L.P.
|
Dallas,
Texas
|
Walker
Guardian LLC
|
N/A
|
N/A
|
48%
|
46%
|
**
|
|
|
|
|
|
|
||
Head
Circle, L.P.
|
Ruleville,
Mississippi
|
SEMC,
Inc.
|
97%
|
85%
|
97%
|
100%
|
100%
|
|
|
|
|
|
|
||
Pleasant
Village, L.P.
|
Dallas,
Texas
|
Walker
Guardian LLC
|
N/A
|
85%
|
85%
|
65%
|
80%
|
|
96%
|
89%
|
73%
|
65%
|
86%
|
N/A
– This Local Limited Partnership was sold as of the
respective year end.
** The
Partnership was unable to obtain the occupancy rate as of December
31, 2012.
16
Item 4. Mine Safety Disclosures
NOT
APPLICABLE
PART II.
Item
5. Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Item 5a.
(a)
The
Partnership 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
Partnership Units and none exists. Partnership Units can be
assigned or otherwise transferred only if certain requirements in
the Partnership Agreement are satisfied.
(b)
At
March 31, 2017, there were 955 Limited Partners, and there were no
assignees of Partnership Units who were not admitted as Limited
Partners.
(c)
The Partnership was
not designed to provide operating cash distributions to Limited
Partners. It is possible that the Partnership could make
distributions from sale proceeds, if the Partnership is able to
sell its Local Limited Partnership Interests or Housing Complexes
for more than the related closing costs and any then accrued
obligations of the Partnership. There can be no assurance in this
regard. Any such distributions would be made in accordance with the
terms of the Partnership Agreement. For all periods presented,
there were no cash distributions to the Limited
Partners.
(d)
No securities are
authorized for issuance by the Partnership under equity
compensation plans.
(e)
The Partnership
does not issue common stock.
(f)
No unregistered
securities were sold by the Partnership during the year ended March
31, 2017.
Item
5b. Use of Proceeds
NOT
APPLICABLE
Item 5c. Purchases of Equity Securities by the Issuers and
Affiliated Purchasers
NONE
17
Item 6. Selected Financial Data
Selected
balance sheet information for the Partnership is as
follows:
|
March
31,
|
||||
|
2017
|
2016
|
2015
|
2014
|
2013
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$271,941
|
$315,082
|
$325,510
|
$18,047
|
$161,924
|
Investments in
Local Limited
Partnerships, net
|
2,286,745
|
3,235,861
|
4,648,056
|
5,396,913
|
7,636,679
|
Due from
affiliates, net
|
-
|
-
|
-
|
2,265,967
|
-
|
Other
assets
|
-
|
2,643
|
-
|
6,500
|
-
|
|
|
|
|
|
|
Total
Assets
|
$2,558,686
|
$3,553,586
|
$4,973,566
|
$7,687,427
|
$7,798,603
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
Payables to Local
Limited Partnerships
|
$245,113
|
$245,113
|
$375,198
|
$474,328
|
$474,328
|
Accrued fees and
expenses due to General Partner and
affiliates
|
1,479,730
|
1,874,186
|
3,341,534
|
3,548,586
|
1,018,170
|
|
|
|
|
|
|
Total
Liabilities
|
1,724,843
|
2,119,299
|
3,716,732
|
4,022,914
|
1,492,498
|
|
|
|
|
|
|
PARTNERS’
EQUITY
|
833,843
|
1,434,287
|
1,256,834
|
3,664,513
|
6,306,105
|
|
|
|
|
|
|
Total
Liabilities and Partners’ Equity
|
$2,558,686
|
$3,553,586
|
$4,973,566
|
$7,687,427
|
$7,798,603
|
18
Selected
results of operations, cash flows, and other information for the
Partnership are as follows:
|
For the Years
Ended March 31,
|
||||
|
2017
|
2016
|
2015
|
2014
|
2013
|
Loss from
operations (Note 1)
|
$(946,854)
|
$(1,942,059)
|
$(2,755,058)
|
$(2,300,623)
|
$(678,906)
|
Equity in losses of
Local Limited Partnerships
|
(245,681)
|
(279,147)
|
(14,547)
|
(341,021)
|
(273,439)
|
Other
income
|
-
|
1,486,040
|
-
|
-
|
-
|
Gain on sale of
Local Limited Partnerships
|
-
|
1,159,711
|
361,865
|
-
|
-
|
Interest
income
|
306
|
172
|
61
|
52
|
120
|
Net
income (loss)
|
$(1,192,229)
|
$424,717
|
$(2,407,679)
|
$(2,641,592)
|
$(952,225)
|
|
|
|
|
|
|
Net
income (loss) allocated to:
|
|
|
|
|
|
General
Partner
|
$(1,192)
|
$425
|
$(2,408)
|
$(2,642)
|
$(952)
|
|
|
|
|
|
|
Limited
Partners
|
$(1,191,037)
|
$424,292
|
$(2,405,271)
|
$(2,638,950)
|
$(951,273)
|
|
|
|
|
|
|
Net
income (loss) per Partnership Unit
|
$(57.24)
|
$20.27
|
$(114.80)
|
$(125.84)
|
$(45.36)
|
Outstanding
Weighted
|
|
|
|
|
|
Partnership
Units
|
20,807
|
20,931
|
20,951
|
20,971
|
20,971
|
|
|
|
|
|
|
Note 1
– Loss from operations for the years ended March 31, 2017,
2016, 2015, 2014 and 2013, includes a charge for impairment losses
on investments in Local Limited Partnerships of $702,972,
$1,052,460, $728,957, $1,876,679 and $339,689, respectively (see
Note 2 to the audited financial statements).
19
|
|
For the Years
Ended March 31,
|
|
||
|
2017
|
2016
|
2015
|
2014
|
2013
|
Net
cash provided by (used in):
|
|
|
|
|
|
Operating
activities
|
$(43,141)
|
$701,050
|
$(490,559)
|
$(4,141)
|
$(20,535)
|
Investing
activities
|
-
|
879,043
|
1,194,631
|
(2,265,967)
|
-
|
Financing
activities
|
-
|
(1,590,521)
|
(396,609)
|
2,126,231
|
-
|
|
|
|
|
|
|
Net
change in cash and cash equivalents
|
(43,141)
|
(10,428)
|
307,463
|
(143,877)
|
(20,535)
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning
of period
|
315,082
|
325,510
|
18,047
|
161,924
|
182,459
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
$271,941
|
$315,082
|
$325,510
|
$18,047
|
$161,924
|
Low
Income Housing Tax Credits per Partnership Unit were as follows for
the year and period ended December 31:
|
2016
|
2015
|
2014
|
2013
|
2012
|
|
|
|
|
|
|
Federal
|
$57
|
$115
|
$51
|
$51
|
$51
|
State
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
Total
|
$57
|
$115
|
$51
|
$51
|
$51
|
Item
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward
Looking Statements
With
the exception of the discussion regarding historical information,
this “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and other discussions
elsewhere in this Form 10-K contain forward looking statements.
Such statements are based on current expectations subject to
uncertainties and other factors which may involve known and unknown
risks that could cause actual results of operations to differ
materially from those projected or implied. Further, certain
forward-looking statements are based upon assumptions about future
events which may not prove to be accurate.
Risks
and uncertainties inherent in forward looking statements include,
but are not limited to, the Partnership’s future cash flows
and ability to obtain sufficient financing, level of operating
expenses, conditions in the Low Income Housing Tax Credits property
market and the economy in general, changes in law, rules and
regulations, and legal proceedings. Historical results are not
necessarily indicative of the operating results for any future
period.
20
Subsequent
written and oral forward looking statements attributable to the
Partnership or persons acting on its behalf are expressly qualified
in their entirety by cautionary statements in this Form 10-K and in
other reports filed with the SEC. 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 Local Limited
Partnerships
The
Partnership accounts for its investments in Local Limited
Partnerships using the equity method of accounting, whereby the
Partnership adjusts its investment balance for its share of the
Local Limited Partnerships’ results of operations and for any
contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local
Limited Partnership for possible impairment at least annually or
whenever events or changes in circumstances indicate that the
carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by the estimated
value derived by management, generally consisting of the product of
the remaining future Low Income Housing Tax Credits estimated to be
allocable to the Partnership and any estimated residual value to
the Partnership. If an investment is considered to be impaired, the
Partnership reduces the carrying value of its investment in any
such Local Limited Partnership. The accounting policies of the
Local Limited Partnerships, generally, are expected to be
consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of
the investment account and were being amortized over 27.5 years
(See Notes 2 and 3 to the financial statements).
“Equity
in losses of Local Limited Partnerships” for each year ended
March 31 has been recorded by the Partnership based on the twelve
months of reported results provided by the Local Limited
Partnerships for each year ended December 31. Equity in losses from
the Local Limited Partnerships allocated to the Partnership is not
recognized to the extent that the investment balance would be
adjusted below zero. If the Local Limited Partnerships report net
income in future years, the Partnership will resume applying the
equity method only after its share of such net income equals the
share of net losses not recognized during the period(s) the equity
method was suspended.
Distributions
received from the Local Limited Partnerships are accounted for as a
reduction of the investment balance. Distributions received after
the investment has reached zero are recognized as distribution
income.
In
accordance with the accounting guidance for the consolidation of
variable interest entities, the Partnership determines when it
should include the assets, liabilities, and activities of a
variable interest entity (VIE) in its financial statements, and
when it should disclose information about its relationship with a
VIE. The analysis that must be performed to determine which entity
should consolidate a VIE focuses on control and economic factors. A
VIE is a legal structure used to conduct activities or hold assets,
which must be consolidated by a company if it is the primary
beneficiary because it has (1) the power to direct the activities
of the VIE that most significantly impact the VIE's economic
performance and (2) the obligation to absorb losses or receive
benefits that could potentially be significant to the VIE. If
multiple unrelated parties share such power, as defined, no party
will be required to consolidate the VIE. Further, the guidance
requires continual reconsideration of the primary beneficiary of a
VIE.
21
Based on this guidance, the Local Limited Partnerships in which the
Partnership invests meet the definition of a VIE because the owners
of the equity at risk in these entities do not have the power to
direct their operations. However, management does not consolidate
the Partnership's interests in these VIEs, as it is not considered
to be the primary beneficiary since it does not have the power to
direct the activities that are considered most significant to
the economic performance of
these entities. The Partnership currently records the amount of its
investment in these Local Limited Partnerships as an asset on its
balance sheets, recognizes its share of partnership income or
losses in the statements of operations, and discloses how it
accounts for material types of these investments in its financial
statements. The Partnership's balance in investment in Local
Limited Partnerships, plus the risk of recapture of tax credits
previously recognized on these investments, represents its maximum
exposure to loss. The Partnership's exposure to loss on these Local
Limited Partnerships is mitigated by the condition and financial
performance of the underlying Housing Complexes as well as the
strength of the Local General Partners and their guarantee against
credit recapture to the investors in the
Partnership.
Impact of Recent Accounting Pronouncements
In
January 2014, the FASB issued an amendment to the accounting and
disclosure requirements for investments in qualified affordable
housing projects. The amendments provide guidance on accounting for
investments by a reporting entity in flow-through limited liability
entities that manage or invest in affordable housing projects that
qualify for the low-income housing tax credit. The amendments
permit reporting entities to make an accounting policy election to
account for their investments in qualified affordable housing
projects using the proportional amortization method if certain
conditions are met. Under the proportional amortization method, an
entity amortizes the initial cost of the investment in proportion
to the tax credits and other tax benefits received, and recognizes
the net investment performance in the income statement as a
component of income tax expense (benefit). The amendments are
effective for interim and annual periods beginning after December
15, 2014 and should be applied retrospectively to all periods
presented. Early adoption was permitted. The adoption of this
update did not materially affect the Partnership's financial
statements.
In
February 2015, the FASB issued ASU No. 2015-02,
“Consolidation (Topic 810): Amendments to the Consolidation
Analysis”. This will improve certain areas of consolidation
guidance for reporting organizations that are required to evaluate
whether to consolidate certain legal entities such as limited
partnerships, limited liability corporations and securitization
structures. ASU 2015-02 simplifies and improves GAAP by:
eliminating the presumption that a general partner should
consolidate a limited partnership, eliminating the indefinite
deferral of FASB Statement No. 167, thereby reducing the number of
Variable Interest Entity (VIE) consolidation models from four to
two (including the limited partnership consolidation model) and
clarifying when fees paid to a decision maker should be a factor to
include in the consolidation of VIEs. ASU 2015-02 is effective for
periods beginning after December 15, 2015. The adoption of this
update did not materially affect the Partnership's financial
statements.
Income
Taxes
The
Partnership has elected to be treated as a pass-through entity for
income tax purposes and, as such, is not subject to income taxes.
Rather, all items of taxable income, deductions and tax credits are
passed through to and are reported by its owners on their
respective income tax returns. The Partnership’s federal tax
status as a pass-through entity is based on its legal status as a
partnership. Accordingly, the Partnership is not required to take
any tax positions in order to qualify as a pass-through entity. The
Partnership is required to file and does file tax returns with the
Internal Revenue Service and other taxing authorities. Accordingly,
these financial statements do not reflect a provision for income
taxes and the Partnership has no other tax positions which must be
considered for disclosure. Income tax returns filed by the
Partnership are subject to examination by the Internal Revenue
Service for a period of three years. While no income tax returns
are currently being examined by the Internal Revenue Service, tax
years since 2013 remain open.
Certain
Risks and Uncertainties
See
Item 1A for a discussion of risks regarding the
Partnership.
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 Partners may be required
to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are
required, the Partnership’s investment in certain of such
Local Limited Partnerships could be lost, and the loss and
recapture of the related Low Income Housing Tax Credits could
occur.
Anticipated
future and existing cash resources of the Partnership are not
sufficient to pay existing liabilities of the Partnership. However,
substantially all of the existing liabilities of the Partnership
are payable to the General Partner and/or its affiliates. Though
the amounts payable to the General Partner and/or its affiliates
are contractually currently payable, the Partnership anticipates
that the General Partner and/or its affiliates will not require the
payment of these contractual obligations until capital reserves are
in excess of the aggregate of then existing contractual obligations
and then anticipated future foreseeable obligations of the
Partnership. The Partnership would be adversely affected should the
General Partner and/or its affiliates demand current payment of the
existing contractual obligations and or suspend services for this
or any other reason.
Financial
Condition
The
Partnership’s assets at March 31, 2017 consisted of $272,000
in cash and cash equivalents and investments in Local Limited
Partnerships of $2,287,000 (See “Method of Accounting for
Investments in Local Limited Partnerships). Liabilities at March
31, 2017 consisted of $245,000 of payables due to Local Limited
Partnerships and $1,480,000 of accrued fees and expenses due to
General Partner and affiliates (See “Future Contractual Cash
Obligations” below).
