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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended March 31, 2004
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: 333-76435
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 9
(Exact name of registrant as specified in its charter)
California 33-0974533
(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 Section12(b) of the Act:
NONE
Securities registered pursuant to section12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
----------- ---------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Indicate by check mark whether the registrant is an accelerated filer.
Yes No X
----------- ---------------
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common equity, as of
the last business day of the registrant's most recently completed second fiscal
quarter.
INAPPLICABLE
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
2
PART 1.
Item 1. Business
Organization
WNC Housing Tax Credit Fund, VI, L.P., Series 9 (the "Partnership") was formed
under the California Revised Limited Partnership Act on July 17, 2001 and
commenced operations on August 3, 2001, the effective date of its public
offering pursuant to the Securities and Exchange Commission's approval of the
Partnership's Pre-Effective Amendment No. 1 to Form S-11 initially filed on
August 16, 2001. The Partnership was formed to invest primarily in other limited
partnerships or limited liability companies which will own and operate
multi-family housing complexes that are eligible for Federal low-income housing
tax and, in certain cases, California low-income housing tax credits ("Low
Income Housing Credit").
The general partner of the Partnership is WNC & Associates, Inc. ("Associates"
or the "General Partner"). The chairman and president of Associates own
substantially all of the outstanding stock of Associates. The business of the
Partnership is conducted primarily through Associates, as the Partnership has no
employees of its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission on August 16, 2001, the Partnership commenced a public offering of
25,000 units of Limited Partnership Interest ("Units"), at a price of $1,000 per
Unit. Such offering is closed. A total of 15,325 Units representing $15,316,125,
net of dealer discounts of $7,350 and volume discounts of $1,525, had been sold.
Holders of Limited Partnership Interests are referred to herein as "Limited
Partners."
The Partnership shall continue in full force and effect until December 31, 2062,
unless terminated prior to that date, pursuant to the partnership agreement or
law.
Description of Business
The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner or non-managing member in
Local Limited Partnerships each of which owns and operates a multi-family
housing complex (the "Housing Complexes") which qualify for the Low Income
Housing Credits. In general, under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
to reduce Federal taxes otherwise due in each year of a ten-year period. In
general, under Section 17058 of the California Revenue and Taxation Code, an
owner of low-income housing can receive the California Low Income Housing Credit
to be used against California taxes otherwise due in each year of a four-year
period. Each Housing Complex is subject to a fifteen-year compliance period (the
"Compliance Period"), and under state law may have to be maintained as low
income housing for 30 or more years.
In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited Partnership of its Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership's Agreement of Limited
Partnership, dated July 17, 2001 (the "Partnership Agreement"), will be able to
be accomplished promptly at the end of the 15-year period. If a Local Limited
Partnership is unable to sell its Housing Complex, it is anticipated that the
local general partner ("Local General Partner") will either continue to operate
such Housing Complex or take such other actions as the Local General Partner
believes to be in the best interest of the Local Limited Partnership.
Notwithstanding the preceding, circumstances beyond the control of the General
Partner or the Local General Partners may occur during the Compliance Period,
which would require the Partnership to approve the disposition of a Housing
Complex prior to the end thereof, possibly resulting in recapture of Low Income
Housing Credits.
3
As of March 31, 2004, the Partnership had invested in thirteen Local Limited
Partnerships. Each of these Local Limited Partnerships owns one Housing Complex
with the exception of one Local Limited Partnership which owns three Housing
Complexes which are eligible for the Federal Low Income Housing Credit. Certain
Local Limited Partnerships may also benefit from government programs promoting
low- or moderate-income housing.
Certain Risks and Uncertainties
An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:
The Low-Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low-Income Housing Credits and
the fractional recapture of Low-Income Housing Credits already taken. An
individual Limited Partner's ability to use tax credits is limited. In most
cases, the annual amount of Low Income Housing Credits that an individual
Limited Partner can use is limited to the tax liability due on the person's last
$25,000 of taxable income. Low Income Housing Credits may be the only material
benefit from the Partnership because Limited Partners may not get back their
capital. Any transactions between the Partnership and Associates and its
affiliates will entail conflicts of interest.
The Partnership has invested in a limited number of Local Limited Partnerships.
Such limited diversity means that the results of operation of each single
Housing Complex will have a greater impact on the Partnership. With limited
diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage indebtedness. If a Local Limited Partnership failed to
pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
future Low-Income Housing Credits, and a fractional recapture of prior
Low-Income Housing Credits would occur. At any time, a foreclosure would result
in a loss of the Partnership's investment in the Housing Complex. The
Partnership is a limited partner or non-managing member of each Local Limited
Partnership. Accordingly, the Partnership has 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, will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of interests in Local Limited Partnerships; limitations
on removal of Local General Partners; limitations on subsidy programs; and
possible changes in applicable regulations. Uninsured casualties could result in
loss of property and Low-Income Housing Credits and recapture of Low-Income
Housing Credits previously taken. The value of real estate is subject to risks
from fluctuating economic conditions, including employment rates, inflation,
tax, environmental, land use and zoning policies, supply and demand of similar
properties, and neighborhood conditions, among others.
The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low-Income Housing
Credits and tax losses allocable to the 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.
There are limits on the transferability of units, including a prohibition on the
transfer of more than 50% of the Units in a 12-month period. No trading market
for the Units exists or is expected to develop. Limited Partners may be unable
to sell their Units except at a discount and should consider their 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.
4
Exit Strategy
The IRS compliance period for low-income housing tax credit properties 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 Credits. The initial programs are completing their
compliance periods.
With that in mind, the Partnership is continuing its review of the Partnership's
holdings, with special emphasis on the more mature properties such as any that
may have satisfied the IRS compliance requirements. The review considers many
factors, including extended use requirements on the property (such as those due
to mortgage restrictions or state compliance agreements), the condition of the
property, and the tax consequences to the Limited Partners from the sale of the
property.
Upon identifying those properties with the highest potential for a successful
sale, refinancing or syndication, the Partnership expects to proceed with
efforts to liquidate those properties. The objective is to maximize the Limited
Partners' return wherever possible and, ultimately, to wind down the Partnership
when it no longer provides tax benefits to Limited Partners. However, Local
Limited Partnership interests may be disposed at any time by Associates in its
discretion. To date no properties in the Partnership have been selected for
disposition.
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 ten Housing Complexes as the dates and for the
periods indicated:
5
------------------------------ ---------------------------------------------
As of March 31, 2004 As of December 31, 2003
------------------------------ ---------------------------------------------
Partnership's Original Mortgage
Total Original Amount of Estimated Balances
General Investment in Investment Aggregate Low of Local
Local Limited Partner Local Limited Paid to Number Income Housing Limited
Partnership Name Location Name Partnerships Date of Units Occupancy Credits (1) Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Crane & Fowler
505 West Investments,
Main Vermillion, L.L.C. & Sioux Falls
Limited South Environmental
Partnership Dakota Access, Inc. $ 761,000 $ 684,000 40 95% $ 1,087,000 $2,111,000
Byhalia Byhalia, SEMC,
Estates, L.P. Mississippi Inc. 219,000 219,000 25 92% 349,000 736,000
Terrace Calico Planning &
Limited Rock, Development
Partnership Arkansas Corp. 452,000 452,000 29 90% 645,000 1,430,000
Harbor Tifton, BC Holdings,
Pointe, L.P. Georgia LLC 1,905,000 1,407,000 56 63% 2,540,000 2,141,000
McPherson Housing
Associates ERC
Limited McPherson, Properties,
Partnership Kansas Inc 1,770,000 1,695,000 72 94% 2,313,000 2,009,000
Morris,
Mendota Illinois
I, L.P., and Mendota, Affordable
an Illinois Illinois and Housing
limited Plano, Development
partnership Illinois Fund, Inc. 1,691,000 1,691,000 96 94% 2,297,000 2,736,000
North Davison
Partners 99 Crane &
Limited Fowler
Partnership, Investments,
a South L.L.C. &
Dakota Mitchell, Sioux Falls
Limited South Environmental
Partnership Dakota Access, Inc. 481,000 409,000 20 90% 688,000 696,000
Curtis G.
Oakview Carlson Co.,
Terrace Inc., M.F.
Townhomes North Arlson Co.,
Limited Branch, Inc., Robert B.
Partnership Minnesota Carlson 1,108,000 997,000 24 96% 1,583,000 1,455,000
Parker Estates,
L.P., a
Mississippi
limited Sunflower,
partnership Mississippi SEMC, Inc. 274,000 274,000 32 100% 400,000 999,000
Preservation
Partners III
Limited Affordable
Partnership, an Housing
Illinois limited Monmouth, Development
partnership Illinois Fund, Inc. 579,000 579,000 32 88% 827,000 792,000
Saw Mill Creek
II Limited
Dividend Housing
Association Raymond T.
Limited Partnerip, a Cato &
Michigan limite Vicksburg, Christopher
partnership Michigan R. Cato 383,000 322,000 24 88% 547,000 1,203,000
6
------------------------------ ---------------------------------------------
As of March 31, 2004 As of December 31, 2003
------------------------------ ---------------------------------------------
Partnership's Original Mortgage
Total Original Amount of Estimated Balances
General Investment in Investment Aggregate Low of Local
Local Limited Partner Local Limited Paid to Number Income Housing Limited
Partnership Name Location Name Partnerships Date of Units Occupancy Credits (1) Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
Selman Bainbridge, BC Holdings,
Place, L.P. Georgia LC 1,679,000 1,329,000 56 100% 2,239,000 2,401,000
Villas of Coon Rapids, Caroline
Palm L.P. Minnesota Corporation 241,000 - - - - -
------------- -------------- --- ---- ------------- ------------
$ 11,543,000 $ 10,058,000 506 91% $ 15,515,000 $18,709,000
============= ============== === ==== ============= ===========
(1) Represents aggregate anticipated Low Income Housing Credits to be received over the 10 year credit period if Housing Complexes
are retained and rentedin compliance with credit rules for the 15-year compliance period.