22
Results
of Operations
Year Ended March 31, 2017 Compared to Year Ended March 31,
2016 The Partnership’s net loss for the year ended
March 31, 2017 was $1,192,000, reflecting a decrease of $1,617,000
from the net income for the year ended March 31, 2016 of $425,000.
The decrease in net income is partially due to a $1,486,000
decrease in other income for the year ended March 31, 2017. The
Partnership received $1,300,000 from insurance proceeds related to
a litigation settlement, and $186,000 from the release of an escrow
account from the sale of a Local Limited Partnership during the
year ended March 31, 2016 compared to no other income recorded for
the year ended March 31, 2017. Gain on sale of Local Limited
Partnerships decreased by $1,160,000 for the year ended March 31,
2017. The gain and loss on sale of Local Limited Partnerships will
vary from period to period depending on the values and sale prices
of the housing complexes that have been identified for disposition
and the closing dates of such transactions. Write off of advances
to Local Limited Partnerships decreased by $229,000 for the year
ended March 31, 2017 compared to the year ended March 31, 2016. The
advances made to Local Limited Partnerships, and the probability of
collection, can vary each period depending on the operations of the
individual Local Limited Partnerships. Additionally, impairment
loss decreased by $349,000 for the year ended March 31, 2017.
Impairment loss varies from year to year depending on the
operations of the Local Limited Partnerships and the amount of Low
Income Housing Tax Credits that are allocated each year to the
Partnership. There was a decrease in accounting and legal fees of
$213,000 for the year ended March 31, 2017 compared to the year
ended March 31, 2016 due to timing of services and payments. Asset
management fees decreased by $44,000 during the year ended March
31, 2017. The fees are calculated based on the value of invested
assets, which decreased due to the sales of Local Limited
Partnerships. Also, amortization decreased by $2,000 during the
year ended March 31, 2017 due to the fact that intangibles were
fully impaired during the first quarter, therefore, no future
amortization expense recorded. Asset management expenses decreased
by $6,000 during the year ended March 31, 2017. The asset
management expenses vary from period to period depending on the
number of site visits to the Local Limited Partnerships from asset
managers during the year. The write off of other assets increased
by $3,000 during the year ended March 31, 2017. Capitalized costs
from potential disposition of Local Limited Partnerships were
expensed due to the length of time it has taken to dispose of the
properties. Other expenses decreased by $205,000 during the year
ended March 31, 2017, mainly due to consulting and tax expenses
incurred for Pleasant Village during the year ended March 31, 2016.
Equity in losses decreased by $33,000 for the year ended March 31,
2017 due to operations of the underlying Housing Complexes
fluctuating form period to period. Reporting fees decreased by
$10,000 and distribution income decreased by $39,000 for the year
ended March 31, 2017. Local Limited Partnerships pay reporting fees
and distributions to the Partnership when the Local Limited
Partnerships’ cash flows will allow for the
payment.
Year Ended March 31, 2016 Compared to Year Ended March 31,
2015 The Partnership’s
net income for the year ended March 31, 2016
was $425,000, reflecting an increase of $2,833,000 from
the net loss for the year ended March 31, 2015 of $2,408,000.
The increase in net income is partially due to an increase of
$798,000 in gain on sale of Local Limited Partnerships for the year
ended March 31, 2016. The gain and loss on sale of Local
Limited Partnerships will vary from period to period depending on
the values and sale prices of the housing complexes that have been
identified for disposition and the closing dates of such
transactions. Write off of advances to Local Limited Partnerships
decreased by $1,106,000 for the year ended March 31, 2016 compared
to the year ended March 31, 2015. The advances made to Local
Limited Partnerships, and the probability of collection, can vary
each period depending on the operations of the individual Local
Limited Partnerships. Additionally, impairment loss increased by
$324,000 for the year ended March 31, 2016. Impairment loss varies
from year to year depending on the operations of the Local Limited
Partnerships and the amount of Low Income Housing Tax Credits that
are allocated each year to the Partnership. There was a decrease in
accounting and legal fees of $118,000 for the year ended March 31,
2016 compared to the year ended March 31, 2015 due to less legal
services related to LIHTC’s for Pleasant Village and Grove
Village during the year ended March 31, 2016. Asset management fees
decreased by $44,000 during the year ended March 31, 2016. The fees
are calculated based on the value of invested assets, which
decreased due to the sales of Local Limited Partnerships. Also,
amortization decreased by $3,000 during the year ended March 31,
2016 due to the fact that intangibles were partially impaired
during the first quarter, therefore decreasing the future
amortization expense. Asset management expenses decreased by
$19,000 during the year ended March 31, 2016. The asset management
expenses vary from period to period depending on the number of site
visits to the Local Limited Partnerships from asset managers during
the year. The write off of other assets decreased by $3,000
during the year ended March 31, 2016. Capitalized costs from
potential disposition of Local Limited Partnerships were expensed
due to the length of time it has taken to dispose of the
properties. Other expenses increased by $204,000 during the year
ended March 31, 2016, mainly due to consulting expenses incurred
for Pleasant Village. Equity in losses increased by $265,000 for
the year ended March 31, 2016 due to operations of the underlying
Housing Complexes fluctuating form period to period. Other income
increased by $1,486,000 for the year ended March 31, 2016 due to
the Partnership receiving $1,300,000 from insurance proceeds
received related to the aforementioned litigation settlement, which
was used to reimburse advances payable to the General Partner or an
affiliate. In addition, the Partnership received $186,000 from the
release of an escrow account from the sale of a Local Limited
Partnership during the year ended March 31, 2015. Reporting fees
increased by $8,000 and distribution income increased by $39,000
for the year ended March 31, 2016 due to the fact that Local
Limited Partnerships pay reporting fees and distributions to the
Partnership when the Local Limited Partnerships’ cash flows
will allow for the payment.
23
Liquidity
and Capital Resources
Year Ended March 31, 2017 Compared to Year Ended March 31,
2016 The net decrease in cash and cash equivalents during
the year ended March 31, 2017 was $43,000 compared to a net
decrease in cash and cash equivalents during the year ended March
31, 2016 of $10,000. During the year ended March 31, 2016, the
Partnership advanced $229,000 to Local Limited Partnerships
compared to no advance during the year ended March 31, 2017. The
advances to troubled Local Limited Partnerships can vary each year
depending on the operations of the individual Local Limited
Partnerships. The Partnership reimbursed the General Partner or an
affiliate $21,000 for operating expenses paid on its behalf during
the year ended March 31, 2017, compared to $630,000 reimbursed
during the year ended March 31, 2016. Also during the year ended
March 31, 2016, the Partnership reimbursed the General Partner or
an affiliate $1,591,000 for advances made to the Partnership, while
no such payments were made during the year ended March 31, 2017.
During the year ended March 31, 2017, the Partnership received
$5,000 in reporting fees and $0 in distributions compared to
$15,000 and $39,000, respectively, received during the year ended
March 31, 2016. The Local Limited Partnerships pay the reporting
fees and distributions to the Partnership when the Local Limited
Partnerships’ cash flows will allow for payments.
Additionally, during year ended March 31, 2016, the Partnership
received $1,117,000 in proceeds from sale of Local Limited
Partners, $1,300,000 in litigation settlement income and $186,000
from a refund of an escrow account.
Year Ended March 31, 2016 Compared to Year Ended March 31,
2015 The net decrease in cash and cash equivalents during
the year ended March 31, 2016 was $10,000 compared to a net
increase in cash and cash equivalents during the year ended March
31, 2015 of $307,000. During the year ended March 31, 2016, the
Partnership advanced $229,000 to Local Limited Partnerships
compared to $1,068,000 advanced during the year ended March 31,
2015. The advances to troubled Local Limited Partnerships can vary
each year depending on the operations of the individual Local
Limited Partnerships. The Partnership reimbursed the General
Partner or an affiliate $630,000 for operating expenses paid on its
behalf during the year ended March 31, 2016, compared to $541,000
reimbursed during the year ended March 31, 2015. Also during the
year ended March 31, 2016, the Partnership reimbursed the General
Partner or an affiliate $1,591,000 for advances made to the
Partnership, compared to $1,314,000 reimbursed during the year
ended March 31, 2015. During the year ended March 31, 2015,
$2,000,000 was received for reimbursement of advances made by the
Partnership to certain Local Limited Partnerships. Additionally,
during year ended March 31, 2016, gain on sale of Local Limited
Partnerships increased by $798,000. The gain on sale of Local
Limited Partnerships will vary from period to period depending on
the values and sale proceeds of the Local Limited Partnerships
which were sold. Reporting fees increased by $8,000 and
distribution income increased by $39,000 for the year ended March
31, 2016. The Local Limited Partnerships pay the reporting fees and
distributions to the Partnership when the Local Limited
Partnerships’ cash flows will allow for payments. During the
year ended March 31, 2016, the Partnership received $1,300,000 in
litigation settlement income and $186,000 from the release of an
escrow account, as discussed above.
Accrued
payables, which consist primarily of related party asset management
fees due to the General Partner, decreased by approximately
$394,000, $1,467,000 and $207,000 for the years ended March 31,
2017, 2016 and 2015, respectively.
The
Partnership currently has insufficient working capital to fund its
operations. Associates has agreed to continue providing advances
sufficient enough to fund the operations and working capital
requirements of the Partnership through June 30, 2018.
Other Matters
Davenport
started construction in October 2006 and was scheduled to be
completed in June 2008. Construction was delayed due to the
original Local General Partner defaulting on his construction
guarantee, and resulting in disputed mechanic liens on the
property. In November 2008, a co-Local General Partner, Shelter
Resource Corporation, was admitted into the Partnership, due to
restrictions implemented by the Iowa Finance Authority
(“IFA”). Subsequently, with IFA’s approval, the
defaulting original Local General Partner was removed from the
Partnership leaving Shelter Resource Corporation as the sole Local
General Partner.
As of
March 31, 2010, the property was 100% completed and a certificate
of occupancy was granted for both buildings in December 2009. The
Partnership engaged all sub-contractors to sign new construction
contracts, along with lien releases for any and all work done after
their engagement. During the year ended March 31, 2011, the
Partnership voluntarily advanced $846,175 to Davenport for
construction related costs. There were no additional advances made
to Davenport due to the additional investment made, as discussed
below.
24
The
project was fully completed as of March 31, 2010 and it achieved
stabilized operations by June 2010. In June 2010 the property
achieved 85% occupancy and has maintained occupancy of 80% to 100%
to the date of this filing. Davenport has been awarded state
historical tax credits from the State of Iowa, federal historical
credits and federal Low Income Housing Tax Credits. The State
historical credits are given in the form of a refund check from the
State in conjunction with the State tax return filing. The net
amount of the check after applicable federal taxes will be
contributed back to the property to help fund construction
shortfalls. Davenport was also allocated additional federal Low
Income Housing Tax Credits as well as federal historical tax
credits. Upon the Limited Partners’ approval of the
dispositions of Sierra’s Run and Fernwood, the Partnership
made the additional investment in Davenport. See the exit strategy
in Note 1 regarding the dispositions of Sierra’s Run and
Fernwood. On July 1, 2010, the Partnership committed additional
capital to Davenport in the amount of $2,490,651. This additional
commitment generated $408,710 of federal historic credits and
$3,582,550 of additional federal Low Income Housing Tax Credits
which were allocated to the partners of the
Partnership.
As of
March 31, 2017, the property is on the watch list due to a low
year-to-date DCR, low replacement reserves and high utilities
expense due to large physical space. Davenport Housing VII was
previously the campus library and nursing building. Due to the
large physical space of the Davenport VII, utilities expense is
typically greater than comparable properties. During the first
quarter 2017, utilities expense was $1,627 over budget. All other
expenses were in line with the budgeted amounts. The replacement
reserve account is depleted, and is not being funded as required.
WNC has established a replacement reserve workout plan with the
Local General Partner. To the extent there is surplus cash at
year-end, the cash will be deposited to the replacement reserve in
lieu of a distribution to the partners. Operating deficits were
paid from the operating cash account, which had a balance of $2,225
at the end of the first quarter 2017. The Local General Partner
entity and it’s Managing Member, James Bergman (individual),
has provided construction completion, operating deficit, tax
credit, and development fee payment guarantees.
Grove
Village Limited Partnership and Pleasant Village Limited
Partnership were disposed of during the year ended March 31, 2016.
These Local Limited partnerships were under IRS audit related to
the LIHTCs and the Partnership filed a lawsuit against the Local
General Partner. During the year ended March 31, 2015, the
Partnership settled the disputed and received $1,300,000 of
settlement proceeds which were included in other income. The
Partnership also received a final escrow release from the sale of
Grove village Limited Partnership totaling $186,040 which was also
included in other income for the year ended March 31,
2016.
Partnership’s Future Contractual Cash
Obligations
The
following table summarizes the Partnership’s future
contractual cash obligations as of March 31, 2017:
|
2018
|
2019
|
2020
|
2021
|
2022
|
Thereafter
|
Total
|
|
|
|
|
|
|
|
|
Asset management fees (1)
|
$1,548,195
|
$68,465
|
$68,465
|
$68,465
|
$68,465
|
$3,286,320
|
$5,108,375
|
Payable
to Local Limited Partnerships
|
245,113
|
-
|
-
|
-
|
-
|
-
|
245,113
|
Total
contractual obligations
|
$1,793,308
|
$68,465
|
$68,465
|
$68,465
|
$68,465
|
$3,286,320
|
$5,353,488
|
(1)
Asset management
fees are payable annually until termination of the Partnership,
which is to occur no later than December 31, 2070. The estimate of
the fees payable included herein assumes the retention of the
Partnership’s interest in all Housing Complexes owned at
March 31, 2017 until December 31, 2070. Amounts due to the General
Partner as of March 31, 2017 have been included in the 2018 column.
The General Partner does not anticipate that these fees will be
paid until such time as capital reserves are in excess of the
aggregate of the existing contractual obligations and the
anticipated future foreseeable obligations of the
Partnership.
For
additional information regarding our asset management fees and
payables due to Local Limited Partnerships, see Notes 3 and 4 to
the financial statements included elsewhere herein.
Off-Balance Sheet Arrangements
The
Partnership has no off-balance sheet arrangements.
25
Exit Strategy
See
Item 1 for information in this regard.
Impact of Recent Accounting Pronouncements
See
footnote 1 to the financial statements.
Item 7A. Quantitative and Qualitative Disclosures Above Market
Risk
NOT
APPLICABLE
Item 8. Financial Statements and Supplementary Data
26
Report of Independent Registered Public Accounting
Firm
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 13
We have audited the accompanying balance sheets of WNC Housing Tax
Credit Fund VI, L.P., Series 13 (the "Partnership") as of March 31,
2017 and 2016,
and the related statements
of operations, partners' equity (deficit), and cash flows for each
of the years in the three-year period ended March 31, 2017. The
Partnership's management is responsible for these financial
statements. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the
financial statements of certain Local Limited Partnerships which
investments represent $1,844,381 and $2,457,282 of the total
Partnership assets as of March 31, 2017 and 2016, respectively, and
$(191,716), $(181,427) and $24,345 of income (loss) of the total
Partnership loss for the years ended March 31, 2017, 2016 and 2015,
respectively. Those statements were audited by other auditors,
whose reports have been furnished to us, and our opinion, insofar
as it relates to those Local Limited Partnerships, is based solely
on the reports of the other auditors.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Partnership is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Partnership's internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of WNC
Housing Tax Credit Fund VI, L.P., Series 13 as of March 31, 2017
and 2016 and the results of its operations and its cash flows for
each of the years in the three-year period ended March 31, 2017 in
conformity with accounting principles generally accepted in the
United States of America.
Our
audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed
under Item 15(a)(2) in the index related to each of the years in
the three-year period ended March 31, 2017 is presented for the
purpose of complying with the Securities and Exchange Commission's
rules and is not part of the basic financial statements. This
schedule is the responsibility of the Partnership's management.
Our audit procedures included determining whether this schedule
reconciles to the basic financial statements or the underlying
accounting and other records, as applicable, and performing
procedures to test the completeness and accuracy of the information
presented in this schedule. This schedule has been subjected to the
auditing procedures applied to the audits of the basic financial
statements and, in our opinion, fairly states in all material
respects the financial statement data required to be set forth
therein in relation to the basic financial statements taken as a
whole.
/s/ CohnReznick, LLP.
Bethesda,
Maryland
June
23, 2017
F-1
F-2
F-3
PAILET, MEUNIER and
LeBLANC, L.L.P.
Certified Public
Accountants Management Consultants
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Partners
Davenport Housing
VII, L.P. Davenport, Iowa
We have audited the
accompanying financial statements of Davenport Housing VII, L.P.,
which comprise the balance sheets as of December 31, 2015 and 2014
and the related statements of operations, changes in partners'
equity and cash flows for the years the ended, and the related
notes to the financial statements.
Management's
Responsibility for the Financial Statements
Management is
responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles
generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to
fraud or error.
Auditor's
Responsibility
Our responsibility
is to express an opinion on these financial statements based on our
audit. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America as established
by the Auditing Standards Board (United States) and in accordance
with auditing standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material
misstatement.
An audit includes
performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. We are not
required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Accordingly, we express
no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness
of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial
statements.
We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Member
of: PCAOB - Public Company Accounting Oversight Board
AICPA:
Center for Public Company Audit Firms (SEC) • Governmental
Audit Quality Center • Private Companies Practice Section
(PCPS)
3421
N. Causeway Blvd., Suite 701 • Metairie, LA 70002 •
Telephone (504) 837-0770 • Fax (504) 837-7102
www.pmlcpa.com
F-4
Opinion
In our opinion, the
financial statements referred to above present fairly, in all
material respects, the financial position of Davenport Housing VII,
L.P. as of December 31, 2015 and 2014, and the results of its
operations and its cash flows for the years then ended in
accordance with accounting principles generally accepted in the
United States of America.
Report
on Supplemental Information
Our audit was
conducted for the purpose of forming an opinion on the financial
statements as a whole. The Schedule of Expenses is presented for
purposes of additional analysis and is not a required part of the
financial statements. Such information is the responsibility of
management and was derived from and relates directly to the
underlying accounting and other records used to prepare the
financial statements. The information has been subjected to the
auditing procedures applied in the audit of the financial
statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying
accounting and other records used to prepare the financial
statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion,
the information is fairly stated in all material respects in
relation to the financial statements as a whole.
Metairie, Louisiana
April 13, 2016
F-5
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Partners
Davenport Housing
VII, L.P. Davenport, Iowa
We have audited the
accompanying financial statements of Davenport Housing VII, L.P.,
which comprise the balance sheets as of December 31, 2016 and 2015
and the related statements of operations, changes in partners'
equity and cash flows for the years the ended, and the related
notes to the financial statements.
Management's
Responsibility for the Financial Statements
Management is
responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles
generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to
fraud or error.
Auditor's
Responsibility
Our responsibility
is to express an opinion on these financial statements based on our
audit. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America as established
by the Auditing Standards Board (United States) and in accordance
with auditing standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material
misstatement.
An audit includes
performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. We are not
required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Accordingly, we express
no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness
of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial
statements.
We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.z
3421 N. Causeway Blvd, Suite 701 · Metairie,
LA 70002 · 504-837-0770 · 504-837-7102 (fax)
· www.lh-cpa.net
F-6
Opinion
In our opinion, the
financial statements referred to above present fairly, in all
material respects, the financial position of Davenport Housing VII,
L.P. as of December 31, 2016 and 2015, and the results of its
operations and its cash flows for the years then ended in
accordance with accounting principles generally accepted in the
United States of America.
Report
on Supplemental Information
Our audit was
conducted for the purpose of forming an opinion on the financial
statements as a whole. The Schedule of Operations Information is
presented for purposes of additional analysis and is not a required
part of the financial statements. Such information is the
responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to
prepare the financial statements. The information has been
subjected to the auditing procedures applied in the audit of the
financial statements and certain additional procedures, including
comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the
financial statements or to the financial statements themselves, and
other additional procedures in accordance with auditing standards
generally accepted in the United States of America. In our opinion,
the information is fairly stated in all material respects in
relation to the financial statements as a whole.
|
Metairie, Louisiana
May 9, 2017
F-7
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
BALANCE SHEETS
|
March
31,
|
|
|
2017
|
2016
|
ASSETS
|
|
|
Cash
and cash equivalents
|
$271,941
|
$315,082
|
Investments
in Local Limited Partnerships, net (Notes 2 and
3)
|
2,286,745
|
3,235,861
|
Due
from affiliates, net (Note 6)
|
-
|
-
|
Other
assets
|
-
|
2,643
|
Total
Assets
|
$2,558,686
|
$3,553,586
|
|
|
|
LIABILITIES
AND PARTNERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
Liabilities:
|
|
|
Payables
to Local Limited Partnerships (Note 5)
|
$245,113
|
$245,113
|
Accrued
fees and expenses due to General Partner and Affiliates
(Note 3)
|
1,479,730
|
1,874,186
|
Total
Liabilities
|
1,724,843
|
2,119,299
|
|
|
|
|
|
|
Partners’
Equity (Deficit)
|
|
|
General
Partner
|
574,165
|
(16,428)
|
Limited
Partners (25,000 Partnership Units authorized, 20,807 and 20,931
Partnership Units issued and outstanding,
respectively)
|
259,678
|
1,450,715
|
|
|
|
Total
Partners’ Equity (Deficit)
|
833,843
|
1,434,287
|
|
|
|
Total
Liabilities and Partners’ Equity (Deficit)
|
$2,558,686
|
$3,553,586
|
See
accompanying notes to financial statements
F-8
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
|
For the Years
Ended March 31,
|
||
|
2017
|
2016
|
2015
|
Operating
income:
|
|
|
|
Reporting
fees
|
$4,825
|
$15,291
|
$6,811
|
Distribution
income
|
-
|
38,957
|
-
|
|
|
|
|
Total
operating income
|
4,825
|
54,248
|
6,811
|
|
|
|
|
Operating expenses
and loss:
|
|
|
|
Amortization
|
463
|
2,627
|
5,353
|
Asset management
fees
|
68,464
|
111,977
|
155,741
|
Asset management
expenses
|
740
|
6,380
|
25,600
|
Accounting and
legal fees
|
118,233
|
330,768
|
449,230
|
Write off of
advances to Local Limited Partnerships (Note 6)
|
-
|
228,544
|
1,334,071
|
Write off of other
assets
|
2,643
|
-
|
3,250
|
Impairment
loss
|
702,972
|
1,052,460
|
728,957
|
Other
|
58,164
|
263,551
|
59,667
|
|
|
|
|
Total
operating expenses and loss
|
951,679
|
1,996,307
|
2,761,869
|
|
|
|
|
Loss from
operations
|
(946,854)
|
(1,942,059)
|
(2,755,058)
|
|
|
|
|
Equity in losses of
Local Limited Partnerships
|
(245,681)
|
(279,147)
|
(14,547)
|
|
|
|
|
Other
income
|
-
|
1,486,040
|
-
|
|
|
|
|
Gain on sale of
Local Limited Partnerships
|
-
|
1,159,711
|
361,865
|
|
|
|
|
Interest
income
|
306
|
172
|
61
|
|
|
|
|
Net income
(loss)
|
$(1,192,229)
|
$424,717
|
$(2,407,679)
|
|
|
|
|
Net income (loss)
allocated to:
|
|
|
|
General
Partner
|
$(1,192)
|
$425
|
$(2,408)
|
|
|
|
|
Limited
Partners
|
$(1,191,037)
|
$424,292
|
$(2,405,271)
|
|
|
|
|
Net income (loss)
per Partnership Unit
|
$(57.24)
|
$20.27
|
$(114.80)
|
|
|
|
|
Outstanding
weighted Partnership Units
|
20,807
|
20,931
|
20,951
|
See
accompanying notes to financial statements
F-9
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)
For the Years Ended March 31, 2017, 2016 and 2015
|
General
Partner
|
Limited
Partners
|
Total
|
|
|
|
|
Partners’
equity (deficit) at March 31, 2014
|
$(14,445)
|
$3,678,958
|
$3,664,513
|
|
|
|
|
Net
loss
|
(2,408)
|
(2,405,271)
|
(2,407,679)
|
|
|
|
|
Partners’
equity (deficit) at March 31, 2015
|
(16,853)
|
1,273,687
|
1,256,834
|
Distributions
|
-
|
(247,264)
|
(247,264)
|
Net
income
|
425
|
424,292
|
424,717
|
|
|
|
|
Partners’
equity (deficit) at March 31, 2016
|
(16,428)
|
1,450,715
|
1,434,287
|
|
|
|
|
Forgiveness of debt
(Note 7)
|
591,785
|
-
|
591,785
|
|
|
|
|
Net
loss
|
(1,192)
|
(1,191,037)
|
(1,192,229)
|
|
|
|
|
Partners’
equity at
|
|
|
|
March 31,
2017
|
$574,165
|
$259,678
|
$833,843
|
See
accompanying notes to financial statements
F-10
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Years Ended March 31, 2017, 2016 and 2015
|
2017
|
2016
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Net
income (loss)
|
$(1,192,229)
|
$424,717
|
$(2,407,679)
|
Adjustments
to reconcile net income (loss) to net cash provided by (used
in) operating activities:
|
|
|
|
Amortization
|
463
|
2,627
|
5,353
|
Equity
in losses of Local Limited Partnerships
|
245,681
|
279,147
|
14,546
|
Impairment
loss
|
702,972
|
1,052,460
|
728,957
|
(Increase)
decrease in other assets
|
2,643
|
(2,643)
|
6,500
|
Gain
on sale of Local Limited Partnerships
|
-
|
(1,159,711)
|
(361,865)
|
Increase
(decrease) in accrued fees and expenses due to
General Partner and affiliates
|
197,329
|
(124,091)
|
189,558
|
Write
off of advances to Local Limited Partnerships
|
-
|
228,544
|
1,334,071
|
|
|
|
|
Net
cash provided by (used in) operating activities
|
(43,141)
|
701,050
|
(490,559)
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Contributions
to Local Limited Partnerships
|
-
|
(9,644)
|
-
|
Advances
to Local Limited Partnerships
|
-
|
(228,544)
|
(1,068,104)
|
Reimbursement
of advances made to Local Limited Partnerships
|
-
|
-
|
2,000,000
|
Net proceeds from
sale of Local Limited Partnerships
|
-
|
1,117,231
|
262,735
|
|
|
|
|
Net
cash provided by investing activities
|
-
|
879,043
|
1,194,631
|
|
|
|
|
Cash Flows from
financing activities:
|
|
|
|
Advances received
from General Partner and affiliates
|
-
|
-
|
917,830
|
Reimbursement
of advances received from General Partner
and affiliates
|
-
|
(1,590,521)
|
(1,314,439)
|
|
|
|
|
Net
cash used in financing activities
|
-
|
(1,590,521)
|
(396,609)
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents
|
(43,141)
|
(10,428)
|
307,463
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
315,082
|
325,510
|
18,047
|
|
|
|
|
Cash and cash
equivalents, end of period
|
$271,941
|
$315,082
|
$325,510
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
Taxes
paid
|
$800
|
$800
|
$800
|
F-11
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS, continued
For the Years Ended March 31, 2017, 2016 and 2015
|
2017
|
2016
|
2015
|
NONCASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
The
Partnership has decreased its investments in
Local Limited Partnerships and decreased its
capital contributions payable for tax credits not
generated.
|
$-
|
$77,961
|
$-
|
|
|
|
|
Limited
Partner equity was decreased and due to
General Partner and affiliates was increased for
distributions paid on behalf of the Partnership.
|
$-
|
$247,264
|
$-
|
|
|
|
|
General
Partner’s equity was increased and due to General Partner and
affiliates was decreased for forgiveness of debt from advances
previously made to the Partnership.
|
$591,785
|
$-
|
$-
|
See
accompanying notes to financial statements
F-12
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization
WNC Housing Tax Credit Fund VI, L.P., Series 13, a California
Limited Partnership (the “Partnership”), was formed on
February 7, 2005 under the laws of the State of California, and
commenced operations on December 14, 2005. The Partnership was
formed to invest primarily in other limited partnerships and
limited liability companies (the “Local Limited
Partnerships”) which own multi-family housing complexes
(“Housing Complexes”) that are eligible for Federal low
income housing tax credits (“Low Income Housing Tax
Credits”). The local general partners (the “Local
General Partners”) of each Local Limited Partnership retain
responsibility for maintaining, operating and managing the Housing
Complex. Each Local Limited Partnership is governed by its
agreement of limited partnership (the “Local Limited
Partnership Agreement”).
The general partner of the Partnership is WNC National Partners,
LLC (the “General Partner”). The general partner of the
General Partner is WNC & Associates, Inc.
(“Associates”). The chairman and the president of
Associates owns all of the outstanding stock of Associates. The
business of the Partnership is conducted primarily through
Associates, as the Partnership and General Partner have no
employees of their own.
The
Partnership shall continue in full force and effect until December
31, 2070, 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.
Pursuant
to a registration statement filed with the U.S. Securities and
Exchange Commission (the “SEC”) on April 18, 2005, the
Partnership commenced a public offering of 25,000 units of limited
partnership interest (“Partnership Units”) at a price
of $1,000 per Partnership Unit. The required minimum offering
amount of $1,400,000 was achieved by December 14, 2005. Total
subscriptions for 20,981 Partnership Units had been accepted,
representing $20,965,400, which is net of volume discounts of
$4,540 and dealer discounts of $11,060. Holders of Partnership
Units are referred to herein as “Limited Partners.” As
of March 31, 2017 and 2016, a total of 20,807 and 20,931
Partnership Units, respectively, remain outstanding. The General
Partner has a 0.1% 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 99.9% interest in proportion to their
respective investments. This offering was closed on September 21,
2006.