7
-------------------------------------------------------------
For the year ended December 31, 2003
-------------------------------------------------------------
Low Income Housing
Credits Allocated
Partnership Name Rental Income Net Income (Loss) to Partnership
- ----------------------------------------------------------------------------------------------------
505 West Main Limited Partnership $357,000 $(110,000) 34.34%
Byhalia Estates, L.P. 124,000 (1,000) 99.98%
Calico Terrace Limited Partnership 140,000 (18,000) 99.98%
Harbor Poine, L. P. 64,000 (105,000) 99.97%
McPherson Housing Associates Limited
Partnership 338,000 (229,000) 99.98%
Mendota I, L.P. an Illinois limited
partnership 466,000 (46,000) 99.98%
North Davison Partners 99 Limited
Partnership, a South Dakota Partnership 130,000 (12,000) 99.98%
Oakview Terrace Townhomes Limited
Partnership 96,000 (37,000) 99.98%
Parker Estates, L.P., a Mississippi
limited partnership 175,000 15,000 99.98%
Preservation Partners III Limited
Partnership, an Illinois limited
partnership 116,000 (74,000) 99.98%
Saw Mill Creek II Limited Dividend
Housing Association Limited
Partnership, a Michigan limited
partnership 111,000 (79,000) 99.98%
Selman Place, L.P. 105,000 (81,000) 99.97%
Villas of Palm L.P. - - -
----------- -----------
$2,222,000 $(776,000)
=========== ===========
8
Item 3. Legal Proceedings
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
PART II.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Item 5a.
(a) The Units are not traded on a public exchange but were sold through a
public offering. It is not anticipated that any public market will
develop for the purchase and sale of any Unit and none exists. Units
can be assigned only if certain requirements in the Partnership
Agreement are satisfied.
(b) At March 31, 2004, there were 788 Limited Partners and 11 assignees of
Units who were not admitted as Limited Partners.
(c) The Partnership was not designed to provide cash distributions to
Limited Partners in circumstances other than refinancing or
disposition of its investments in Local Limited Partnerships. Any such
distributions would be made in accordance with the terms of the
Partnership Agreement.
(d) No securities are authorized for issuance by the Partnership under
equity compensation plans.
(e) No unregistered securities were sold by the Partnership during the
year ended March 31, 2004.
Item 5b. Use of proceeds
The Partnership conducted an offering pursuant to a registration statement
(Commission File No. 333-67670) which was declared effective on November 14,
2001. As of March 31, 2004, the Partnership had received subscriptions for
15,325 Units, for an aggregate amount of capital contributions of $15,316,125,
net of dealer discounts of $7,350 and volume discounts of $1,525. At March 31,
2004, approximately $1,983,000 was paid or due to Associates or WNC Capital
Corporation, the dealer-manager for the offering, for selling commissions,
wholesaling activities and in reimbursement of other organization and offering
expenses. Included therein are selling commissions of approximately $1,064,000
which were paid or were to be paid to non-affiliates. At March 31, 2004,
approximately $13,333,000 is invested or available to be invested in Local
Limited Partnership Interests or Reserves as follows:
Paid or to be
Paid to Paid or to be
Affiliates Paid to Others Total
--------------- --------------- ---------------
Acquisition Fees through 3/31/2004 $ 1,073,000 $ - $ 1,073,000
Acquisition Costs through 3/31/2004 306,000 - 306,000
Cash invested or available to be invested and reserves - 11,954,000 11,954,000
--------------- --------------- ---------------
Total $ 1,379,000 $ 11,954,000 $ 13,333,000
=============== =============== ===============
Item 5c. Purchases of Equity Securities by the Issuer and affiliated Purchasers
NONE
9
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows:
March 31
---------------------------------------------------
2004 2003 2002
--------------- --------------- -------------
ASSETS
Cash and cash equivalents $ 1,709,308 $ 4,521,172 $ 1,221,805
Subscriptions and notes
receivable 146 3,226 364,026
Investments in limited partnerships 11,827,145 8,870,849 173,781
--------------- --------------- -------------
$ 13,536,599 $ 13,395,247 $ 1,759,612
=============== =============== =============
LIABILITIES
Payables to limited partnerships $ 1,484,983 $ 849,320 $ -
Accrued fees and expenses due to
General Partner and affiliates 183,229 115,557 228,940
Other liabilities - - 6,900
PARTNERS' EQUITY (DEFICIT) 11,868,387 12,430,370 1,523,772
--------------- --------------- -------------
$ 13,536,599 $ 13,395,247 $ 1,759,612
=============== =============== =============
Selected results of operations, cash flows, and other information for the Partnership are as follows:
For the period
from August 3,
2001 (date
operations
For the Year Ended commenced) to
March 31 March 31, 2002
--------------------------------------
2004 2003
--------------- ---------------- ----------------
Loss from operations $ (208,705) $ (100,573) $ (7,538)
Equity in losses of limited partnerships (839,570) (309,076) -
--------------- ---------------- ----------------
Net loss $ (1,048,275) $ (409,649) $ (7,538)
=============== ================ ================
Net loss allocated to:
General Partner $ (1,048) $ (410) $ (8)
=============== ================ ================
Limited partners $ (1,047,227) $ (409,239) $ (7,530)
=============== ================ ================
Net loss per limited partner
unit $ (68.33) $ (47.38) $ (188.25)
=============== ================ ================
Outstanding weighted limited
partner units 15,325 8,638 40
=============== ================ ================
10
For the period
from August 3,
2001 (date
operation
For the Year Ended commenced) to
March 31 March 31, 2002
-----------------------------------
2004 2003
--------------- --------------- ----------------
Net cash provided by (used in):
Operating activities $ (88,736) $ (84,436) $ 415
Investing activities (3,209,420) (8,218,332) (136,530)
Financing activities 486,292 11,602,135 1,357,920
--------------- --------------- ----------------
Net change in cash and cash
equivalents (2,811,864) 3,299,367 1,221,805
Cash and cash equivalents,
beginning of period 4,521,172 1,221,805 -
--------------- --------------- ----------------
Cash and cash equivalents, end
of period $ 1,709,308 $ 4,521,172 $ 1,221,805
=============== =============== ================
Low Income Housing Credits per Unit were as follows for the year and period ended December 31:
2003 2002 2001
--------------- --------------- ----------------
Federal $ 72 $ 38 $ -
State - - -
--------------- --------------- ----------------
Total $ 72 $ 38 $ -
=============== =============== ================
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward Looking Statements
With the exception of the discussion regarding historical information,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other discussions elsewhere in this Form 10-K contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties and other factors which may involve known and unknown risks that
could cause actual results of operations to differ materially from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.
Risks and uncertainties inherent in forward looking statements include, but are
not limited to, our future cash flows and ability to obtain sufficient
financing, level of operating expenses, conditions in the low-income housing tax
credit property market and the economy in general, as well as legal proceedings.
Historical results are not necessarily indicative of the operating results for
any future period.
Subsequent written and oral forward looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by
cautionary statements in this Form 10-K and in other reports we filed with the
Securities and Exchange Commission. The following discussion should be read in
conjunction with the Financial Statements and the Notes thereto included
elsewhere in this filing.
Critical Accounting Policies and Certain Risks and Uncertainties
The Partnership believes that the following discussion addresses its 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.
11
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially differ from those
estimates.
Method of Accounting For Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnerships' results of operations
and for any contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by the estimated value derived by
management, generally consisting of the sumof the remaining future Low-Income
Housing 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 30
years (Notes 2 and 3 to the financial statements).
Equity in losses of limited partnerships for each year ended March 31 have been
recorded by the Partnership based on nine months of reported results provided by
the Local Limited Partnerships for each year ended December 31 and on three
months of results estimated by management of the Partnership. Management's
estimate for the three-month period is based on either actual unaudited results
reported by the Local Limited Partnerships or historical trends in the
operations of the Local Limited Partnerships. In subsequent annual financial
statements, upon receiving the actual annual results reported by the Local
Limited Partnerships, management reverses its prior estimate and records the
actual results reported by the Local Limited Partnerships. Equity in losses from
the Local Limited Partnerships allocated to the Partnership are not recognized
to the extent that the investment balance would be adjusted below zero. As soon
as the investment balance reaches zero, amortization of the related costs of
acquiring the investment are accelerated to the extent of losses available.
Distributions received from the Local Limited Partnerships are accounted for as
a reduction of the investment balance. Distributions received after the
investment has reached zero are recognized as income. If the Local Limited
Partnerships report net income in future year, 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.
Income Taxes
No provision for income taxes has been recorded in the accompanying financial
statements as any liability and/or benefits for income tax purposes flows to the
partners of the Partnership and is their obligation and/or benefit. For income
tax purposes the Partnership reports on a calendar year basis.
Certain Risks and Uncertainties
An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:
The Low-Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low-Income Housing Credits and
the fractional recapture of Low-Income Housing Credits already taken. In most
cases the annual amount of Low-Income Housing Credits that an individual can use
is limited to the tax liability due on the person's last $25,000 of taxable
income. The Local Limited Partnerships may be unable to sell the Housing
Complexes at a 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
Credits may be the only benefit from an investment in the Partnership.
12
The Partnership has invested in a limited number of Local Limited Partnerships.
Such limited diversity means that the results of operation of each single
Housing Complex will have a greater impact on the Partnership. With limited
diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage indebtedness. If a Local Limited Partnership failed to
pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
Low-Income Housing Credits, a fractional recapture of prior Low-Income Housing
Credits, and a loss of the Partnership's investment in the Housing Complex would
occur. The Partnership is a limited partner or non-managing member of each Local
Limited Partnership. Accordingly, the Partnership has very limited rights with
respect to management of the Local Limited Partnerships. The Partnership will
rely totally on the Local General Partners. Neither the Partnership's
investments in Local Limited Partnerships, nor the Local Limited Partnerships'
investments in Housing Complexes, are readily marketable. To the extent the
Housing Complexes receive government financing or operating subsidies, they may
be subject to one or more of the following risks: difficulties in obtaining
tenants for the Housing Complexes; difficulties in obtaining rent increases;
limitations on cash distributions; limitations on sales or refinancing of
Housing Complexes; limitations on transfers of interests in Local Limited
Partnerships; limitations on removal of Local General Partners; limitations on
subsidy programs; and possible changes in applicable regulations. Uninsured
casualties could result in loss of property and Low-Income Housing Credits and
recapture of Low-Income Housing Credits previously taken. The value of real
estate is subject to risks from fluctuating economic conditions, including
employment rates, inflation, tax, environmental, land use and zoning policies,
supply and demand of similar properties, and neighborhood conditions, among
others.