The
proceeds from the disposition of any of the Housing Complexes will
be used first to pay debts and other obligations per the respective
Local Limited Partnership Agreement. Any remaining proceeds will
then be paid to the partners of the Local Limited Partnership,
including the Partnership, in accordance with the terms of the
particular Local Limited Partnership Agreement. The sale of a
Housing Complex may be subject to other restrictions and
obligations. Accordingly, there can be no assurance that a Local
Limited Partnership will be able to sell its Housing Complex. Even
if it does so, there can be no assurance that any significant
amounts of cash will be distributed to the Partnership. Should such
distributions occur, the Limited Partners will be entitled to
receive distributions from the proceeds remaining after payment of
Partnership obligations and funding reserves, equal to their
capital contributions and their return on investment (as defined in
the Partnership Agreement). The General Partner would then be
entitled to receive proceeds equal to their capital contributions
from the remainder. Any additional sale or refinancing proceeds
will be distributed 90% to the Limited Partners (in proportion to
their respective investments) and 10% to the General
Partner.
F-13
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
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 Tax Credits rules are extremely complicated.
Noncompliance with these rules results in the loss of future Low
Income Housing Tax Credits and the fractional recapture of Low
Income Housing Tax Credits already taken. In most cases the annual
amount of Low Income Housing Tax Credits that an individual can use
is limited to the tax liability due on the person’s last
$25,000 of taxable income. The Local Limited Partnerships may be
unable to sell the Housing Complexes at a price which would result
in the Partnership realizing cash distributions or proceeds from
the transaction. Accordingly, the Partnership may be unable to
distribute any cash to its Limited Partners. Low Income Housing Tax
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
“Compliance Period”), the loss of any remaining future
Low Income Housing Tax Credits, a fractional recapture of prior Low
Income Housing Tax Credits, and a loss of the Partnership’s
investment in the Housing Complex would occur. The Partnership is a
limited partner or non-managing member of each Local Limited
Partnership. Accordingly, the Partnership will have very limited
rights with respect to management of the Local Limited
Partnerships. The Partnership will rely totally on the Local
General Partners. Neither the Partnership’s investments in
Local Limited Partnerships, nor the Local Limited
Partnerships’ investments in Housing Complexes, are readily
marketable. To the extent the Housing Complexes receive government
financing or operating subsidies, they may be subject to one or
more of the following risks: difficulties in obtaining tenants for
the Housing Complexes; difficulties in obtaining rent increases;
limitations on cash distributions; limitations on sales or
refinancing of Housing Complexes; limitations on transfers of
interests in Local Limited Partnerships; limitations on removal of
Local General Partners; limitations on subsidy programs; and
possible changes in applicable regulations. Uninsured casualties
could result in loss of property and Low Income Housing Tax Credits
and recapture of Low Income Housing Tax Credits previously taken.
The value of real estate is subject to risks from fluctuating
economic conditions, including employment rates, inflation, tax,
environmental, land use and zoning policies, supply and demand of
similar properties, and neighborhood conditions, among
others.
The
ability of Limited Partners to claim tax losses from the
Partnership is limited. The IRS may audit the Partnership or a
Local Limited Partnership and challenge the tax treatment of tax
items. The amount of Low Income Housing Tax Credits and tax losses
allocable to the Limited Partners could be reduced if the IRS were
successful in such a challenge. The alternative minimum tax could
reduce tax benefits from an investment in the Partnership. Changes
in tax laws could also impact the tax benefits from an investment
in the Partnership and/or the value of the Housing
Complexes.
F-14
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
The
Partnership currently has insufficient working capital to fund its
operations. Associates has agreed to continue providing advances
sufficient enough to fund the operations and working capital
requirements of the Partnership through June 30, 2018.
Anticipated
future and existing cash resources of the Partnership are not
sufficient to pay existing liabilities of the Partnership. A
significant portion of the existing liabilities are the payables to
Local Limited Partnerships and those payables are the first
priority to be paid. If the Partnership does not have enough cash
to pay those liabilities the General Partner or an affiliate will
fund the necessary cash to pay the liabilities. The remaining
portion of the payables is due to the General Partner or an
affiliate. Though the amounts payable to the General Partner and/or
its affiliates are contractually currently payable, the Partnership
anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual obligations until capital
reserves are in excess of the aggregate of then existing
contractual obligations and then anticipated future foreseeable
obligations of the Partnership. The Partnership would be adversely
affected should the General Partner and/or its affiliates demand
current payment of the existing contractual obligations and or
suspend services for this or any other reason.
No
trading market for the Partnership Units exists or is expected to
develop. Limited Partners may be unable to sell their Partnership
Units except at a discount and should consider their Partnership
Units to be a long-term investment. Individual Limited Partners
will have no recourse if they disagree with actions authorized by a
vote of the majority of Limited Partners.
Exit Strategy
The
Compliance Period for a Housing Complex is generally 15 years
following construction or rehabilitation completion. Associates was
one of the first in the industry to offer syndicated investments in
Low Income Housing Tax Credits. The initial programs have completed
their Compliance Periods. Upon the sale of a Local Limited
Partnership Interest or Housing Complex after the end of the
Compliance Period, there would be no recapture of Low Income
Housing Tax Credits. A sale prior to the end of the Compliance
Period must satisfy the reasonable belief test to avoid
recapture.
With
that in mind, the General Partner is continuing its review of the
Housing Complexes. The review considers many factors, including
extended use requirements (such as those due to mortgage
restrictions or state compliance agreements), the condition of the
Housing Complexes, Partnership cash flow, and the tax consequences
to the Limited Partners from the sale of the Housing
Complexes.
Upon
identifying those Housing Complexes with the highest potential for
a successful sale, refinancing or re-syndication, the Partnership
expects to proceed with efforts to liquidate them or the applicable
Local Limited Partnership Interests. The objective is to wind down
the Partnership after Low Income Housing Tax Credits are no longer
available. Local Limited Partnership Interests may be disposed of
at any time by the General Partner in its discretion.
The
proceeds from the disposition of any Housing Complex will be used
first to pay debts and other obligations per the applicable Local
Limited Partnership Agreement. Any remaining proceeds will then be
paid to the partners of the Local Limited Partnership, including
the Partnership, in accordance with the terms of the applicable
Local Limited Partnership Agreement.
The
sale of a Housing Complex may be subject to other restrictions and
obligations. Accordingly, there can be no assurance that a Local
Limited Partnership will be able to sell its Housing Complex. Even
if it does so, there can be no assurance that any amounts of cash
will be distributed to the Limited Partners, as the proceeds first
would be used to pay Partnership obligations and to fund reserves.
Similarly, there can be no assurance that the Partnership will be
able to sell its Local Limited Partnership Interests, or that cash
therefrom would be available for distribution to the Limited
Partners.
F-15
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
During
the year ended March 31, 2011, the Partnership sold two Local
Limited Partnerships, Fernwood Meadows, L.P.
(“Fernwood”) and Sierra’s Run, L.P.,
(“Sierra’s Run”), in order to generate sufficient
equity to complete the purchase of additional Low Income Housing
Tax Credits for Davenport VII, L.P.
(“Davenport”).
Fernwood
and Sierra’s Run will complete their Compliance Periods in
2022; therefore there is a risk of tax credit recapture. The
maximum exposure of recapture (excluding the interest and penalties
related to the recapture) is $177,508 and $170,246, respectively,
for Fernwood and Sierra’s Run, which equates to $16.57 per
Partnership Unit in the aggregate. Under the circumstances,
the General Partner believes there is a reasonable expectation that
each Local Limited Partnership will continue to be operated as
qualified low income housing for the balance of its Compliance
Period, and, accordingly, does not anticipate that there will be
any recapture.
As of
March 31, 2016, the underlying Housing complexes of Pleasant
Village Limited Partnership (“Pleasant Village”) and
Grove Village Limited Partnership (“Grove Village”)
were sold resulting in the termination of the Partnership’s
Local Limited Partnership interest. The Partnership also gifted its
Local Limited Partnership interest in 909 4th YMCA Limited Partnership to an
unrelated nonprofit corporation. There was no risk of tax credit
recapture to the investors for all three of the
dispositions.
Method of Accounting For Investments in Local Limited
Partnerships
The
Partnership accounts for its investments in Local Limited
Partnerships using the equity method of accounting, whereby the
Partnership adjusts its investment balance for its share of the
Local Limited Partnerships’ results of operations and for any
contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local
Limited Partnership for possible impairment at least annually or
whenever events or changes in circumstances indicate that the
carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by the estimated
value derived by management, generally consisting of the product of
the remaining future Low Income Housing Tax Credits estimated to be
allocable to the Partnership and the estimated residual value to
the Partnership. If an investment is considered to be impaired, the
Partnership reduces the carrying value of its investment in any
such Local Limited Partnership. The accounting policies of the
Local Limited Partnerships, generally, are expected to be
consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of
the investment account and are being amortized over 27.5 years.
(See Notes 2 and 3 to the financial statements).
“Equity
in losses of Local Limited Partnerships” for each year ended
March 31 has been recorded by the Partnership based on the twelve
months of reported results provided by the Local Limited
Partnerships for each year ended December 31. Equity in losses from
the Local Limited Partnerships allocated to Partnership is not
recognized to the extent that the investment balance would be
adjusted below zero. If the Local Limited Partnerships report net
income in future years, the Partnership will resume applying the
equity method only after its share of such net income equals the
share of net losses not recognized during the period(s) the equity
method was suspended.
Distributions
received by the Partnership are accounted for as a reduction of the
investment balance. Distributions received after the investment has
reached zero are recognized as income. As of March 31, 2017 and
2016, zero and one, respectively, of the investment balances had
reached zero.
In
accordance with the accounting guidance for the consolidation of
variable interest entities, the Partnership determines when it
should include the assets, liabilities, and activities of a
variable interest entity (VIE) in its financial statements, and
when it should disclose information about its relationship with a
VIE. The analysis that must be performed to determine which entity
should consolidate a VIE focuses on control and economic factors. A
VIE is a legal structure used to conduct activities or hold assets,
which must be consolidated by a company if it is the primary
beneficiary because it has (1) the power to direct the activities
of the VIE that most significantly impact the VIE’s economic
performance and (2) the obligation to absorb losses or receive
benefits that could potentially be significant to the VIE. If
multiple unrelated parties
F-16
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
share
such power, as defined, no party will be required to consolidate
the VIE. Further, the guidance requires continual reconsideration
of the primary beneficiary of a VIE.
Based
on this guidance, the Local Limited Partnerships in which the
Partnership invests meet the definition of a VIE because the owners
of the equity at risk in these entities do not have the power to
direct their operations. However, management does not consolidate
the Partnership’s interests in these VIEs, as it is not
considered to be the primary beneficiary since it does not have the
power to direct the activities that are considered most significant
to the economic performance of these entities. The Partnership
currently records the amount of its investment in these Local
Limited Partnerships as an asset on its balance sheets, recognizes
its share of partnership income or losses in the statements of
operations, and discloses how it accounts for material types of
these investments in its financial statements. The
Partnership’s balance in investment in Local Limited
Partnerships, plus the risk of recapture of tax credits previously
recognized on these investments, represents its maximum exposure to
loss. The Partnership’s exposure to loss on these Local
Limited Partnerships is mitigated by the condition and financial
performance of the underlying Housing Complexes as well as the
strength of the Local General Partners and their guarantee against
credit recapture to the investors in the Partnership.
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially differ
from those estimates.
Cash and Cash Equivalents
The
Partnership considers all highly liquid investments with original
maturities of three months or less when purchased to be cash
equivalents. As of March 31, 2017 and 2016, the Partnership had
$271,941 and $315,082 in cash equivalents,
respectively.
Reporting Comprehensive Income
The
Partnership had no items of other comprehensive income for all
periods presented.
Net Income (Loss) Per Partnership Unit
Net
income (loss) per Partnership Unit includes no dilution and is
computed by dividing income (loss) allocated to Limited Partners by
the weighted average Partnership Units outstanding during the
period. Calculation of diluted net income (loss) per Partnership
Unit is not required.
Income Taxes
The
Partnership has elected to be treated as a pass-through entity for
income tax purposes and, as such, is not subject to income taxes.
Rather, all items of taxable income, deductions and tax credits are
passed through to and are reported by its owners on their
respective income tax returns. The Partnership’s federal tax
status as a pass-through entity is based on its legal status as a
partnership. Accordingly, the Partnership is not required to take
any tax positions in order to qualify as a pass-through entity. The
Partnership is required to file and does file tax returns with the
Internal Revenue Service and other taxing authorities. Accordingly,
these financial statements do not reflect a provision for income
taxes and the Partnership has no other tax positions which must be
considered for disclosure.
Income
tax returns filed by the Partnership are subject to examination by
the Internal Revenue Service for a period of three years. While no
income tax returns are currently being examined by the Internal
Revenue Service, tax years since 2013 remain open.
F-17
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
Revenue Recognition
The
Partnership is entitled to receive reporting fees from the Local
Limited Partnerships. The intent of the reporting fees is to offset
(in part) administrative costs incurred by the Partnership in
corresponding with the Local Limited Partnerships. Due to the
uncertainty of the collection of these fees, the Partnership
recognizes reporting fees as collections are made.
Amortization
Acquisition fees and costs included in investments in Local Limited
Partnerships were being amortized over 27.5 years using the
straight-line method. Amortization expense for the years ended
March 31, 2017, 2016 and 2015 was $463, $2,627 and $5,353,
respectively. As of March 31, 2017, the acquisition fees and
costs were fully amortized or impaired.
Impairment
The
Partnership reviews its investments in Local Limited Partnership
for impairment at least annually or whenever events or changes in
circumstances indicate that the carrying value of such investments
may not be recoverable. Impairment is measured by comparing the
Partnership’s carrying amount in the investment to the sum of
the total amount of the remaining future Low Income Housing Tax
Credits estimated to be allocated to the Partnership and the
estimated residual value to the Partnership. For the years ended
March 31, 2017, 2016 and 2015, impairment loss related to
investments in Local Limited Partnerships was $668,766, $991,757
and $696,069, respectively.
The
Partnership also evaluates its intangibles for impairment in
connection with its investments in Local Limited Partnerships.
Impairment on the intangibles is measured by comparing the
Partnership’s total investment balance after impairment of
investments in Local Limited Partnerships to the sum of the total
of the remaining Low Income Housing Tax Credits allocated to the
Partnership and any estimated residual value of the investments.
During the years ended March 31, 2017,
2016 and 2015, an impairment loss of $34,206, $60,703 and $32,888,
respectively, was recorded against related
intangibles.
Impact of Recent Accounting Pronouncements
In
January 2014, the FASB issued an amendment to the accounting and
disclosure requirements for investments in qualified affordable
housing projects. The amendments provide guidance on accounting for
investments by a reporting entity in flow-through limited liability
entities that manage or invest in affordable housing projects that
qualify for the low-income housing tax credit. The amendments
permit reporting entities to make an accounting policy election to
account for their investments in qualified affordable housing
projects using the proportional amortization method if certain
conditions are met. Under the proportional amortization method, an
entity amortizes the initial cost of the investment in proportion
to the tax credits and other tax benefits received, and recognizes
the net investment performance in the income statement as a
component of income tax expense (benefit). The amendments are
effective for interim and annual periods beginning after December
15, 2014 and should be applied retrospectively to all periods
presented. Early adoption is permitted. The adoption of this update
did not materially affect the Partnership's financial
statements.
In
February 2015, the FASB issued ASU No. 2015-02,
“Consolidation (Topic 810): Amendments to the Consolidation
Analysis”. This will improve certain areas of consolidation
guidance for reporting organizations that are required to evaluate
whether to consolidate certain legal entities such as limited
partnerships, limited liability corporations and securitization
structures. ASU 2015-02 simplifies and improves GAAP by:
eliminating the presumption that a general partner should
consolidate a limited partnership, eliminating the indefinite
deferral of FASB Statement No. 167, thereby reducing the number of
Variable Interest Entity (VIE) consolidation models
from
F-18
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
four to
two (including the limited partnership consolidation model) and
clarifying when fees paid to a decision maker should be a factor to
include in the consolidation of VIEs. ASU 2015-02 will be effective
for periods beginning after December 15, 2015. The adoption of this
update did not materially affect the Partnership's financial
statements.
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
As of
March 31, 2017 and 2016, the Partnership has acquired limited
partnership interests in 5 Local Limited Partnerships, each of
which owns one Housing Complex consisting of an aggregate of 146
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 entitled to 99.98%, as specified in the Local
Limited Partnership agreements, of the operating profits and
losses, taxable income and losses and Low Income Housing Tax
Credits of the Local Limited Partnerships.
The
Partnership's investments in Local Limited Partnerships as shown in
the balance sheets at March 31, 2017 and 2016 is approximately
$7,792,000 and $8,156,000, 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 Local
Limited Partnerships which were netted against partner capital in
the Local Limited Partnerships’ financial
statements.
F-19
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS,
continued
At
March 31, 2017 and 2016, the investment accounts in certain Local
Limited Partnerships have reached a zero balance. Consequently, a
portion of the Partnerships’ estimate of its share of losses
for the years ended March 31, 2017, 2016 and 2015, amounting to
approximately $52,000, $38,000 and $4,607,000, respectively, have
not been recognized. As of March 31, 2017, the aggregate share of
net losses not recognized by the Partnership amounted to
$130,000.
The
Partnership reviews its investments in Local Limited Partnership
for impairment at least annually or whenever events or changes in
circumstances indicate that the carrying value of such investments
may not be recoverable. Recoverability is measured by a comparison
of the carrying amount of the investment to the sum of the total
amount of the remaining Low Income Housing Tax Credits allocated to
the Partnership and any estimated residual value of the investment.
For the years ended March 31, 2017, 2016 and 2015, impairment loss
related to investments in Local Limited Partnerships was $668,766,
$991,757 and $696,069, respectively.
The
Partnership also evaluates its intangibles for impairment in
connection with its investments in Local Limited Partnerships.
Impairment on the intangibles is measured by comparing the
Partnership’s total investment balance after impairment of
investments in Local Limited Partnerships to the sum of the total
of the remaining Low Income Housing Tax Credits allocated to the
Partnership and any estimated residual value of the investments.
During the years ended March 31, 2017, 2016 and 2015, an impairment
loss of $34,206, $60,703 and $32,888, respectively, was recorded
against related intangibles.
The
following is a summary of the equity method activity of the
investments in Local Limited Partnerships for the periods
presented:
|
For the Years
Ended March 31,
|
||
|
2017
|
2016
|
2015
|
Investments per
balance sheet, beginning of year
|
$3,235,861
|
$4,648,056
|
$5,396,913
|
Equity in losses of
Local Limited Partnerships
|
(245,681)
|
(279,147)
|
(14,545)
|
Impairment
loss
|
(702,972)
|
(1,052,460)
|
(728,957)
|
Tax credit
adjustments
|
-
|
(77,961)
|
-
|
Amortization of
acquisition fees and costs
|
(463)
|
(2,627)
|
(5,353)
|
|
|
|
|
Investments per
balance sheet, end of year
|
$2,286,745
|
$3,235,861
|
$4,648,056
|
|
For the Years
Ended March 31,
|
||
|
2017
|
2016
|
2015
|
|
|
|
|
Investments in
Local Limited Partnerships, net
|
$2,286,745
|
$3,201,192
|
$4,550,057
|
Acquisition fees
and costs, net of accumulated amortization of
$463, $1,386 and $3,723
|
-
|
34,669
|
97,999
|
Investments per
balance sheet, end of year
|
$2,286,745
|
$3,235,861
|
$4,648,056
|
F-20
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS,
continued
The
financial information from the individual financial statements of
the Local Limited Partnerships includes rental and interest
subsidies. Rental subsidies are included in total revenues and
interest subsidies are generally netted against interest expense.
Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships
as of December 31 and for the years then ended is as
follows:
COMBINED CONDENSED BALANCE SHEETS
|
2016
|
2015
|
ASSETS
|
|
|
Buildings and improvements, net of accumulated depreciation of
$3,741,000 and $3,318,000, respectively
|
$11,117,000
|
$13,738,000
|
Land
|
423,000
|
645,000
|
Other assets
|
525,000
|
803,000
|
Total Assets
|
$12,065,000
|
$15,186,000
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Mortgage and construction loans payable
|
$4,056,000
|
$9,489,000
|
Due to related parties
|
1,230,000
|
4,678,000
|
Other liabilities
|
107,000
|
7,231,000
|
Total Liabilities
|
5,393,000
|
21,398,000
|
|
|
|
PARTNERS’ EQUITY
|
|
|
|
|
|
WNC Housing Tax Credit Fund VI, L.P., Series 13
|
(5,505,000)
|
(4,920,000)
|
Other Partners
|
(1,167,000)
|
(1,292,000)
|
Total
Partners’ Equity
|
6,672,000
|
6,212,000
|
Total
Liabilities and Partners’ Equity
|
$12,065,000
|
$15,186,000
|
COMBINED CONDENSED STATEMENTS OF OPERATIONS
|
2016
|
2015
|
2014
|
|
|
|
|
Revenues
|
$1,167,000
|
$2,574,000
|
$4,471,000
|
|
|
|
|
Expenses:
|
|
|
|
Operating expenses
|
703,000
|
2,519,000
|
4,565,000
|
|
334,000
|
938,000
|
1,719,000
|
Impairment loss
|
-
|
2,184,000
|
1,890,000
|
Depreciation and amortization
|
428,000
|
452,000
|
920,000
|
|
|
|
|
Total expenses
|
1,465,000
|
6,093,000
|
9,094,000
|
|
|
|
|
Net loss
|
$(298,000)
|
$(3,519,000)
|
$(4,623,000)
|
|
|
|
|
Net loss allocable to the Partnership
|
$(298,000)
|
$(3,518,000)
|
$(4,622,000)
|
|
|
|
|
Net loss recorded by the Partnership
|
$(246,000)
|
$(279,000)
|
$(15,000)
|
F-21
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS,
continued
Certain
Local Limited Partnerships have incurred 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 Local Limited Partnerships
could be impaired, and the loss and recapture of the related Low
Income Housing Tax Credits could occur.
Troubled Housing Complex
Davenport
started construction in October 2006 and was scheduled to be
completed in June 2008. Construction was delayed due to the
original Local General Partner defaulting on his construction
guarantee, and resulting in disputed mechanic liens on the
property. In November 2008, a co-Local General Partner, Shelter
Resource Corporation, was admitted into the Partnership, due to
restrictions implemented by the Iowa Finance Authority
(“IFA”). Subsequently, with IFA’s approval, the
defaulting original Local General Partner was removed from the
Partnership leaving Shelter Resource Corporation as the sole Local
General Partner.
As of
March 31, 2010, the property was 100% completed and a certificate
of occupancy was granted for both buildings in December 2009. The
Partnership engaged all sub-contractors to sign new construction
contracts, along with lien releases for any and all work done after
their engagement. During the year ended March 31, 2011, the
Partnership voluntarily advanced $846,175 to Davenport for
construction related costs. There were no additional advances made
to Davenport due to the additional investment made, as discussed
below.
The
project was fully completed as of March 31, 2010 and it achieved
stabilized operations by June 2010. In June 2010 the property
achieved 85% occupancy and has maintained occupancy of 80% to 100%
to the date of this filing. Davenport has been awarded state
historical tax credits from the State of Iowa, federal historical
credits and federal Low Income Housing Tax Credits. The State
historical credits are given in the form of a refund check from the
State in conjunction with the State tax return filing. The net
amount of the check after applicable federal taxes will be
contributed back to the property to help fund construction
shortfalls. Davenport was also allocated additional federal Low
Income Housing Tax Credits as well as federal historical tax
credits. Upon the Limited Partners’ approval of the
dispositions of Sierra Run’s and Fernwood, the Partnership
made the additional investment in Davenport. See the exit strategy
in Note 1 regarding the dispositions of Sierra’s Run and
Fernwood. On July 1, 2010, the Partnership committed additional
capital to Davenport in the amount of $2,490,651. This additional
commitment generated $408,710 of federal historic credits and
$3,582,550 of additional federal Low Income Housing Tax Credits
which were allocated to the partners of the
Partnership.
As of
March 31, 2017, the property is on the watch list due to a low
year-to-date DCR, low replacement reserves and high utilities
expense due to large physical space. Davenport Housing VII was
previously the campus library and nursing building. Due to the
large physical space of the Davenport VII, utilities expense is
typically greater than comparable properties. During the first
quarter 2017, utilities expense was $1,627 over budget. All other
expenses were in line with the budgeted amounts. The replacement
reserve account is depleted, and is not being funded as required.
WNC has established a replacement reserve workout plan with the
Local General Partner. To the extent there is surplus cash at
year-end, the cash will be deposited to the replacement reserve in
lieu of a distribution to the partners. Operating deficits were
paid from the operating cash account, which had a balance of $2,225
at the end of the first quarter 2017. The Local General Partner
entity and it’s Managing Member, James Bergman (individual),
has provided construction completion, operating deficit, tax
credit, and development fee payment guarantees.
Grove
Village Limited Partnership and Pleasant Village Limited
Partnership were disposed of during the year ended March 31, 2016.
These Local Limited partnerships were under IRS audit related to
the LIHTCs and the Partnership filed a lawsuit against the Local
General Partner. During the year ended March 31, 2015, the
Partnership settled the dispute and received $1,300,000 of
settlement proceeds which were included in other income. The
Partnership also received a final escrow release from the sale of
Grove village Limited Partnership totaling $186,040 which was also
included in other income for the year ended March 31,
2016.
F-22
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 3 - 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
7% of the gross proceeds from the sale of Partnership Units as
compensation for services rendered in connection with the
acquisition of Local Limited Partnerships. As of March 31, 2017 and
2016, the Partnership had incurred cumulative acquisition fees of
$1,468,670 which were included in investments in Local Limited
Partnerships. Impairment on the
intangibles is measured by comparing the Partnership’s total
investment balance after impairment of investments in Local Limited
Partnerships to the sum of the total of the remaining Low Income
Housing Tax Credits allocated to the Partnership and the estimated
residual value of the investments. If an impairment loss related to
the acquisition expenses is recorded, the accumulated amortization
is reduced to zero at that time. As of all periods presented, the
fees have been fully amortized or impaired.
Non-accountable acquisition costs of 2% of the
gross proceeds from the sale of Partnership Units as an expense
reimbursement in connection with the acquisition of Local Limited
Partnerships. As of March 31, 2017 and 2016, the Partnership incurred cumulative acquisition
costs of $419,620 which were included in investments in Local
Limited Partnerships. Accumulated amortization of these
capitalized costs was $0 and $1,386, as of March 31, 2017 and 2016,
respectively. Impairment on the
intangibles is measured by comparing the Partnership’s total
investment balance after impairment of investments in Local Limited
Partnerships to the sum of the total of the remaining Low Income
Housing Tax Credits allocated to the Partnership and the estimated
residual value of the investments. If an impairment loss related to
the acquisition expenses is recorded, the accumulated amortization
is reduced to zero at that time.
An
annual asset management fee accrues in an amount equal to 0.5% of
the Invested Assets of the Partnership, as defined. “Invested
Assets” is defined as the sum of the Partnership’s
Investment in Local Limited Partnerships, plus the reserves of the
Partnership of up to 5% of gross Partnership Unit sales proceeds,
and the Partnership’s allocable share of the amount of the
mortgage loans and other debts related to the Housing Complexes
owned by such Local Limited Partnerships. Management fees of
$68,464, $111,977 and $155,741 were incurred during the years ended
March 31, 2017, 2016 and 2015, respectively. No payments were made
during any of the years ended March 31, 2017, 2016 and
2015.
The
Partnership will reimburse the General Partner or its affiliates
for operating expenses incurred on behalf of the Partnership and
paid for by the General Partner or its affiliates on behalf of the
Partnership. Operating expense reimbursements were $20,845,
$629,981 and $540,942 during the years ended March 31, 2017, 2016
and 2015, respectively.
A
subordinated disposition fee will be paid 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 return on
investment (as defined in the Partnership Agreement) and is payable
only if the General Partner or its affiliates render services in
the sales effort. No disposition fees have been incurred for the
three years presented.
WNC
Holding, LLC (“Holding”), a wholly owned subsidiary of
Associates, acquires investments in Local Limited Partnerships
using funds from a secured warehouse line of credit. Such
investments are warehoused by Holding until transferred to
syndicated partnerships as investors are identified. The transfer
of the warehoused investments is typically achieved through the
admittance of the syndicated partnership as the Limited Partner of
the Local Limited Partnership and the removal of Holding as the
Limited Partner. Consideration paid to Holding for the transfer of
its interest in the Local Limited Partnership generally consists of
cash reimbursement of capital contribution installment(s) paid to
the Local Limited Partnerships by Holding, assumption of the
remaining capital contributions payable due to the Local Limited
Partnership and
F-23
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
financing costs and
interest charged by Holding. As of all periods presented, the
Partnership incurred financing costs of $772 and interest of $267
which are included in investments in Local Limited Partnerships.
Impairment on the intangibles is
measured by comparing the Partnership’s total investment
balance after impairment of investments in Local Limited
Partnerships to the sum of the total of the remaining Low Income
Housing Tax Credits allocated to the Partnership. If an impairment
loss related to the capitalized warehouse interest and costs are
recorded, the accumulated amortization is reduced to zero at that
time. As of all periods presented, the financing costs and interest
were fully amortized or impaired.