The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low-Income Housing
Credits and tax losses allocable to the 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.
No trading market for the Units exists or is expected to develop. Limited
partners may be unable to sell their Units except at a discount and should
consider their 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.
To date, certain Local Limited Partnerships have incurred significant operating
losses and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partner may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired, and the loss and recapture of the related tax credits could occur.
Financial Condition
The Partnership's assets at March 31, 2004 consisted primarily of $1,709,000 in
cash, and aggregate investments in the thirteen Local Limited Partnerships of
$11,827,000. Liabilities at March 31, 2004 consisted of $183,000 in advances and
other payables due to the General Partner or affiliates and $1,485,000 in
contributions payable to limited partnerships.
The Partnership offered Units for sale to the public until February 28, 2003, at
which time total limited partner capital of $15,316,125 net of dealer and volume
discounts of $8,875 was raised.
13
Results of Operations
Year Ended March 31, 2004 Compared to Year Ended March 31, 2003. The
Partnership's net loss for the year ended March 31, 2004 was $(1,048,000),
reflecting an increase of $638,000 from the net loss of $(410,000) experienced
for the period ended March 31, 2003. The increase in net loss is primarily due
to equity in losses from limited partnerships which increased to $(840,000) for
the year ended March 31, 2004 from $(309,000) for the period ended March 31,
2003 along with an increase in loss from operations of $108,000. Equity in
losses of limited partnerships increased from prior year due to the investment
in thirteen Local Limited Partnerships which have completed construction and
started operations. Loss from operations increased due to increase of asset
management fees as the Partnership became operational.
Year Ended March 31, 2003 Compared to Period Ended March 31, 2002. The
Partnership's net loss for the year ended March 31, 2003 was $(410,000),
reflecting an increase of $(402,000) from the net loss of $(8,000) experienced
for the period ended March 31, 2002. The increase in net loss is primarily due
to equity in losses from limited partnerships which increased to $(309,000) for
the year ended March 31, 2003 from $(0) for the period ended March 31, 2002
along with an increase in loss from operations of $93,000. Equity in losses of
limited partnerships increased from prior year due to the investment in ten
Local Limited Partnerships which own twelve apartment complexes, ten of which
have completed construction and started operations. Loss from operations
increased due to increase of asset management fees as the Partnership became
operational.
Liquidity and Capital Resources
Year Ended March 31, 2004 Compared to Period Ended March 31, 2003. Net cash used
during the year ended March 31, 2004 was $(2,812,000) compared to net cash
provided for the period ended March 31, 2003 of $3,299,000. The change was
primarily due to a $11,116,000 decrease in cash provided by financing activities
net of expenses due to the sale of units, offset by an decrease of $(5,009,000)
of cash used in investing activities, for capital contributions paid to Local
Limited Partnerships and payments for capitalized acquisition costs and fees.
Year Ended March 31, 2003 Compared to Period Ended March 31, 2002. Net cash
provided during the year ended March 31, 2003 was $3,299,000 compared to net
cash provided for the period ended March 31, 2002 of $1,222,000. The change was
primarily due to a $10,244,000 increase in cash provided by financing activities
net of expenses due to the sale of units, offset by an increase of $(8,082,000)
of cash used in investing activities, for capital contributions paid to Local
Limited Partnerships and payments for capitalized acquisition costs and fees.
Cash flows used in investing activities for the period ended March 31, 2002
consisted of capitalized acquisition fees and costs totaling $137,000.
The Partnership expects its future cash flows, together with its net available
assets at March 31, 2003, to be sufficient to meet all currently foreseeable
future cash requirements. This excludes amounts owed to Associates by the
Partnership disclosed below.
Future Contractual Cash Obligations
The following table summarizes our future contractual cash obligations as of
March 31, 2004:
2005 2006 2007 2008 2009 Thereafter Total
---------- ---------- ---------- ---------- --------- ------------ -----------
Asset Management Fees $ 325,078 $ 143,296 $ 143,296 $ 143,296 $ 143,296 $ 7,450,391 $ 8,348,653
Capital Contributions Payable
to Lower Tier Partnerships 1,484,983 - - - - 1,484,983
---------- ---------- ---------- ---------- --------- ------------ -----------
Total contractual cash
obligations $ 1,810,061 $ 143,296 $ 143,296 $ 143,296 $ 143,296 $ 7,450,391 $ 9,833,636
========== ========== ========== ========== ========= ============ ===========
(1) Asset Management Fees are payable annually until termination of the
Partnership, which is to occur no later than 2062. The estimate of the fees
payable included herein assumes the retention of the Partnership's interest
in all Housing Complexes until 2062. Amounts due to the General Partner as
of March 31, 2004 have been included in the 2005 column.
For additional information on our Asset Management Fees and Capital
Contributions Payable to Lower Tier Partnerships, see Notes 3 and 6 to the
financial statements included elsewhere herein.
14
Off-Balance Sheet Arrangements
The Partnership has no off-balance sheet arrangements.
Exit Strategy
The IRS compliance period for low-income housing tax credit properties is
generally 15 years from occupancy following construction or rehabilitation
completion. WNC was one of the first in the industry to offer investments using
the tax credit. Now these very first programs are completing their compliance
period.
With that in mind, we are continuing our review of the Partnership's holdings,
with special emphasis on the more mature properties including those that may
have satisfied the IRS compliance requirements. Our review will consider many
factors including extended use requirements on the property (such as those due
to mortgage restrictions or state compliance agreements), the condition of the
property, and the tax consequences to the investors from the sale of the
property.
Upon identifying those properties with the highest potential for a successful
sale, refinancing or syndication, we expect to proceed with efforts to liquidate
those properties. Our objective is to maximize the investors' return wherever
possible and, ultimately, to wind down those funds that no longer provide tax
benefits to investors. To date no properties in the Partnership have been
selected.
Impact of New Accounting Pronouncements
In January 2003, the FASB issued Interpretation No. 46 ("FIN46"), "Consolidation
of Variable Interest Entities." FIN 46 provides guidance on when a company
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. 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 absorbs the majority of the entity's
expected losses, the majority of the expected returns, or both.
In December 2003, the FASB issued a revision of FIN 46 ("FIN 46R") to clarify
some of its provisions. The revision results in multiple effective dates based
on the nature as well as the creation date of the VIE. VIEs created after
January 31, 2003, but prior to January 1, 2004, may be accounted for either
based on the original interpretations or the revised interpretations. However,
all VIEs must be accounted for under the revised interpretations as of March 31,
2004, when FIN 46R is effective for the Partnership.
This Interpretation would require consolidation by the Partnership of certain
Local Limited Partnerships' assets and liabilities and results of operations if
the Partnership determined that the Local Limited Partnership was a VIE and that
the Partnership was the "Primary Beneficiary." Minority interests may be
recorded for the Local Limited Partnerships' ownership share attributable to
other Limited Partners. Where consolidation of Local Limited Partnerships is not
required, additional financial information disclosures of Local Limited
Partnerships may be required. The Partnership has assessed the potential
consolidation effects of the Interpretation and concluded that the adoption of
the Interpretation does not have a material impact on the financial statements
of the Partnership.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NONE
Item 8. Financial Statements and Supplementary Data
15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 9
We have audited the accompanying balance sheet of WNC Housing Tax Credit
Fund VI, L.P., Series 9 (a California Limited Partnership) (the "Partnership")
as of March 31, 2004 and the related statements of operations, partners' equity
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit. A significant
portion of the financial statements of the limited partnerships in which the
Partnership is a limited partner were audited by other auditors whose reports
have been furnished to us. As discussed in note 2 to the financial statements,
the Partnership accounts for its investments in limited partnerships using the
equity method. The portion of the Partnership's investment in limited
partnerships audited by other auditors represented $9,913,000 of the total
assets of the Partnership at March 31, 2004 and $630,000 of the Partnership's
equity in losses of limited partnerships for the year ended March 31, 2004. Our
opinion, insofar as it relates to the amounts included in the financial
statements for the limited partnerships which were audited by others, is based
solely on the reports of the other auditors.
We conducted our audit in accordance with the 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
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit and the reports of the other auditors provide a reasonable basis for our
opinion.
In our opinion, based on our audit and the reports of the other material
respects, the financial position of WNC Housing Tax Credit Fund VI, L.P., Series
9 (a California Limited Partnership) as of March 31, 2004, and the results of
its operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Reznick Group, PC
Bethesda, Maryland
November 1, 2004
16
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 9
We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
VI, L.P., Series 9 (a California Limited Partnership) (the "Partnership") as of
March 31, 2003 and the related statements of operations, partners' equity
(deficit) and cash flows for the year ended March 31, 2003 and for the period
August 3, 2001 (date operations commenced) through March 31, 2002. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. All of the financial statements of the limited partnerships in which
the Partnership is a limited partner were audited by other auditors whose
reports have been furnished to us. As discussed in Note 2 to the financial
statements, the Partnership accounts for its investments in limited partnerships
using the equity method. The portion of the Partnership's investment in limited
partnerships audited by other auditors represented 50% of the total assets of
the Partnership at March 31, 2003, and 100% and 0% of the Partnership's equity
in losses of limited partnerships for the year ended March 31, 2003 and for the
period August 3, 2001 (date operations commenced) through March 31, 2002,
respectively. Our opinion, insofar as it relates to the amounts included in the
financial statements for the limited partnerships which were audited by others,
is based solely on the reports of the other auditors.