Payables to General
Partner or an affiliates amounting to $0 and $139,101 at March 31,
2017 and 2016, respectively, represent advances that had been made
to the Partnership by the General Partner or an affiliate to aid
the Partnership in providing funding to a Local Limited
Partnerships which were experiencing operational issues and $0 and
$247,264, respectively, of distributions paid to the Limited
Partners on behalf of the Partnership.
The
accrued fees and expenses due to General Partner and affiliates
consist of the following at:
|
March
31,
|
|
|
2017
|
2016
|
Asset management
fee payable
|
$1,427,605
|
$1,359,141
|
Reimbursements for
expenses paid by the General
Partner or an affiliate
|
52,125
|
128,680
|
Payable to General
Partner or affiliates
|
-
|
386,365
|
|
|
|
Total
|
$1,479,730
|
$1,874,186
|
The
Partnership currently has insufficient working capital to fund its
operations. Associates has agreed to continue providing
advances sufficient enough to fund the operations and working
capital requirements of the Partnership through June 30,
2018.
F-24
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 4 - QUARTERLY RESULTS
OF OPERATIONS (UNAUDITED)
The
following is a summary of the quarterly operations for the years
ended March 31 (rounded):
|
June
30
|
September
30
|
December
31
|
March
31
|
2017
|
|
|
|
|
|
|
|
|
|
Income
|
$-
|
$4,000
|
$-
|
$1,000
|
|
|
|
|
|
Operating expenses
and loss
|
(696,000)
|
(160,000)
|
(24,000)
|
(72,000)
|
|
|
|
|
|
Loss from
operations
|
(696,000)
|
(156,000)
|
(24,000)
|
(71,000)
|
|
|
|
|
|
Equity in losses of
Local Limited Partnerships
|
(70,000)
|
(70,000)
|
(70,000)
|
(36,000)
|
|
|
|
|
|
Net
loss
|
(766,000)
|
(226,000)
|
(94,000)
|
(107,000)
|
|
|
|
|
|
Net loss available
to Limited Partners
|
(765,000)
|
(226,000)
|
(94,000)
|
(106,000)
|
|
|
|
|
|
Net loss per
Partnership Unit
|
(37)
|
(11)
|
(4)
|
(5)
|
|
June
30
|
September
30
|
December
31
|
March
31
|
2016
|
|
|
|
|
|
|
|
|
|
Income
|
$-
|
$-
|
$4,000
|
$50,000
|
|
|
|
|
|
Operating expenses
and loss
|
(1,275,000)
|
(285,000)
|
(108,000)
|
(328,000)
|
|
|
|
|
|
Loss from
operations
|
(1,275,000)
|
(285,000)
|
(104,000)
|
(278,000)
|
|
|
|
|
|
Equity in losses of
Local Limited Partnerships
|
(4,000)
|
(4,000)
|
(4,000)
|
(267,000)
|
|
|
|
|
|
Gain on sale of
Local Limited Partnerships
|
-
|
-
|
6,000
|
1,154,000
|
|
|
|
|
|
Other
income
|
103,000
|
1,300,000
|
-
|
83,000
|
|
|
|
|
|
Net income
(loss)
|
(1,176,000)
|
1,011,000
|
(102,000)
|
692,000
|
|
|
|
|
|
Net income (loss)
available to Limited Partners
|
(1,174,000)
|
1,011,000
|
(101,000)
|
688,000
|
|
|
|
|
|
Net income (loss)
per Partnership Unit
|
(56)
|
48
|
(5)
|
33
|
F-25
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 4 - QUARTERLY RESULTS
OF OPERATIONS (UNAUDITED), continued
|
June
30
|
September
30
|
December
31
|
March 31
|
2015
|
|
|
|
|
|
|
|
|
|
Income
|
$-
|
$-
|
$4,000
|
$3,000
|
|
|
|
|
|
Operating expenses
and loss
|
(835,000)
|
(1,288,000)
|
(292,000)
|
(347,000)
|
|
|
|
|
|
Loss from
operations
|
(835,000)
|
(1,288,000)
|
(288,000)
|
(344,000)
|
|
|
|
|
|
Equity in income
(losses) of Local Limited Partnerships
|
(74,000)
|
(74,000)
|
(74,000)
|
207,000
|
|
|
|
|
|
Gain on sale of
Local Limited Partnerships
|
-
|
-
|
-
|
362,000
|
|
|
|
|
|
Net income
(loss)
|
(909,000)
|
(1,362,000)
|
(362,000)
|
225,000
|
|
|
|
|
|
Net income (loss)
available to Limited Partners
|
(908,000)
|
(1,361,000)
|
(361,000)
|
225,000
|
|
|
|
|
|
Net income (loss)
per Partnership Unit
|
(43)
|
(65)
|
(17)
|
10
|
F-26
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2017, 2016 and 2015
NOTE 5 – PAYABLES TO LOCAL LIMITED PARTNERSHIPS
Payables
to Local Limited Partnerships amounting to $245,113 at March 31,
2017 and 2016, respectively, 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 Local Limited
Partnerships achieving certain operating and development benchmarks
(generally within two years of the Partnership’s initial
investment). The payables to Local Limited Partnerships are subject
to adjustment in certain circumstances.
NOTE 6 – DUE FROM AFFILIATES, NET
The
Partnership is not obligated to fund advances to the Local Limited
Partnerships. Occasionally, when Local Limited Partnerships
encounter operational issues the Partnership may decide to advance
funds to assist the Local Limited Partnership with its operational
issues.
As of
both March 31, 2017 and 2016, the Partnership advanced $763,336 to
Davenport Housing VII, L.P., in which the Partnership is a limited
partner. All advances were reserved in full in the year they were
advanced.
As of
March 31, 2016, the Partnership advanced $2,880,986 to Pleasant
Village, L.P. in which the Partnership is a limited partner. During
the year ended March 31, 2016, total advances of $224,544 were made
and written off due to collectability, and $1,529,133 of
receivables and related allowances were written off due to the
disposition of Pleasant Village. During the year ended March 31,
2015, $160,423 and $908,045 were advanced to Grove Village, L.P.
(sold as of March 31, 2015), and Pleasant Village L.P.,
respectively. Settlement proceeds of $2,000,000 from the Local
General Partner were applied against the advances during the year
ended March 31, 2015. Total advances of $1,334,071 were written off
due to collectability, and $29,482 was written off due to Grove
Village disposition during the year ended March 31,
2015.
NOTE 7 – FORGIVENESS OF DEBT
During
the year ended March 31, 2017, the Partnership was relieved of debt
which was owed to the General Partner or an affiliate totaling
$591,785. The debt was a result of advances that had previously
been made to the Partnership by the General Partner or affiliate to
aid the Partnership with operational issues. The forgiveness of
debt is accounted for as an equity transaction.
F-27
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure
NONE
Item 9A. Controls and Procedures
(a)
Evaluation of disclosure controls and procedures
As of
the end of the periods covered by this report, the
Partnership’s General Partner, under the supervision and with
the participation of the Chief Executive Officer and Chief
Financial Officer of Associates, carried out an evaluation of the
effectiveness of the Partnership’s “disclosure controls
and procedures” as defined in Securities Exchange Act of 1934
Rules 13a-15 and 15d-15. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that,
as of the end of the periods covered by this report, the
Partnership’s disclosure controls and procedures were not
effective to ensure that material information required to be
disclosed in the Partnership’s periodic report filings with
SEC is recorded, processed, summarized and reported within the time
period specified by the SEC’s rules and forms, consistent
with the definition of “disclosure controls and
procedures” under the Securities Exchange Act of
1934.
The
Partnership must rely on the Local Limited Partnerships to provide
the Partnership with certain information necessary to the timely
filing of the Partnership’s periodic reports. Factors in the
accounting at the Local Limited Partnerships have caused delays in
the provision of such information during past reporting periods,
and resulted in the Partnership’s inability to file its
periodic reports in a timely manner.
Once
the Partnership has received the necessary information from the
Local Limited Partnerships, the Chief Executive Officer and the
Chief Financial Officer of Associates believe that the material
information required to be disclosed in the Partnership’s
periodic report filings with SEC is effectively recorded,
processed, summarized and reported, albeit not in a timely manner.
Going forward, the Partnership will use the means reasonably within
its power to impose procedures designed to obtain from the Local
Limited Partnerships the information necessary to the timely filing
of the Partnership’s periodic reports.
(b)
Management’s annual report on internal control over financial
reporting
The
management of Associates is responsible for establishing and
maintaining for the Partnership adequate internal control over
financial reporting as that term is defined in Securities Exchange
Act of 1934 Rules 13a-15(f) and 15d-15(f), and for performing an
assessment of the effectiveness of internal control over financial
reporting as of March 31, 2017. The internal control process of
Associates, as it is applicable to the Partnership, was designed to
provide reasonable assurance to Associates regarding the
preparation and fair presentation of published financial
statements, and includes those policies and procedures
that:
(1)
Pertain to the
maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of
the Partnership;
(2)
Provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles in the United States, and that the
Partnership’s receipts and expenditures are being made only
in accordance with authorization of the management of Associates;
and
(3)
Provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Partnership’s assets
that could have a material effect on the financial
statements.
All
internal control processes, no matter how well designed, have
inherent limitations. Therefore, even those processes determined to
be effective can provide only reasonable assurance with respect to
the reliability of financial statement preparation and
presentation. Further, projections of any evaluation of
effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions or
that the degree of compliance with the policies or procedures may
deteriorate.
27
Management of
Associates assessed the effectiveness of its internal control over
financial reporting, as it is applicable to the Partnership, as of
the end of the Partnership’s most recent fiscal year. In
making this assessment, it used the criteria set forth in Internal
Control – Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based
on its assessment, management of Associates concluded that, for the
reasons set forth above under “Disclosure controls and
procedures”, the internal control over financial reporting,
as it is applicable to the Partnership, was not effective as of
March 31, 2017. This annual report does not include an attestation
report of the Partnership’s independent registered public
accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation
by the Partnership’s independent registered public accounting
firm pursuant to temporary rules of the Securities and Exchange
Commission that permit the Partnership to provide only
management’s report in this annual report.
For
purposes of the Securities Exchange Act of 1934, the term
“material weakness” is a deficiency, or a combination
of deficiencies, in a reporting company’s internal control
over financial reporting such that there is a reasonable
possibility that a material misstatement of the company's annual or
interim financial statements will not be prevented or detected on a
timely basis. For the reasons discussed above in this Item 9A,
sub-section (a) under the caption “Evaluation of disclosure
controls and procedures,” the Partnership’s internal
control over financial reporting has not been effective in
permitting timely reporting of the Partnership’s financial
information. Accordingly, the management of Associates believes
that this inability to generate timely reports constitutes a
material weakness in its internal control over financial
reporting.
(c)
Changes in internal controls
There
were no changes in the Partnership’s internal control over
financial reporting that occurred during the quarter ended March
31, 2017 that materially affected, or are reasonably likely to
materially affect, the Partnership’s internal control over
financial reporting.
Item 9B. Other Information
NONE
Item 10. Directors, Executive Officers and Corporate
Governance
(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, executives, officers, or employees of
its own. The business of the Partnership is conducted primarily
through Associates. Associates is a California corporation which
was organized in 1971. The following biographical information is
presented for the officers and employees of Associates with
principal responsibility for the Partnership’s
affairs.
WNC
& Associates, Inc. is a California corporation which was
organized in 1971. Its officers and significant employees
are:
Wilfred
N. Cooper, Sr.
|
Chairman
|
Wilfred
N. Cooper, Jr.
|
President,
Chief Executive Officer
|
Michael
J. Gaber
|
Executive
Vice President and Chief Operating Officer
|
David
N. Shafer, Esq.
|
Executive
Vice President
|
Melanie
R. Wenk, CPA
|
Senior
Vice President – Chief Financial Officer
|
Darrick
Metz
|
Senior
Vice President – Originations
|
Christine
A. Cormier
|
Senior
Vice President – Investor Relations
|
Anand
Kannan
|
President
– Community Preservation Partners
|
Gregory
S. Hand
|
Senior
Vice President – Underwriting
|
Anil
Advani
|
Senior
Vice President – Syndications
|
In
addition to Wilfred N. Cooper, Sr., the directors of WNC &
Associates, Inc. are Wilfred N. Cooper, Jr., Kay L. Cooper and
Jennifer E. Cooper.
28
Wilfred
N. Cooper, Sr. is the founder and Chairman of the Board of
Directors of WNC & Associates, Inc., a Director of WNC Capital
Corporation, and a general partner in some of the partnerships
previously sponsored by WNC & Associates, Inc. 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 WNC & Associates, Inc., and of Creative Equity Corporation,
a real estate investment firm. For 12 years before that, Mr. Cooper
was employed by Rockwell International Corporation, last serving as
its manager of housing and urban developments where he had
responsibility for factory-built housing evaluation and project
management in urban planning and development. He has testified
before committees of the U.S. Senate and the U.S. House of
Representatives on matters pertaining to the affordable housing
industry. Mr. Cooper is a Life Director of the National Association
of Home Builders (“NAHB”), a National Trustee for
NAHB’s Political Action Committee, and a past Chairman of
NAHB’s Multifamily Council. He is a Life Trustee of the
National Housing Conference, and a co-founder and Director Emeritus
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. is President, Chief Executive Officer, Secretary, a
Director, and a member of the Investment Committee, of WNC &
Associates, Inc. He is President and a Director of, and a
registered principal with, WNC Capital Corporation. He has been
involved in real estate investment and acquisition activities since
1988 when he joined WNC & Associates, Inc. Previously, he
served as a Government Affairs Assistant with Honda North America
in Washington, D.C. Mr. Cooper serves on the Orange County Advisory
Board of U.S. Bank, the Board of Trustees of NHC, the Editorial
Advisory Board of Tax Credit
Advisor, and the Tax Policy Council of the National Trust
for Historic Preservation. He is a member of the Urban Land
Institute and of Vistage International, a global network of
business leaders and chief executives. He is the son of Wilfred
Cooper, Sr. and Kay Cooper. Mr. Cooper graduated from The American
University in 1985 with a Bachelor of Arts degree.
Michael
J. Gaber is an Executive Vice President, Chief Operating Officer,
chair of the Investment Committee, and oversees the Property
Acquisition and Investment Management groups, of WNC &
Associates, Inc. Mr. Gaber has been involved in real estate
acquisition, valuation and investment activities since 1989 and has
been associated with WNC & Associates, Inc. since 1997. Prior
to joining WNC & Associates, Inc., he was involved in the
valuation and classification of major assets, restructuring of debt
and analysis of real estate taxes with a large financial
institution. Mr. Gaber is a member of the Housing Credit Group of
NAHB and of National Housing and Rehabilitation Association
(“NH&RA”). Mr. Gaber graduated from the California
State University, Fullerton in 1991 with a Bachelor of Science
degree in business administration – finance.
David
N. Shafer is an Executive Vice President, a member of the
Investment Committee, and oversees the New Markets Tax Credit
group, of WNC & Associates, Inc. He is a registered
representative with WNC Capital Corporation. Mr. Shafer has been
active in the real estate industry since 1984. Before joining WNC
& Associates, Inc. in 1990, he was engaged as an attorney in
the private practice of law with a specialty in real estate and
taxation. Mr. Shafer is a Director and past President of the
California Council of Affordable Housing, a Director of the Council
for Affordable and Rural 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 Laws degree in taxation.
Melanie
R. Wenk is Senior Vice President – Chief Financial Officer of
WNC & Associates, Inc. She oversees WNC’s corporate and
partnership accounting group, which is responsible for SEC
reporting and New Markets Tax Credit compliance. Prior to joining
WNC in 2003, Ms. Wenk was associated as a public accountant with
BDO Seidman, LLP. She graduated from the California Polytechnic
State University, Pomona in 1999 with a Bachelor of Science degree
in accounting.
Darrick
Metz is Senior Vice President – Originations of WNC &
Associates, Inc. He has been involved in multifamily property
underwriting, acquisition and investment activities since 1991.
Prior to joining WNC in 1999, he was employed by a Minnesota
development company specializing in tax credit and market rate
multifamily projects. Mr. Metz also worked with the Minnesota
Housing Finance Agency (“MHFA”), where he held the
position of Senior Housing Development Officer. While at MHFA, he
was responsible for the allocation of tax credits, HOME funds and
state loan products. Mr. Metz is active in the Qualified Allocation
Plan Tax Credit Advisory Committee for the Wisconsin Housing and
Economic Development Authority, a member of MHFA’s
Multifamily Technical Assistance and a board member of NH&RA.
He graduated from St. Cloud State University in 1993 with a
Bachelor of Science degree in finance/economics.
29
Christine
A. Cormier is Senior Vice President – Investor Relations of
WNC & Associates, Inc. and oversees multi-investor fund equity
raising and closings as well as the marketing group. She is a
registered representative with WNC Capital Corporation. Ms. Cormier
has been active in the real estate industry since 1985. Prior to
joining WNC in 2008, Ms. Cormier was with another major tax credit
syndicator for over 12 years where she was the Managing Director of
investor relations. Ms. Cormier graduated from Bentley University
in 1982 with a Bachelor of Science degree (summa cum laude) in
accounting and computer science.
Anand
Kannan is Senior Vice President – Development of WNC &
Associates, Inc. and leads the preservation and development teams
for Community Preservation Partners, LLC. Prior to joining WNC in
2011, Mr. Kannan served as Associate Director at Vitus Group
(previously Pacific Housing Advisors, Inc.), where he developed or
consulted on affordable housing projects across the country. His
expertise is in the acquisition and rehabilitation of existing
low-income housing projects that are or will be financed by
tax-exempt bonds, tax credits, and other government subsidies.
Prior to his tenure at Vitus Group, Mr. Kannan was associated with
Novogradac & Company LLP. Mr. Kannan graduated from the
University of California at Berkeley in 2002 with a Bachelor of
Arts degree in economics with an emphasis in
accounting.
Gregory
S. Hand is Senior Vice President – Underwriting of WNC &
Associates, Inc. and oversees the property underwriting activities.
Mr. Hand has been involved in real estate analysis, development and
management since 1987. Prior to joining WNC in 1998, he was a
portfolio asset manager with a national tax credit sponsor with
responsibility for the management of $200 million in assets. Prior
to that, he was a finance manager with The Koll Company and a
financial analyst with The Irvine Company. Mr. Hand graduated from
Iowa State University in 1987 with a Bachelor of Business
Administration degree in finance.
Anil
Advani is President – Private Label Funds of WNC &
Associates, Inc. He oversees all activities pertaining to private
label funds, including structuring, originations, underwriting and
acquisitions. Mr. Advani has 16 years of experience in affordable
housing. Prior to joining WNC in 2011 and rejoining WNC in 2013, he
worked for major tax credit syndicators where he was involved in
the originations, structuring, and placement to institutional
investors of local limited partnership investments. Prior to that,
he was associated with a major accounting firm performing due
diligence reviews of tax credit investments on behalf of
institutional investors. Mr. Advani graduated from the University
of Texas at Austin in 1993 with a Bachelor of Arts degree in
economics and from The American University – Washington
College of Law in 1996 with a Juris Doctor degree.
(g)
Involvement in Certain Legal Proceedings
None.
(h)
Promoters and Control Persons
Inapplicable.
(i)
Audit Committee Financial Expert, and (i) Identification of the
audit Committee
Neither
the Partnership nor Associates has an audit committee.
(j)
Changes to Nominating
Procedures
Inapplicable.
(k)
Compliance With Section 16(a) of the Exchange Act
None.
(l)
Code of Ethics
Associates
has adopted a Code of Ethics which applies to the Chief Executive
Officer and Chief Financial Officer of Associates. The Code of
Ethics will be provided without charge to any person who requests
it. Such requests should be directed to: Investor Relations at
(714) 662-5565 extension 187.
30
Item 11. Executive Compensation
The
General Partner and its affiliates are not permitted under Section
5.6 of the Partnership’s Agreement of Limited Partnership
(the “Agreement,” incorporated as Exhibit 3.1 to this
report) to receive any salary, fees, profits, distributions or
allocations from the Partnership or any Local Limited Partnership
in which the Partnership invests except as expressly allowed by the
Agreement. The compensation and other economic benefits to the
General Partner and its affiliates provided for in the Agreement
are summarized below.
(a) Compensation for Services
For
services rendered by the General Partner or an Affiliate of the
General Partner in connection with the administration of the
affairs of the Partnership, the General Partner or any such
Affiliates shall receive from the Partnership an annual Asset
Management Fee in an amount not to exceed 0.5% of that portion of
Invested Assets in Local Limited Partnerships which are
attributable to apartment units receiving Government Assistance.
"Invested Assets" means the sum of the Partnership's original
investment in Local Limited Partnerships and the Partnership's
allocable share of mortgage loans on and other debts related to the
Housing Complexes owned by such Local Limited Partnerships. Accrued
but unpaid asset management fees for any year are deferred without
interest and are payable in subsequent years from any funds
available to the Partnership after payment of all other costs and
expenses of the Partnership, including any capital reserves then
determined by the General Partner to no longer be necessary to be
retained by the Partnership, or from the proceeds of a sale or
refinancing of Partnership assets. Fees of $68,464, $111,977 and
$155,741 were incurred during the years ended March 31, 2017, 2016
and 2015, respectively. No payments were made during the years
ended March 31, 2017, 2016 and 2015.
Subject
to a number of terms and conditions set forth in the Agreement, the
General Partner and its Affiliates may be entitled to compensation
for services actually rendered or to be rendered in connection with
(i) selecting, evaluating, structuring, negotiating and closing the
Partnership's investments in Local Limited Partnership Interests,
(ii) the acquisition or development of Properties for the Local
Limited Partnerships, or (iii) property management services
actually rendered by the General Partners or their Affiliates
respecting the Housing Complexes owned by Local Limited
Partnerships. No property management services were rendered and no
compensation was payable for such services during the periods
covered by this report.
(b)
Operating Expenses
Reimbursement to a
General Partner or any of its Affiliates of Operating Cash Expenses
is subject to specific restrictions in Section 5.3.3 of the
Partnership’s Agreement of Limited Partnership (the
“Agreement,” incorporated as Exhibit 3.1 to this
report). The Agreement defines “Operating Cash
Expenses” as
“
. . . the amount of cash disbursed by the Partnership . . . in the
ordinary course of business for the payment of its operating
expenses, such as expenses for management, utilities, repair and
maintenance, insurance, investor communications, legal, accounting,
statistical and bookkeeping services, use of computing or
accounting equipment, travel and telephone expenses, salaries and
direct expenses of Partnership employees while engaged in
Partnership business, and any other operational and administrative
expenses necessary for the prudent operation of the Partnership.
Without limiting the generality of the foregoing, Operating Cash
Expenses shall include fees paid by the Partnership to any General
Partner or any Affiliate of a General Partner permitted by this
Agreement and the actual cost of goods, materials and
administrative services used for or by the Partnership, whether
incurred by a General Partner, an Affiliate of a General Partner or
a non-Affiliated Person in performing the foregoing functions. As
used in the preceding sentence, actual cost of goods and materials
means the actual cost of goods and materials used for or by the
Partnership and obtained from entities not Affiliated with a
General Partner, and actual cost of administrative services means
the pro rata cost of personnel (as if such persons were employees
of the Partnership) associated therewith, but in no event to exceed
the Competitive amount.”
The
Agreement provides that no such reimbursement shall be permitted
for services for which a General Partner or any of its Affiliates
is entitled to compensation by way of a separate fee. Furthermore,
no such reimbursement is to be made for (a) rent or depreciation,
utilities, capital equipment or other such administrative items,
and (b) salaries, fringe benefits, travel expenses and other
administrative items incurred or allocated to any "controlling
person" of a General Partner or any Affiliate of a General Partner.
For the purposes of Section 5.3.4, "controlling person" includes,
but is not limited to, any person, however titled, who performs
functions for a General Partner or any Affiliate of a General
Partner similar to those of: (1) chairman or member of the board of
directors; (2) executive management, such as president, vice
president or senior vice president, corporate secretary or
treasurer; (3) senior management, such as the vice president of an
operating division who reports directly to executive management; or
(4) those holding 5% or more equity interest in such General
Partner or any such Affiliate of a General Partner or a person
having the power to direct or cause the direction of such General
Partner or any such Affiliate of a General Partner, whether through
the ownership of voting securities, by contract or
otherwise.
31
The
unpaid operating expenses reimbursable to the General Partner or
its affiliates were $52,125, $128,680 and $364,748, for the years
ended March 31, 2017, 2016 and 2015, respectively. The Partnership
reimbursed the General Partner or its affiliates for operating
expenses of $20,845, $629,981 and $540,942, during the years ended
March 31, 2017, 2016 and 2015, respectively.
(c)
Interest in Partnership
The
General Partner receives .10% of the Partnership’s allocated
Low Income Housing Tax Credits, which approximated $1,190, $2,411
and $1,080 for the years ended December 31, 2016, 2015 and 2014,
respectively. The General Partner is also entitled to receive .10%
of the Partnership’s operating income or losses, gain or loss
from the sale of property and operating cash distributions. There
were no distributions of operating cash to the General Partner
during the years ended March 31, 2017, 2016 and 2015. The General
Partner has an interest in sale or refinancing proceeds as follows:
after the Limited Partners have received a return of their capital,
General Partner may receive an amount equal to its capital
contribution, less any prior distribution of such proceeds, and
then the General Partner may receive 10% and the Limited Partners
90% of any remaining proceeds. There were no such distributions of
cash to the General Partner during the years ended March 31, 2017,
2016 and 2015.
(d)
Subordinated Disposition Fee
The
General Partner may receive a subordinated disposition fee in an
amount equal to 1% of the sale price of real estate sold by the
Local Limited Partnerships. Payment of this fee is subordinated to
the Limited Partners receiving distributions equal to their capital
contributions and their return on investment (as defined in the
Partnership Agreement) and is payable only if services are rendered
in the sales effort. No such fee was incurred for all periods
presented.
(e)
Compensation Committee Interlocks and Insider
Participation
The
Partnership has no compensation committee.
(f)
Compensation Committee Report
The
Partnership has no compensation committee.
Item
12.
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
(a)
Securities Authorized for Issuance Under Equity Compensation
Plans
The
Partnership has no compensation plans under which interests in the
Partnership are authorized for issuance.
(b)
Security Ownership of Certain Beneficial Owners
No
person is known to own beneficially in excess of 5% of the
outstanding Partnership Units.
(c)
Security Ownership of Management
Neither
the General Partner, Associates, its affiliates, nor any of the
officers or directors of the General Partner, Associates, or its
affiliates own directly or beneficially any Partnership
Units.
(d)
Changes in Control
The
management and control of the General Partner and of Associates may
be changed at any time in accordance with their respective
organizational documents, without the consent or approval of the
Limited Partners. In addition, the Partnership Agreement provides
for the admission of one or more additional and successor General
Partners in certain circumstances.
32
First,
with the consent of any other General Partners and a
majority-in-interest of the Limited Partners, any General Partner
may designate one or more persons to be successor or additional
General Partners. In addition, any General Partner may, without the
consent of any other General Partner or the Limited Partners, (i)
substitute in its stead as General Partner any entity which has, by
merger, consolidation or otherwise, acquired substantially all of
its assets, stock or other evidence of equity interest and
continued its business, or (ii) cause to be admitted to the
Partnership an additional General Partner or Partners if it deems
such admission to be necessary or desirable so that the Partnership
will be classified a partnership for Federal income tax purposes.
Finally, a majority-in-interest of the Limited Partners may at any
time remove the General Partner of the Partnership and elect a
successor General Partner.
Item 13. Certain Relationships and Related Transactions, and
Director Independence
(a)
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, reimbursement
of expenses, and the General Partner’s interest in the
Partnership, as discussed in Item 11 and in the notes to the
Partnership’s financial statements.
(b)
The
Partnership has no directors.
Item 14. Principal Accountant Fees and Services
The
following is a summary of fees paid to the Partnership’s
principal independent registered public accounting firm for the
years ended March 31:
|
2017
|
2016
|
|
|
|
Audit
Fees
|
$45,350
|
$7,550
|
Audit-related
Fees
|
|
|
Tax
Fees
|
4,000
|
4,000
|
All Other
Fees
|
|
|
TOTAL
|
$49,350
|
$11,550
|
The
Partnership has no Audit Committee. All audit services and any
permitted non-audit services performed by the Partnership’s
independent auditors are preapproved by the General
Partner.
33
PART
IV.
Item 15. Exhibits and Financial Statement Schedules
(a)(1)
List of financial statements included
in Part II hereof:
Reports
of Independent Registered Public Accounting Firms
Balance
Sheets, March 31, 2017 and 2016
Statements of
Operations for the years ended March 31, 2017, 2016 and
2015
Statements of
Partners’ Equity (Deficit) for the years ended March 31,
2017, 2016 and 2015
Statements of Cash
Flows for the years ended March 31, 2017, 2016 and
2015
Notes
to Financial Statements
(a)(2)
List of Financial statement schedules:
Schedule III - Real
Estate Owned by Local Limited Partnerships
(a)(3)
Exhibits
3.1
Agreement of
Limited Partnership dated February 7, 2005 filed in the
Post-Effective Amendment No. 1 on July 11, 2006 is hereby
incorporated herein by reference as exhibit 3.1
31.1
Certification of
the Chief Executive Officer pursuant to Rule 13a-14 and 15d-14
(filed herewith)
31.2
Certification of
the Chief Financial Officer pursuant to Rule 13a-14 and 15d-14
(filed herewith)
32.1
Section 1350
Certification of the Chief Executive Officer. (filed
herewith)
32.2
Section 1350
Certification of the Chief Financial Officer. (filed
herewith)
99.1
Financial
Statements of Davenport Housing VII L.P. for the years ended
December 31, 2016, 2015 and 2014 together with
Independent Auditor’s Reports thereon; a significant
subsidiary of the Partnership.