We conducted our audits in accordance with 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 examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the reports of
the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly in all material respects,
the financial position of WNC Housing Tax Credit Fund VI, L.P., Series 9 (a
California Limited Partnership) as of March 31, 2003 and the results of its
operations and its cash flows for the year ended March 31, 2003 and for the
period August 3, 2001 (date operations commenced) through March 31, 2002 in
conformity with accounting principles generally accepted in the United States of
America.
/s/ BDO SEIDMAN, LLP
Costa Mesa, California
June 23, 2003
17
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
BALANCE SHEETS
March 31
-----------------------------
2004 2003
------------- -------------
ASSETS
Cash and cash equivalents $ 1,709,308 $ 4,521,172
Subscriptions and notes receivable (Note 6) 146 3,226
Investments in limited partnerships (Notes 2 and 3) 11,827,145 8,870,849
------------- -------------
$ 13,536,599 $ 13,395,247
============= =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Payables to limited partnerships (Note 5) $ 1,484,983 $ 849,320
Accrued fees and expenses due to General
Partner and affiliates (Note 3) 183,229 115,557
------------- -------------
Total liabilities 1,668,212 964,877
------------- -------------
Commitments and contingencies
Partners' equity (deficit) (Note 6)
General Partner (2,170) (1,122)
Limited partners (25,000 units authorized; 15,325 units
outstanding at March 31, 2004 and 2003) 11,870,557 12,431,492
------------- -------------
Total partners' equity 11,868,387 12,430,370
------------- -------------
$ 13,536,599 $ 13,395,247
============= =============
See accompanying notes to financial statements
18
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
For The Period
August 3,
2001 (Date
Operations
Commenced)
For the Year Ended March 31 through
-------------------------------
2004 2003 March 31, 2002
-------------------------------------------------
Interest income $ 5,716 $ 18,207 $ 441
Other income 2,288 2,000 -
-------------- ------------ ----------------
8,004 20,207 441
-------------- ------------ ----------------
Operating expenses:
Amortization (Notes 2 and 3) 49,217 24,068 189
Asset management fees (Note 3) 133,152 83,630 -
Legal and accounting 16,357 5,595 7,635
Other 17,983 7,487 155
-------------- ------------ ----------------
Total operating expenses 216,709 120,780 7,979
-------------- ------------ ----------------
Loss from operations (208,705) (100,573) (7,538)
Equity in losses of limited partnerships (Note 2) (839,570) (309,076) -
-------------- ------------ ----------------
Net loss $ (1,048,275) $ (409,649) $ (7,538)
============== ============ ================
Net loss allocated to:
General Partner $ (1,048) $ (410) $ (8)
============== ============ ================
Limited partners $ (1,047,227) $ (409,239) $ (7,530)
============== ============ ================
Net loss per limited partnership unit $ (68.33) $ (47.38) $ (188.25)
============== ============ ================
Outstanding weighted limited partner units 15,325 8,638 40
============== ============ ================
See accompanying notes to financial statements
19
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
General Limited Total
Partner Partners
--------------- -------------- ---------------
Contribution from General Partner and initial limited
partner on August 3, 2001 $ 100 $ 1,000 $ 1,100
Sale of limited partnership units - 1,933,000 1,933,000
Sale of limited partnership units issued for
promissory notes receivable (Note 6) - (151,500) (151,500)
Offering expenses - (251,290) (251,290)
Net loss (8) (7,530) (7,538)
--------------- -------------- ---------------
Partners' equity at March 31, 2002 92 1,523,680 1,523,772
Sale of limited partnership units (net of discounts
of $8,875) - 13,383,125 13,383,125
Sale of limited partnership units issued for
promissory notes receivable (Note 6) - (539,793) (539,793)
Collection of promissory notes receivable - 205,000 205,000
Offering expenses (804) (1,731,281) (1,732,085)
Net loss (410) (409,239) (409,649)
--------------- -------------- ---------------
Partners' equity (deficit) at March 31, 2003 (1,122) 12,431,492 12,430,370
Collection of promissory notes receivable - 486,292 486,292
Net loss (1,048) (1,047,227) (1,048,275)
--------------- -------------- ---------------
Partners' equity (deficit) at March 31, 2004 $ (2,170) $ 11,870,557 $ 11,868,387
=============== ============== ===============
See accompanying notes to financial statements
20
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
For The Period
August 3, 2001
(Date
Operations
For the Year For the Year Commenced)
Ended March Ended March through
31, 2004 31, 2003 March 31, 2002
---------------- ---------------- -----------------
Cash flows from operating activities:
Net loss $ (1,048,275) $ (409,649) $ (7,538)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Amortization 49,217 24,068 189
Equity in losses of limited partnerships 839,570 309,076 -
Change in interest receivable 3,080 (3,200) (26)
Change in due to general partner and affiliates 67,672 2,169 890
Change in other liabilities - (6,900) 6,900
---------------- ------------------ -----------------
Net cash provided by (used in) operating
activities (88,736) (84,436) 415
---------------- ------------------ -----------------
Cash flows from investing activities:
Investments in limited partnerships, net (3,099,814) (6,958,401) -
Capitalized acquisition costs and fees (110,186) (1,259,931) (136,530)
Distributions 580 - -
---------------- ------------------ ------------------
Net cash used in investing activities (3,209,420) (8,218,332) (136,530)
---------------- ------------------ -----------------
Cash flows from financing activities:
Capital contributions 486,292 13,412,332 1,418,600
Offering expenses - (1,810,197) (60,680)
---------------- ------------------ -----------------
Net cash provided by financing activities 486,292 11,602,135 1,357,920
---------------- ------------------ -----------------
Net increase (decrease) in cash and cash
equivalents (2,811,864) 3,299,367 1,221,805
Cash and cash equivalents, beginning of period 4,521,172 1,221,805 -
---------------- ------------------ -----------------
Cash and cash equivalents, end of period $ 1,709,308 $ 4,521,172 $ 1,221,805
================ ================== =================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ 800 $ 800 $ -
================ ================== =================
See accompanying notes to financial statements
21
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------
Organization
- ------------
WNC Housing Tax Credit Fund VI, L.P., Series 9, a California Limited Partnership
(the "Partnership"), was formed on July 17, 2001 under the laws of the state of
California, and commenced operations on August 3, 2001, the effective date of
its public offering pursuant to the Securities and Exchange Commission's
approval of the Partnership's Pre-Effective Amendment No. 1 to Form S-11
initially filed on August 16, 2001. The Partnership was formed to invest
primarily in other limited partnerships and limited liability companies (the
"Local Limited Partnerships") which own and operate multi-family housing
complexes (the "Housing Complex") that are eligible for low income housing 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. . During the year ended March 31, 2004, two of the
Partnerships Local Limited Partnerships were acquired from WNC Holding, LLC, a
wholly owned subsidiary of Associates (See Note 3).
The general partner of the Partnership is WNC & Associates, Inc. ("Associates"
or the "General Partner"). The chairman and the president of Associates own
substantially all of the outstanding stock of Associates. The initial limited
partner is an affiliate of Associates. The business of the Partnership is
conducted primarily through Associates, as the Partnership has no employees of
its own.
The Partnership shall continue in full force and effect until December 31, 2062,
unless terminated prior to that date, pursuant to the partnership agreement or
law.
The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.
The Partnership agreement authorized the sale of up to 25,000 units at $1,000
per Unit ("Units"). As of March 31, 2004, 15,325 Units, representing
subscriptions in the amount of $15,316,125, net of dealer discounts of $7,350
and volume discounts of $1,525, had been accepted. 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.
After the Limited Partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership Agreement) and the General Partner has received proceeds
equal to its capital contribution and a subordinated disposition fee (as
described in Note 3) 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.
22
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- -------------------------------------------------------------------------------
Risks and Uncertainties
- -----------------------
An investment in the Partnership and the Partnership's investments in Local
Limited Partnerships and their Housing Complexes are subject to risks. These
risks may impact the tax benefits of an investment in the Partnership, and the
amount of proceeds available for distribution to the Limited Partners, if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:
The Low Income Housing Credit rules are extremely complicated. Noncompliance
with these rules results in the loss of future Low Income Housing Credits and
the fractional recapture of Low Income Housing Credits already taken. In most
cases the annual amount of Low Income Housing Credits that an individual can use
is limited to the tax liability due on the person's last $25,000 of taxable
income. The Local Limited Partnerships may be unable to sell the Housing
Complexes at a 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
Credits may be the only benefit from an investment in the Partnership.
The Partnership has invested in a limited number of Local Limited Partnerships.
Such limited diversity means that the results of operation of each single
Housing Complex will have a greater impact on the Partnership. With limited
diversity, poor performance of one Housing Complex could impair the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage indebtedness. If a Local Limited Partnership failed to
pay its mortgage, it could lose its Housing Complex in foreclosure. If
foreclosure were to occur during the first 15 years, the loss of any remaining
Low Income Housing Credits, a fractional recapture of prior Low Income Housing
Credits, and a loss of the Partnership's investment in the Housing Complex would
occur. The Partnership is a limited partner or non-managing member of each Local
Limited Partnership. Accordingly, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships. The Partnership
will rely totally on the Local General Partners. Neither the Partnership's
investments in Local Limited Partnerships, nor the Local Limited Partnerships'
investments in Housing Complexes, are readily marketable. To the extent the
Housing Complexes receive government financing or operating subsidies, they may
be subject to one or more of the following risks: difficulties in obtaining
tenants for the Housing Complexes; difficulties in obtaining rent increases;
limitations on cash distributions; limitations on sales or refinancing of
Housing Complexes; limitations on transfers of interests in Local Limited
Partnerships; limitations on removal of Local General Partners; limitations on
subsidy programs; and possible changes in applicable regulations. Uninsured
casualties could result in loss of property and Low Income Housing Credits and
recapture of Low Income Housing Credits previously taken. The value of real
estate is subject to risks from fluctuating economic conditions, including
employment rates, inflation, tax, environmental, land use and zoning policies,
supply and demand of similar properties, and neighborhood conditions, among
others.
The ability of Limited Partners to claim tax losses from the Partnership is
limited. The IRS may audit the Partnership or a Local Limited Partnership and
challenge the tax treatment of tax items. The amount of Low Income Housing
Credits and tax losses allocable to the 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.
No trading market for the Units exists or is expected to develop. Limited
Partners may be unable to sell their Units except at a discount and should
consider their Units to be a long-term investment. Individual Limited Partnes
will have no recourse if they disagree with actions authorized by a vote of the
majority of Limited Partners.
23
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTSS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Exit Strategy
- -------------
The IRS compliance period for low-income housing tax credit properties is
generally 15 years from occupancy following construction or rehabilitation
completion. WNC was one of the first in the industry to offer investments using
the tax credit. Now these very first programs are completing their compliance
period.
With that in mind, the Partnership will review the Partnership's holdings, with
special emphasis on the more mature properties including those that have
satisfied the IRS compliance requirements. The Partnership's review will
consider many factors including extended use requirements on the property (such
as those due to mortgage restrictions or state compliance agreements), the
condition of the property, and the tax consequences to the limited partners from
the sale of the property.
Upon identifying those properties with the highest potential for a successful
sale, refinancing or syndication, the Partnership expects to proceed with
efforts to liquidate those properties. The Partnership's objective is to
maximize the limited partners' return wherever possible and, ultimately, to wind
down those funds that no longer provide tax benefits to limited partners. To
date no properties in the Partnership have been selected for disposition.
Method of Accounting for Investments in Limited Partnerships
- ------------------------------------------------------------
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnerships' results of operations
and for any contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by the estimated value derived by
management, generally consisting of the sum of the remaining future Low-Income
Housing 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 30
years (see Notes 2 and 3).
Equity in losses of limited partnerships for each year ended March 31 have been
recorded by the Partnership based on nine months of reported results provided by
the Local Limited Partnerships for each year ended December 31 and on three
months of results estimated by management of the Partnership. Management's
estimate for the three-month period is based on either actual unaudited results
reported by the Local Limited Partnerships or historical trends in the
operations of the Local Limited Partnerships. In subsequent annual financial
statements, upon receiving the actual annual results reported by the Local
Limited Partnerships, management reverses its prior estimate and records the
actual results reported by the Local Limited Partnerships. Equity in losses from
the Local Limited Partnerships allocated to the Partnership are not recognized
to the extent that the investment balance would be adjusted below zero. As soon
as the investment balance reaches zero, amortization of the related costs of
acquiring the investment are accelerated to the extent of losses available (see
Note 3). 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 balance has reached zero are recognized as income.
Reclassification
- ----------------
Certain prior year balances have been reclassified to conform to the 2004
presentation.
24
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTSS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred in connection with selling
limited partnership interests in the Partnership. The General Partner is
obligated to pay all offering and organization costs in excess of 13% (excluding
sales commissions and the dealer manager fee) of the total offering proceeds.
Offering expenses are reflected as a reduction of partners' capital and amounted
to $1,983,375 as of March 31, 2004 and 2003.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially differ from those
estimates.
Cash and Cash Equivalents
- -------------------------
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. As of
March 31, 2004 and 2003, the Partnership had no cash equivalents.
Concentration of Credit Risk
- ----------------------------
At March 31, 2004, the Partnership maintained cash balances at certain financial
institutions in excess of the federally insured maximum. The Partnership
believes that it is not exposed to any significant risks on cash.
Net Income Per Limited Partner Unit
- -----------------------------------
Net income per limited partner unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net income per unit
includes no dilution and is computed by dividing income available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net income per unit is not required.
Income Taxes
- ------------
No provision for income taxes has been recorded in the accompanying financial
statements as any liability and/or benefits for income tax purposes flows to the
partners of the Partnership and is their obligation and/or benefit. For income
tax purposes the Partnership reports on a calendar year basis.
25
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTSS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Impact of New Accounting Pronouncements
- ---------------------------------------
In January 2003, the FASB issued Interpretation No. 46 ("FIN46"), "Consolidation
of Variable Interest Entities." FIN 46 provides guidance on when a company
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. 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 absorbs the majority of the entity's
expected losses, the majority of the expected returns, or both.
In December 2003, the FASB issued a revision of FIN 46 ("FIN 46R") to clarify
some of its provisions. The revision results in multiple effective dates based
on the nature as well as the creation date of the VIE. VIEs created after
January 31, 2003, but prior to January 1, 2004, may be accounted for either
based on the original interpretations or the revised interpretations. However,
all VIEs must be accounted for under the revised interpretations as of March 31,
2004, when FIN 46R is effective for the Partnership.
This Interpretation would require consolidation by the Partnership of certain
Local Limited Partnerships' assets and liabilities and results of operations if
the Partnership determined that the Local Limited Partnership was a VIE and that
the Partnership was the "Primary Beneficiary." Minority interests may be
recorded for the Local Limited Partnerships' ownership share attributable to
other Limited Partners. Where consolidation of Local Limited Partnerships is not
required, additional financial information disclosures of Local Limited
Partnerships may be required. The Partnership has assessed the potential
consolidation effects of the Interpretation and concluded that the adoption of
the Interpretation does not have a material impact on the financial statements
of the Partnership.
26
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTSS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of March 31, 2004, the Partnership has acquired limited partnership interests
in thirteen Local Limited Partnerships, each of which owns one Housing Complex,
except for one that owns three Housing Complexes. Collectively, the Housing
Complexes consist of an aggregate of 506 apartment units. The respective Local
General Partners of the Local Limited Partnerships manage the day-to-day
operations of the entities. Significant Local Limited Partnership business
decisions require approval from the Partnership. The Partnership, as a limited
partner, is generally entitled to approximately 99%, as specified in the Local
Limited Partnership agreements, of the operating profits and losses, taxable
income and losses and tax credits of the Local Limited Partnerships.
The Partnership's investments in limited partnerships as reflected in the
balance sheets at March 31, 2004 and 2003 are approximately $2,909,000 and
$2,398,000, 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 to capital
contributions payable to the limited partnerships which were netted against
partner capital in the Local Limited Partnerships' financial statements (see
Note 5). The Partnership's investment is also lower than the Partnership's
equity as shown in the Local Limited Partnership's combined financial statements
due to the estimated losses recorded by the Partnership for the three month
period ended March 31.
Equity in losses of the Local Limited Partnerships is recognized in the
financial statements until the related investment account is reduced to a zero
balance. Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
A loss in value from a Local Limited Partnership other than a temporary decline
would be recorded as an impairment loss. Impairment is measured by comparing the
investment carrying amount to the sum of the total amount of the remaining tax
credits allocated to the Partnership and the estimated residual value of the
investment. The Partnership recorded no impairment loss during the years ended
March 31, 2004 and 2003.
Distributions received from Local Limited Partnerships are accounted for as a
reduction of the investment balance. Distributions received after the investment
has reached zero are recognized as income. As of March 31, 2004, no investment
accounts in Local Limited Partnerships had reached a zero balance.
The following is a summary of the equity method activity of the investments in
limited partnerships:
For the Years Ended
March 31
------------------------------
2004 2003
------------- --------------
Investments per balance sheet, beginning of year $ 8,870,849 $ 173,781
Capital contributions paid, net 3,099,814 6,958,602
Capital contributions payable 635,663 849,119
Equity in losses of limited partnerships (839,570) (309,076)
Acquisition fees and costs - 1,205,280
Distributions (580) -
Amortization of capitalized acquisition fees and costs (45,976) (23,812)
Capitalized warehouse interest and fees 110,186 17,211
Amortization of capitalized warehouse interest and fees (3,241) (256)
------------- --------------
Investments per balance sheet, end of year $ 11,827,145 $ 8,870,849
============= ==============
27
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTSS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
The financial information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted in
interest expense. Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships as of December
31 and for the year then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
2003 2002
----------------- --------------
ASSETS
Land $ 1,503,000 $ 573,000
Buildings and improvements, net of accumulated depreciation as of
December 31, 2003 and 2002 of $1,313,000 and $409,000, respectively 29,087,000 20,714,000
Other assets 1,239,000 1,079,000
--------------- ---------------
$ 31,829,000 $ 22,366,000
=============== ===============
LIABILITIES AND PARTNERS' EQUITY
Mortgage and construction loans payable $ 18,709,000 $ 12,675,000
Due to related parties 1,815,000 1,377,000
Other liabilities 513,000 757,000
--------------- ---------------
21,037,000 14,809,000
--------------- ---------------
PARTNERS' CAPITAL
WNC Housing Tax Credit Fund VI, L.P., Series 9 8,918,000 6,473,000
Other partners 1,874,000 1,084,000
--------------- ---------------
10,792,000 7,557,000
--------------- ---------------
$ 31,829,000 $ 22,366,000
=============== ===============
28
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTSS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED CONDENSED STATEMENTS OF OPERATIONS
2003 2002
--------------- ---------------
Revenues $ 2,313,000 $ 1,490,000
--------------- ---------------
Expenses:
Operating expenses 1,555,000 1,070,000
Interest expense 624,000 247,000
Depreciation and amortization 910,000 430,000
--------------- ---------------
Total expenses 3,088,000 1,747,000
--------------- ---------------
Net loss $ (776,000) $ (255,000)
=============== ===============
Net loss allocable to the Partnership $ (709,000) $ (255,000)
=============== ===============
Net loss recorded by the Partnership $ (840,000) $ (309,000)
=============== ===============
Certain Local Limited Partnerships have incurred significant operating losses
and/or have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partner may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired, and the loss of future and recapture of prior Low Income Housing
Credits could occur.
29
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTSS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 3 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partner or their affiliates for the following items:
Acquisition fees of 7% of the gross proceeds from the sale of Units as
compensation for services rendered in connection with the acquisition of Local
Limited Partnerships. As of March 31, 2004 and 2003, the Partnership incurred
acquisition fees of $1,072,750, which is included in investments in limited
partnerships. Accumulated amortization of these capitalized costs was $54,770
and $19,010, respectively, as of March 31, 2004 and 2003, respectively.