99.2
Financial
Statements of Crestview Housing, L.P. for the year ended December
31, 2014, together with Independent
Auditor’s Report thereon; a significant subsidiary of the
Partnership.
101.
Interactive data
files pursuant to Rule 405 of Regulation S-T: (i) the Balance
Sheets at March 31, 2017 and 2016, (ii) the
Statements of Operations for the years ended March 31, 2017, 2016
and 2015, (iii) the Statements of Partners’ Equity (Deficit)
for the years ended March 31, 2017, 2016 and 2015, (iv) the
Statements of Cash Flows for the years ended March 31, 2017, 2016
and 2015 and (v) the Notes to Financial Statements
Exhibits 32.1,
32.2 and 101 shall not be deemed “filed” for purposes
of Section 18 of the Securities Exchange Act of 1934, or
otherwise subject to the liability of that Section. Such exhibits
shall not be deemed incorporated by reference into any filing under
the Securities Act of 1933 or Securities Exchange Act of
1934.
34
WNC Housing Tax Credit Fund VI, L.P., Series 13
|
|
|
||||||||||||||||||
Schedule III
|
|
|
||||||||||||||||||
Real Estate Owned by Local Limited Partnerships
|
|
|
||||||||||||||||||
March 31, 2017
|
|
|
|
As of March 31,
2017
|
Initial Cost to
Partnership
|
|
As of December
31, 2016
|
||||||
Local Limited
Partnership Name
|
|
Location
|
Total Investment
in Local Limited Partnership
|
Amount of
Investment Paid to Date
|
Land
|
Building &
Improvements
|
Cost Capitalized
Subsequent to Acquisition
|
Mortgage
Balances of Local Limited Partnerships
|
Land
|
Building &
Equipment
|
Accumulated
Depreciation
|
Net Book
Value
|
Crestview
Housing, L.P.
|
|
Bigfork,
Montana
|
$1,895,000
|
$1,895,000
|
$215,000
|
$2,474,000
|
$313,000
|
$663,000
|
$251,000
|
$2,751,000
|
$628,000
|
$2,374,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Davenport
Housing VII, L.P.
|
|
Davenport,
Iowa
|
4,744,000
|
4,499,000
|
50,000
|
6,231,000
|
364,000
|
508,000
|
50,000
|
6,595,000
|
1,196,000
|
5,449,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FDI-Country
Square, LTD.
|
|
Lone
Star, Texas
|
605,000
|
605,000
|
18,000
|
1,359,000
|
63,000
|
543,000
|
18,000
|
1,422,000
|
465,000
|
975,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FDI-Park
Place, LTD.
|
|
Bellville,
Texas
|
758,000
|
758,000
|
50,000
|
2,023,000
|
130,000
|
1,026,000
|
50,000
|
2,153,000
|
558,000
|
1,645,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Head
Circle, L.P.
|
|
Ruleville,
Mississippi
|
464,000
|
464,000
|
54,000
|
1,914,000
|
23,000
|
1,315,000
|
54,000
|
1,937,000
|
894,000
|
1,097,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$8,466,000
|
$8,221,000
|
$387,000
|
$14,001,000
|
$893,000
|
$4,055,000
|
$423,000
|
$14,858,000
|
$3,741,000
|
$11,540,000
|
35
WNC Housing Tax Credit Fund VI, L.P., Series 13
Schedule III
Real Estate Owned by Local Limited Partnerships
|
|||||||||||||||||||||||||
March 31, 2017
|
|
For the Year
Ended December 31, 2016
|
||||
Local
Limited Partnership
Name
|
Rental
Income
|
Net
Income (Loss)
|
Year Investment
Acquired
|
Status
|
Estimated Useful
Life (Years)
|
Crestview Housing,
L.P.
|
$132,000
|
$(52,000)
|
2007
|
Completed
|
40
|
|
|
|
|
|
|
Davenport Housing
VII, L.P.
|
118,000
|
(192,000)
|
2007
|
Completed
|
40
|
|
|
|
|
|
|
FDI-Country Square,
LTD.
|
149,000
|
10,000
|
2006
|
Completed
|
40
|
|
|
|
|
|
|
FDI-Park Place,
LTD.
|
224,000
|
(11,000)
|
2006
|
Completed
|
40
|
|
|
|
|
|
|
Head Circle,
L.P.
|
273,000
|
(53,000)
|
2006
|
Completed
|
27.5
|
|
$896,000
|
$(298,000)
|
|
|
|
36
WNC Housing Tax Credit Fund VI, L.P., Series 13
|
|
|
||||||||||||||||||
Schedule III
|
|
|
||||||||||||||||||
Real Estate Owned by Local Limited Partnerships
|
|
|
||||||||||||||||||
March 31, 2016
|
|
|
As of March 31,
2016
|
Initial Cost to
Partnership
|
|
As of December
31, 2015
|
|||||||
Local Limited
Partnership Name
|
|
Location
|
Total Investment
in Local Limited Partnership
|
Amount of
Investment Paid to Date
|
Land
|
Building &
Improvements
|
Cost Capitalized
Subsequent to Acquisition
|
Mortgage
Balances of Local Limited Partnerships
|
Land
|
Building &
Equipment
|
Accumulated
Depreciation
|
Net Book
Value
|
Crestview
Housing, L.P.
|
|
Bigfork,
Montana
|
$1,895,000
|
$1,895,000
|
$215,000
|
$2,474,000
|
$302,000
|
$675,000
|
$250,000
|
$2,741,000
|
$548,000
|
$2,443,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Davenport
Housing VII, L.P.
|
|
Davenport,
Iowa
|
4,744,000
|
4,499,000
|
50,000
|
6,231,000
|
364,000
|
519,000
|
50,000
|
6,595,000
|
1,025,000
|
5,620,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FDI-Country
Square, LTD.
|
|
Lone Star,
Texas
|
605,000
|
605,000
|
18,000
|
1,359,000
|
54,000
|
562,000
|
18,000
|
1,413,000
|
422,000
|
1,009,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FDI-Park
Place, LTD.
|
|
Bellville,
Texas
|
758,000
|
758,000
|
50,000
|
2,023,000
|
119,000
|
1,050,000
|
50,000
|
2,142,000
|
496,000
|
1,696,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Head Circle,
L.P.
|
|
Ruleville,
Mississippi
|
464,000
|
464,000
|
54,000
|
1,914,000
|
23,000
|
1,339,000
|
54,000
|
1,937,000
|
827,000
|
1,164,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pleasant Village, L.P. (2)
|
|
Dallas,
Texas
|
N/A
|
N/A
|
811,000
|
8,690,000
|
(7,050,000)(1)
|
5,344,000
|
223,000
|
2,228,000
|
-
|
2,451,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$8,466,000
|
$8,221,000
|
$1,198,000
|
$22,691,000
|
$(6,188,000)
|
$9,489,000
|
$645,000
|
$17,056,000
|
$3,318,000
|
$14,383,000
|
(1)
Impairment charge
recorded as a result of a permanent decline in value.
(2)
The Local Limited
Partnership was disposed of subsequent to December 31, 2015, but
prior to March 31, 2016.
37
WNC Housing Tax Credit Fund VI, L.P., Series 13
Schedule III
Real Estate Owned by Local Limited Partnerships
|
|||||||||||||||||||||||||
March 31, 2016
|
|
For the Year
Ended December 31, 2015
|
||||
Local
Limited Partnership
Name
|
Rental
Income
|
Net
Los
|
Year Investment
Acquired
|
Status
|
Estimated Useful
Life (Years)
|
Crestview Housing,
L.P.
|
$129,000
|
$(53,000)
|
2007
|
Completed
|
40
|
|
|
|
|
|
|
Davenport Housing
VII, L.P.
|
112,000
|
(179,000)
|
2007
|
Completed
|
40
|
|
|
|
|
|
|
FDI-Country Square,
LTD.
|
149,000
|
(6,000)
|
2006
|
Completed
|
40
|
|
|
|
|
|
|
FDI-Park Place,
LTD.
|
210,000
|
(39,000)
|
2006
|
Completed
|
40
|
|
|
|
|
|
|
Head Circle,
L.P.
|
275,000
|
(38,000)
|
2006
|
Completed
|
27.5
|
|
|
|
|
|
|
Pleasant Village,
L.P.
|
1,468,000
|
(3,204,000)
|
2006
|
Completed
|
27.5
|
|
|
|
|
|
|
|
$2,343,000
|
$(3,519,000)
|
|
|
|
38
WNC Housing Tax Credit Fund VI, L.P., Series 13
|
|
|
||||||||||||||||||
Schedule III
|
|
|
||||||||||||||||||
Real Estate Owned by Local Limited Partnerships
|
|
|
||||||||||||||||||
March 31, 2015
|
|
|
|
As of March 31,
2015
|
Initial Cost to
Partnership
|
|
As of December
31, 2014
|
||||||
Local Limited
Partnership Name
|
|
Location
|
Total Investment
in Local Limited Partnership
|
Amount of
Investment Paid to Date
|
Land
|
Building &
Improvements
|
Cost Capitalized
Subsequent to Acquisition
|
Mortgage
Balances of Local Limited Partnerships
|
Land
|
Building &
Equipment
|
Accumulated
Depreciation
|
Net Book
Value
|
909 4th
YMCA, L.P. (3)
|
|
Seattle,
Washington
|
$508,000
|
$508,000
|
$-
|
$16,649,000
|
$-
|
$-
|
$-
|
$16,649,000
|
$5,612,000
|
$11,037,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crestview
Housing, L.P.
|
|
Bigfork,
Montana
|
1,973,000
|
1,885,000
|
215,000
|
2,474,000
|
302,000
|
684,000
|
250,000
|
2,741,000
|
469,000
|
2,522,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Davenport
Housing VII, L.P.
|
|
Davenport,
Iowa
|
4,744,000
|
4,499,000
|
50,000
|
6,231,000
|
361,000
|
530,000
|
50,000
|
6,592,000
|
855,000
|
5,787,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FDI-Country
Square, LTD.
|
|
Lone Star,
Texas
|
605,000
|
605,000
|
18,000
|
1,359,000
|
45,000
|
579,000
|
18,000
|
1,404,000
|
378,000
|
1,044,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FDI-Park
Place, LTD.
|
|
Bellville,
Texas
|
758,000
|
758,000
|
50,000
|
2,023,000
|
94,000
|
1,072,000
|
50,000
|
2,117,000
|
434,000
|
1,733,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grove Village, L.P. (2)
|
|
Dallas,
Texas
|
N/A
|
N/A
|
877,000
|
9,625,000
|
(8,812,000)(1)
|
5,464,000
|
183,000
|
1,507,000
|
-
|
1,690,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Head Circle,
L.P.
|
|
Ruleville,
Mississippi
|
464,000
|
464,000
|
54,000
|
1,914,000
|
-
|
1,362,000
|
54,000
|
1,914,000
|
762,000
|
1,206,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pleasant Village, L.P. (3)
|
|
Dallas,
Texas
|
2,850,000
|
2,808,000
|
811,000
|
8,690,000
|
(4,793,000)(1)
|
5,344,000
|
223,000
|
4,485,000
|
85,000
|
4,623,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$11,902,000
|
$11,527,000
|
$2,075,000
|
$48,965,000
|
$(12,803,000)
|
$15,035,000
|
$828,000
|
$37,409,000
|
$8,595,000
|
$29,642,000
|
(1)
Impairment charge
recorded as a result of a permanent decline in value.
(2)
The Local Limited
Partnership was disposed of subsequent to December 31, 2014, but
prior to March 31, 2015
(3)
The Local Limited
Partnership was sold subsequent to March 31, 2015.
39
WNC Housing Tax Credit Fund VI, L.P., Series 13
Schedule III
Real Estate Owned by Local Limited Partnerships
|
|||||||||||||||||||||||||
March 31, 2015
|
|
For the Year
Ended December 31, 2014
|
||||
Local
Limited Partnership
Name
|
Rental
Income
|
Net Income
(Loss)
|
Year Investment
Acquired
|
Status
|
Estimated Useful
Life (Years)
|
909 4th YMCA, L.P.
(2)
|
$679,000
|
$125,000
|
2006
|
Completed
|
40
|
|
|
|
|
|
|
Crestview Housing,
L.P.
|
121,000
|
205,000
|
2007
|
Completed
|
40
|
|
|
|
|
|
|
Davenport Housing
VII, L.P.
|
116,000
|
(180,000)
|
2007
|
Completed
|
40
|
|
|
|
|
|
|
FDI-Country Square,
LTD.
|
141,000
|
(13,000)
|
2006
|
Completed
|
40
|
|
|
|
|
|
|
FDI-Park Place,
LTD.
|
187,000
|
(26,000)
|
2006
|
Completed
|
40
|
|
|
|
|
|
|
Grove Village, L.P.
(1)
|
849,000
|
(2,912,000)
|
2006
|
Completed
|
27.5
|
|
|
|
|
|
|
Head Circle,
L.P.
|
282,000
|
(40,000)
|
2006
|
Completed
|
27.5
|
|
|
|
|
|
|
Pleasant Village,
L.P. (2)
|
1,299,000
|
(1,782,000)
|
2006
|
Completed
|
27.5
|
|
|
|
|
|
|
|
$3,674,000
|
$(4,623,000)
|
|
|
|
(1)
The Local Limited
Partnership was disposed of subsequent to December 31, 2015, but
prior to March 31, 2015.
(2)
The Local Limited
Partnership was disposed of subsequent to March 31,
2015.
40
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
WNC
HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
By:
WNC National
Partners, LLC
General
Partner
By:
/s/ Wilfred N. Cooper, Jr.
Wilfred
N. Cooper, Jr.,
President
of WNC & Associates, Inc.
Date:
June
23, 2017
Pursuant
to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates
indicated.
By:
/s/ Wilfred N. Cooper, Jr.
Wilfred
N. Cooper, Jr.,
Chief
Executive Officer, President and Director of WNC & Associates,
Inc. (principal executive officer)
Date:
June
23, 2017
By:
/s/ Melanie R. Wenk
Melanie
R. Wenk,
Senior
Vice President - Chief Financial Officer of WNC & Associates,
Inc. (principal financial officer and principal accounting
officer)
Date:
June
23, 2017
By:
/s/ Wilfred N. Cooper, Sr.
Wilfred
N. Cooper, Sr.,
Chairman of the
Board of WNC & Associates, Inc.
Date:
June
23, 2017
By:
/s/ Kay L. Cooper
Kay L.
Cooper
Director of WNC
& Associates, Inc.
Date:
June
23, 2017
41