Acquisition costs of 2% of the gross proceeds from the sale of Units as
non-accountable reimbursement of costs incurred by the General Partner in
connection with the acquisition of Local Limited Partnerships. As of March 31,
2004 and 2003, the Partnership incurred acquisition costs of $306,500, which are
included in investments in limited partnerships. Accumulated amortization was
$15,207 and $4,991 as of March 31, 2004 and 2003, respectively.
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 financing costs
and interest charged by Holding. During the year ended March 31, 2004, two Local
Limited Partnerships, totaling $3,584,788 in paid capital contributions and
assumption of capital contributions payable, were acquired by the Partnership
from Holding. Additionally, for the year ended March 31, 2004 the Partnership
incurred financing costs of $17,386 and interest of $92,800 was incurred with
Holding in connection with these acquisitions. Accumulated amortization of these
acquisition costs was $3,497 and $256 as of March 31, 2004 and 2003,
respectively.
A non-accountable organization and offering expense reimbursement equal to 4% of
the gross proceeds from the sale of the Units, a dealer manager fee equal to 2%
of the gross proceeds from the sale of the Units, and reimbursement for retail
selling commissions advanced by the General Partner or affiliates on behalf of
the Partnership. This reimbursement plus all other organizational and offering
expenses, inclusive of the non-accountable organization and offering expense
reimbursement, and the dealer manager fees, are not to exceed 13% of the gross
proceeds from the sale of the Units. Non-accountable organizational offering
expense reimbursement and dealer manager fees totaled $613,000 for the year
ended March 31, 2004.
An annual asset management fee not to exceed 0.5% of the invested assets
(defined as the sum of the Partnerships' investment in local limited
partnerships and the Partnership's allocable share of the amount of the mortgage
loans on, and other debts related to, the apartment complexes) of the Local
Limited Partnerships. Management fees of $133,152 and $83,630 were incurred
during the years ended March 31, 2004 and 2003, respectively, of which $25,000
and $10,000 was paid during the years ended March 31, 2004 and 2003,
respectively.
The Partnership reimburses the General Partner or its affiliates for operating
expenses incurred in behalf of the Partnership. Operating expense reimbursements
were approximately $35,315 during the year ended March 31, 2004.
A subordinated disposition fee in an amount equal to 1% of the sales price of
real estate sold. Payment of this fee is subordinated to the Limited Partners
receiving a 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 such fees were incurred in the year ended March 31, 2004.
30
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTSS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
The accrued fees and expenses due to General Partner and affiliates consist of
the following at:
March 31
----------------------------------
2004 2003
--------------- ---------------
Asset management fees payable $ 181,782 $ 73,630
Organizational, offering and selling costs payable - 200
Commissions payable - 38,668
Reimbursements for expenses paid by the General Partner or an affiliate 1,447 3,059
--------------- ---------------
$ 183,229 $ 115,557
=============== ===============
The General Partner does not anticipate that these accrued fees will be paid in
full until such time as capital reserves are in excess of the future foreseeable
working capital requirements of the Partnership.
NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ----------------------------------------------------
The following is a summary of the quarterly operations for the years ended March 31:
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2004
----
Income $ 2,000 $ 1,000 $ 1,000 $ 4,000
Operating expenses (43,000) (62,000) (58,000) (54,000)
Equity in gains/(losses) of
limited partnerships (88,000) (335,000) (295,000) (122,000)
Net loss (129,000) (396,000) (352,000) (171,000)
Net Loss available to limited
partners (129,000) (396,000) (352,000) (171,000)
Net Loss available per limited
partner unit (8) (26) (23) (11)
31
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTSS - CONTINUED
For The Years Ended March 31, 2004 and 2003 and
For The Period August 3, 2001 (Date Operations Commenced)
through March 31, 2002
NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), continued
- ---------------------------------------------------------------
June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------
2003
----
Income $ 7,000 $ 4,000 $ 5,000 $ 4,000
Operating expenses (14,000) (29,000) (37,000) (41,000)
Equity in gains/(losses) of
limited partnerships 4,000 (18,000) (232,000) (63,000)
Net loss (3,000) (43,000) (264,000) (100,000)
Net Loss available to limited
partners (3,000) (43,000) (263,000) (100,000)
Net Loss available per limited
partner unit (1) (7) (26) (13)
NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the respective limited partnership
agreements. These contributions are payable in installments and are generally
due upon the limited partnerships achieving certain development and operating
benchmarks (generally within two years of the Partnership's initial investment).
NOTE 6 - SUBSCRIPTIONS AND NOTES RECEIVABLE
- -------------------------------------------
As of March 31, 2004, the Partnership had received subscriptions for 15,325
units. Limited partners who subscribed for ten or more units of limited
partnerships interest ($10,000) could elect to pay 50% of the purchase price in
cash upon subscription and the remaining 50% by the delivery of a promissory
note payable, together with interest at a rate equal to the three month treasury
bill rate as of the date of execution of the promissory note, due no later than
13 months after the subscription date. During the year ended March 31, 2004, the
promissory notes in the amount of $486,293 outstanding at March 31, 2003 were
collected in full.
32
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NOT APPLICABLE
Item 9a. Controls and Procedures
As of the end of the period covered by this report, the Partnership's General
Partner, under the supervision and with the participation of the Chief Executive
Officer and Chief Financial Officer of Associates carried out an evaluation of
the effectiveness of the Partnership's "disclosure controls and procedures" as
defined in Securities Exchange Act of 1934 Rule 13a-15 and 15d-15. Based on that
evaluation, the Chief Executive Officer and Principal Financial Officer have
concluded that as of the end of the period covered by this report, the
Partnership's disclosure controls and procedures were adequate and effective in
timely alerting them to material information relating to the Partnership
required to be included in the Partnership's periodic SEC filings.
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, 2004 that materially affected, or are reasonably likely to materially
affect, the Partnership's internal control over financial reporting.
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of Directors, (b) Identification of Executive Officers, (c)
--------------------------------------------------------------------------
Identification of Certain Significant Employees, (d) Family Relationships,
--------------------------------------------------------------------------
and (e) Business Experience
---------------------------
The Partnership has no directors, executive officers or employees of its own.
The following biographical information is presented for the directors, executive
officers and significant employees of Associates, which has principal
responsibility for the Partnership's affairs.
Associates is a California corporation which was organized in 1971. Its officers
and significant employees are:
Wilfred N. Cooper, Sr. Chairman of the Board
Wilfred N. Cooper, Jr. President and Chief Executive Officer
David N. Shafer, Esq. Executive Vice President and Director of Asset Management
Sylvester P. Garban Senior Vice President - Institutional Investments
Thomas J. Riha, CPA Senior Vice President - Chief Financial Officer
David C. Turek Senior Vice President - Originations
Michael J. Gaber Senior Vice President - Acquisitions
Diemmy T. Tran Vice President - Portfolio Management
In addition to Wilfred N. Cooper, Sr., the directors of Associates are Wilfred
N. Cooper, Jr., David N. Shafer, and Kay L. Cooper. The principal shareholder of
Associates is a trust established by Wilfred N. Cooper, Sr. and Kay L. Cooper.
Wilfred N. Cooper, Sr., age 73, is the founder and Chairman of the Board of
Directors of Associates, a Director of WNC Capital Corporation, and a general
partner in some of the partnerships previously sponsored by Associates. Mr.
Cooper has been actively involved in the affordable housing industry since 1968.
Previously, during 1970 and 1971, he was founder and a principal of Creative
Equity Development Corporation, a predecessor of Associates, and of Creative
Equity Corporation, a real estate investment firm. For 12 years before that, Mr.
Cooper was employed by Rockwell International Corporation, last serving as its
manager of housing and urban developments where he had responsibility for
factory-built housing evaluation and project management in urban planning and
development. He has testified before committees of the U.S. Senate and the U.S.
House of Representatives. Mr. Cooper is a Life Director of the National
Association of Home Builders and a National Trustee for NAHB's Political Action
Committee, and the Chairman of NAHB's Multifamily Council. He is a Director of
the National Housing Conference and a member of NHC's Executive Committee, and a
founder and Director of the California Housing Consortium. He is the husband of
Kay Cooper and the father of Wilfred N. Cooper, Jr. Mr. Cooper graduated from
Pomona College in 1956 with a Bachelor of Arts degree.
Wilfred N. Cooper, Jr., age 41, is President, Chief Executive Officer,
Secretary, a Director and a member of the Acquisition Committee of Associates.
He is President of, and a registered principal with, WNC Capital Corporation,
and is a Director of WNC Management, Inc. He has been involved in real estate
investment and acquisition activities since 1988 when he joined Associates.
33
Previously, he served as a Government Affairs Assistant with Honda North America
in Washington, D.C. Mr. Cooper is a member of the Editorial Advisory Boards of
Affordable Housing Finance and LIHC Monthly Report, a Steering Member of the
- ---------------------------- --------------------
Housing Credit Group of the National Association of Home Builders, an Alternate
Director of NAHB, a member of the Advisory Board of the New York State
Association for Affordable Housing and a member of the Urban Land Institute. He
is the son of Wilfred Cooper, Sr. and Kay Cooper. Mr. Cooper graduated from The
American University in 1985 with a Bachelor of Arts degree.
David N. Shafer, age 51, is Executive Vice President, a Director, Director of
Asset Management and a member of the Acquisition Committee of Associates, and a
Director and Secretary of WNC Management, Inc. Mr. Shafer has been active in the
real estate industry since 1984. Before joining Associates 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 President of the California
Council of Affordable Housing, and a member of the State Bar of California. Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts degree, from the New England School of Law in 1983 with a
Juris Doctor degree cum laude and from the University of San Diego in 1986 with
a Master of Law degree in Taxation.
Sylvester P. Garban, age 58, is Senior Vice President - Institutional
Investments of Associates. Mr. Garban has been involved in real estate
investment activities since 1978. Before joining Associates in 1989, he served
as Executive Vice President with MRW, Inc., a real estate development and
management firm. Mr. Garban is a member of the National Association of
Affordable Housing Lenders and the Financial Planning Association. He graduated
from Michigan State University in 1967 with a Bachelor of Science degree in
Business Administration.
Thomas J. Riha, age 48, is Senior Vice President - Chief Financial Officer and a
member of the Acquisition Committee of Associates and President, Treasurer and a
Director of WNC Management, Inc. He has been involved in real estate acquisition
and investment activities since 1979. Before joining Associates in 1994, Mr.
Riha was employed by Trust Realty Advisor, a real estate acquisition and
management company, last serving as Vice President - Operations. He is a
Director of the Task Force on Housing Credit Certification of the National
Association of Home Builders. Mr. Riha graduated from the California State
University, Fullerton in 1977 with a Bachelor of Arts degree cum laude in
Business Administration with a concentration in Accounting and is a Certified
Public Accountant and a member of the American Institute of Certified Public
Accountants.
David C. Turek, age 49, is Senior Vice President - Originations of Associates.
His experience with real estate investments and finance has continued since
1976, and he has been employed by Associates since 1996. Previously, from 1995
to 1996, Mr. Turek served as a consultant for a national tax credit sponsor
where he was responsible for on-site feasibility studies and due diligence
analyses of tax credit properties. From 1992 to 1995 he served as Executive Vice
President for Levcor, Inc., a multi-family development company, and from 1990 to
1992 he served as Vice President for the Paragon Group where he was responsible
for tax credit development activities. He is a Director of the National Housing
and Rehabilitation Association, the Rural Rental Housing Association of Texas,
and the Alabama Council of Affordable Rental Housing. Mr. Turek graduated from
Southern Methodist University in 1976 with a Bachelor of Business Administration
degree.
Michael J. Gaber, age 38, is Senior Vice President - Acquisitions and a member
of the Acquisition Committee of Associates. Mr. Gaber has been involved in real
estate acquisition, valuation and investment activities since 1989 and has been
associated with Associates since 1997. Prior to joining Associates, he was
involved in the valuation and classification of major assets, restructuring of
debt and analysis of real estate taxes with H.F. Ahmanson & Company, parent of
Home Savings of America. Mr. Gaber graduated from the California State
University, Fullerton in 1991 with a Bachelor of Science degree in Business
Administration - Finance.
Diemmy T. Tran, age 38, is Vice President - Portfolio Management of Associates.
She is responsible for overseeing portfolio management and investor reporting
for all WNC funds, and for monitoring investment returns for all WNC
institutional funds. Ms. Tran has been involved in real estate asset management
and finance activities for 12 years. Prior to joining Associates in 1998, Ms.
Tran served as senior asset manager for a national Tax Credit sponsor and as an
asset specialist for the Resolution Trust Corporation where she was responsible
for the disposition and management of commercial loan and REO portfolios. Ms.
Tran is licensed as a California real estate broker. She graduated from
California State University, Northridge in 1989 with a Bachelor of Science
degree in finance and a minor in real estate.
Kay L. Cooper, age 67, is a Director of Associates. Mrs. Cooper was the sole
proprietor of Agate 108, a manufacturer and retailer of home accessory products,
from 1975 until its sale in 1998. She is the wife of Wilfred Cooper, Sr. and the
mother of Wilfred Cooper, Jr. Mrs. Cooper graduated from the University of
Southern California in 1958 with a Bachelor of Science degree.
34
(f) Involvement in Certain Legal Proceedings
----------------------------------------
Inapplicable
(g) Promoters and Control Persons
-----------------------------
Inapplicable
(h) Audit Committee Financial Expert, and (I) Identification of the Audit
---------------------------------------------------------------------------
Committee
---------
Neither the Partnership nor Associates has an audit committee.
(i) Changes to Nominating Procedures
--------------------------------
Inapplicable
(j) Code of Ethics
--------------
WNC & Associates has adopted a Code of Ethics which applies to the Chief
Executive Officer and Chief Financial Officer of WNC & 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 118.
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or its affiliates for the following fees:
(a) Organization and Offering Expenses. The Partnership accrued or paid
the General Partner or its affiliates as of March 31, 2004 and 2003
approximately $1,983,000 and $1,983,000 for selling commissions and
other fees and expenses of the Partnership's offering of Units. Of the
total accrued or paid, approximately $1,064,000 as of March 31, 2004
and 2003 were paid or to be paid to unaffiliated persons participating
in the Partnership's offering.
(b) Acquisition Fees. Acquisition fees in an amount equal to 7.0% of the
gross proceeds of the Partnership's Offering ("Gross Proceeds"). As of
March 31, 2004 and 2003 the aggregate amount of acquisition fees paid
or accrued was approximately $1,073,000 and $1,073,000, respectively.
(c) Acquisition Expense. The Partnership reimbursed the General Partner
for acquisition expenses on a non-accountable basis in an amount equal
to 2% of the Gross Proceeds, pursuant to the terms of the partnership
agreement. As of March 31, 2004 and 2003, the aggregate amount of
acquisition fees paid or accrued was approximately $306,000 and
$306,000, respectively.
(d) Annual Asset Management Fee. An annual asset management fee accrues in
an amount equal to not to exceed 0.5% of the Invested Assets of the
Partnership. "Invested Assets" is defined as the sum of the
Partnership's Investment in Local Limited Partnerships and the
Partnership's allocable share of the amount of the mortgage loans and
other debts related to the Housing Complexes owned by such Local
Limited Partnerships. Fees of $133,000 and $84,000 were incurred for
the years ended March 31, 2004 and 2003, respectively.
(e) Operating Expenses. The Partnership reimbursed the General Partner or
its affiliates for operating expenses of approximately $35,000 and
$16,000 for the years ended March 31, 2004 and 2003 respectively.
(f) Subordinated Disposition Fee. A subordinated disposition fee in an
amount equal to 1% of the sale price maybe received in connection with
the sale or disposition of an Apartment Complex or Local Limited
Partnership Interest. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital
contributions and payment of the Return on Investment to the Limited
Partners. "Return on Investment" means an annual, cumulative but not
compounded, "return" to the Limited Partners (including Low Income
Housing Credits) as a class on their adjusted capital contributions
commencing for each Limited Partner on the last day of the calendar
quarter during which the Limited Partner's capital contribution is
received by the Partnership, calculated at the following rates: (i)
11% through December 31, 2010, and (ii) 6% for the balance of the
Partnerships term. No disposition fees have been incurred.
35
(g) Interest in Partnership. The General Partner will receive 0.1% of the
Low Income Housing Credits, which approximated $1,000 and $0 for the
General Partner for the tax year ended December 31, 2003 and 2002,
respectively. The General Partners is also entitled to receive a
percentage of cash distributions. There were no distributions of cash
to the General Partner during the year ended March 31, 2004 and 2003.
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 Units.
(c) Security Ownership of Management
---------------------------------
Neither the General Partner, its affiliates, nor any of the officers
or directors of the General Partner or its affiliates own directly or
beneficially any Units in the Partnership.
(d) Changes in Control
------------------
The management and control of the General Partner and of Associates
and their affiliates 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.
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
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.
36
Item 14. Principal Accountant Fees and Services
The following is a summary of fees paid to the Partnership's independent
auditors for the years ended March 31:
2004 2003
--------------- ---------------
Audit Fees $ 14,732 $ 18,820
Audit-related Fees - 35,000
Tax Fees 1,625 -
All Other Fees - -
--------------- ---------------
TOTAL $ 16,357 $ 53,820
=============== ===============
The Partnership has no Audit Committee. All audit services and any permitted
non-audit services performed by the Fund's independent auditors are pre-approved
by the General Partner.
37
PART IV.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof:
------------------------------------------------
Report of Independent Registered Public Accounting Firm- Reznick
Fedder & Silverman
Report of Independent Registered Public Accounting Firm - BDO Seidman
LLP
Balance Sheets, March 31, 2004 and 2003
Statements of Operations for the years ended March 31, 2004 and 2003
and for the period August 3, 2001(Date Operations Commenced) through
March 31, 2002
Statements of Partners' Equity (Deficit) for the years ended March 31,
2004 and 2003 and for the period August 3, 2001 (Date Operations
Commenced) through March 31, 2002
Statements of Cash Flows for the years ended March 31, 2004 and 2003
and for the period August 3, 2001(Date Operations Commenced) through
March 31, 2002
Notes to Financial Statements
(a)(2) Financial statement schedules:
------------------------------
Report of Independent Registered Public Accounting Firm on Financial
Statement Schedules - Reznick Group, PC
Report of Independent Registered Public Accounting Firm on Financial
Statement Schedules - BDO Seidman LLP
Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K
--------------------
NONE
(c) Exhibits
---------
3.1 First Amended and Restated Agreement of Limited Partnership of WNC
Housing Tax Credit Fund VI, L.P., Series 9 dated as of July 17, 2001
filed as Exhibit 3.1 to Post-Effective Amendment No. 1 to the
Registration Statement on Form S-11 filed on August 18, 2001 is hereby
incorporated herein by reference as Exhibit 3.1.
31.1 Certification of the Principal Executive Officer pursuant to Rule
13a-14 and 15d-14, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002. (filed herewith)
31.2 Certification of the Principal Financial Officer pursuant to Rule
13a-14 and 15d-14, as adopted pursuant to section 302 of the
Sarbanes-Oxley Act of 2002. (filed herewith)
32.1 Section 1350 Certification of the Chief Executive Officer. (filed
herewith)
32.2 Section 1350 Certification of the Chief Financial Officer. (filed
herewith)
99.1 Amended and Restated Operating Agreement of Byhalia Estates, L.P.
filed as Exhibit 10.1 to the current report on Form 8-K dated April 1,
2002 is herein incorporated by reference as Exhibit 99.1.
99.2 First amendment to the Amended and Restated Operating Agreement of
Byhalia Estates, L.P. filed as Exhibit 10.2 to the current report on
Form 8-K dated April 1, 2002 is herein incorporated by reference as
Exhibit 99.2.
99.3 Amendment to the Amended and Restated Limited Partnership Agreement of
Parker Estates Limited Partnership filed as exhibit 10.21 to the
current report on Form 8-K dated April 1, 2002 is herein incorporated
by reference as Exhibit 99.3.
38
99.4 First amendment to the Amended and Restated Limited Partnership
Agreement of Parker Estates Limited Partnership filed as exhibit 10.4
to the current report on Form 8-K dated April 23, 2002 is herein
incorporated by reference as Exhibit 99.4.
99.5 Amended and Restated agreement of Limited Partnership of Preservation
Partners III L.P. filed as exhibit 10.1to the current report on Form
8-K dated April 10, 2002 is herein incorporated by reference as
exhibit 99.5.
99.6 Amended and Restated agreement of Limited Partnership of Saw Mill
Creek II Limited Dividend Housing Association Limited Partnership.
filed as exhibit 10.3 to the current report on Form 8-K dated June 5,
2002 is herein incorporated by reference as exhibit 99.6.
99.7 First Amendment to the Amended and Restated agreement of Limited
Partnership of Saw Mill Creek II Limited Dividend Housing Association
Limited Partnership. filed as exhibit 10.2 to the current report on
Form 8-K dated June 5, 2002 is herein incorporated by reference as
exhibit 99.7.
99.8 Amended and Restated agreement of Limited Partnership of Mendota I
Limited Partnership. filed as exhibit 10.1 to the current report on
Form 8-K dated May 31, 2002 is herein incorporated by reference as
exhibit 99.8.
99.9 Amended and Restated agreement of Limited Partnership of Calico
Terrace Limited Partnership. filed as exhibit 10.1 to the current
report on Form 8-K dated July 24, 2002 is herein incorporated by
reference as exhibit 99.9.
99.10 First Amendment to the Amended and Restated agreement of Limited
Partnership of Calico Terrace Limited Partnership. filed as exhibit
10.2 to the current report on Form 8-K dated July 24, 2002 is herein
incorporated by reference as exhibit 99.10.
99.11 Second Amended and Restated agreement of Limited Partnership of
Oakview Terrace Townhomes Limited Partnership. filed as exhibit 10.1
to the current report on Form 8-K dated August 8, 2002 is herein
incorporated by reference as exhibit 99.11.
99.12 First Amendment to the Second Amended and Restated agreement of
Limited Partnership of Oakview Terrace Townhomes Limited Partnership.
filed as exhibit 10.1 to the current report on Form 8-K dated August
8, 2002 is herein incorporated by reference as exhibit 99.12.
99.13 Amended and Restated agreement of Limited Partnership of 505 West Main
Limited Partnership. filed as exhibit 10.1 to the current report on
Form 8-K dated July 31, 2002 is herein incorporated by reference as
exhibit 99.13.
99.14 First Amendment to the Amended and Restated agreement of Limited
Partnership of 505 West Main Limited Partnership. filed as exhibit
10.2 to the current report on Form 8-K dated July 31, 2002 is herein
incorporated by reference as exhibit 99.14.
99.15 Amended and Restated agreement of Limited Partnership of North Davison
Partners 99 Limited Partnership. filed as exhibit 10.1 to the current
report on Form 8-K dated July 31, 2002 is herein incorporated by
reference as exhibit 99.15.
99.16 First Amendment to the Amended and Restated agreement of Limited
Partnership of North Davison Partners 99 Limited Partnership. filed as
exhibit 10.2 to the current report on Form 8-K dated July 31, 2002 is
herein incorporated by reference as exhibit 99.16.
99.17 Amended and Restated agreement of Limited Partnership of McPherson
Housing Associates Limited Partnership. filed as exhibit 10.1 to the
current report on Form 8-K dated December 6, 2002 is herein
incorporated by reference as exhibit 99.17.
99.18 First Amendment to the Amended and Restated agreement of Limited
Partnership of McPherson Housing Associates Limited Partnership. filed
as exhibit 10.2 to the current report on Form 8-K dated December 6,
2002 is herein incorporated by reference as exhibit 99.18.
99.19 Second Amendment to the Amended and Restated agreement of Limited
Partnership of McPherson Housing Associates Limited Partnership. filed
as exhibit 10.3 to the current report on Form 8-K dated December 6,
2002 is herein incorporated by reference as exhibit 99.19.
39
99.20 Third Amendment to the Amended and Restated agreement of Limited
Partnership of McPherson Housing Associates Limited Partnership. filed
as exhibit 10.4 to the current report on Form 8-K dated December 6,
2002 is herein incorporated by reference as exhibit 99.20.
99.21 Amended and Restated agreement of Limited Partnership of Harbor Pointe
Limited Partnership. filed as exhibit 10.1 to the current report on
Form 8-K dated June 30, 2003 is herein incorporated by reference as
exhibit 99.21.
99.22 First Amendment to the Amended and Restated agreement of Limited
Partnership Harbor Pointe Limited Partnership. filed as exhibit 10.2
to the current report on Form 8-K dated June 30, 2003, is herein
incorporated by reference as exhibit 99.22.
99.23 Second Amendment to the Amended and Restated agreement of Limited
Partnership of Harbor Pointe Limited Partnership. filed as exhibit
10.3 to the current report on Form 8-K dated June 30, 2003 is herein
incorporated by reference as exhibit 99.23.
99.24 Amended and Restated agreement of Limited Partnership of Selman Place
Limited Partnership. filed as exhibit 10.4 to the current report on
Form 8-K dated June 30, 2003 is herein incorporated by reference as
exhibit 99.24.
99.25 First Amendment to the Amended and Restated agreement of Limited
Partnership Selman Place Limited Partnership. filed as exhibit 10.5 to
the current report on Form 8-K dated June 30, 2003 is herein
incorporated by reference as exhibit 99.25.
99.26 Second Amendment to the Amended and Restated agreement of Limited
Partnership Selman Place Limited Partnership. filed as exhibit 10.6 to
the current report on Form 8-K dated June 30, 2003 is herein
incorporated by reference as exhibit 99.26.
99.27 Financial Statements of McPherson Housing Associates Limited
Partnership, for the years ended December 31, 2003 and 2002 together
with Independent Auditors' Report thereon: a significant subsidiary of
the Partnership.
(d) Financial Statement schedule follow, as set forth in subsection (a)(2)
------------------------------------
hereof.
40
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL
STATEMENT SCHEDULES
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 9
The audit referred to in our report dated November 1, 2004 relating to the 2004
financial statements of WNC Housing Tax Credit Fund VI, L.P., Series 9 (a
California Limited Partnership) (the "Partnership"), which are contained in Item
8 of this Form 10-K, included the audit of the accompanying financial statement
schedule "Real Estate Owned by Local Limited Partnerships March 31, 2004." This
financial statement schedule is the responsibility of the Partnership's
management. Our responsibility is to express an opinion on this financial
statement schedule based upon our audit.
In our opinion, based on our audit and the reports of the other auditors, such
financial statement schedule referred to above presents fairly, in all material
respects, the information set forth therein.
/s/ Reznick Group, PC
Bethesda, Maryland
November 1, 2004
41
Report of Independent Registered Public Accounting Firm on Financial Statement
Schedules
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 9
The audits referred to in our report dated June 23, 2003 relating to the 2003
and 2002 financial statements of WNC Housing Tax Credit Fund VI, L.P., Series 9
(the "Partnership"), which are contained in Item 8 of this Form 10-K, included
the audit of the accompanying financial statement schedules. The financial
statement schedules, listed in Item 15(a)2, are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statement schedules based upon our audits.
In our opinion, such financial statement schedules present fairly, in all
material respects, the financial information set forth therein.
/s/ BDO SEIDMAN, LLP
Costa Mesa, California
June 23, 2003
42
WNC Housing Tax Credit Fund VI L.P., Series 9
Schedule III
March 31, 2004
----------------------------- ------------------------------------------------------------
As of March 31, 2004 As of December 31, 2003
----------------------------- ------------------------------------------------------------
Total Original Mortgage
Investment in Amount of Loans of Property
Local Limited Investment Local Limited and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ---------------------------------------------------------------------- ------------------------------------------------------------
505 West Vermillion,
Main Limited South
Partnership Dakota $ 761,000 $ 684,000 $ 2,111,000 $3,951,000 $(148,000) $ 3,803,000
Byhalia Byhalia,
Estates, L.P. Mississippi 219,000 219,000 736,000 966,000 (58,000) 908,000
Calico Terrace Calico
Limited Rock,
Partnership Arkansas 452,000 452,000 1,430,000 1,894,000 (58,000) 1,836,000
Harbor Tifton,
Pointe, L.P. Georgia 1,905,000 1,407,000 2,141,000 4,309,000 (58,000) 4,251,000
McPherson Housing
Associates McPherson,
Limited Partnership Kansas 1,770,000 1,695,000 2,009,000 3,931,000 (227,000) 3,704,000
Morris,
Illinois and
Mendota I, L.P, Mendota,
an Illinois Illinois and
limited partnership Plano,
Illinois 1,691,000 1,691,000 2,736,000 4,506,000 (268,000) 4,238,000
North Davison
Partners 99
Limited Partnership,
a South Mitchell,
Dakota Limited South
Partnership Dakota 481,000 409,000 696,000 1,194,000 (33,000) 1,161,000
Oakview Terrace North
Townhomes Branch,
Limited Partnership Minnesota 1,108,000 997,000 1,455,000 2,526,000 (68,000) 2,458,000
Parker
Estates, L.P., a
Mississippi limited Sunflower,
partnership Mississippi 274,000 274,000 999,000 1,363,000 (85,000) 1,278,000
Preservation
Partners III
Limited
Partnership, an
Illinois limited Monmouth,
partnership Illinois 579,000 579,000 792,000 1,373,000 (85,000) 1,288,000
43
WNC Housing Tax Credit Fund VI L.P., Series 9
Schedule III
March 31, 2004
----------------------------- ------------------------------------------------------------
As of March 31, 2004 As of December 31, 2003
----------------------------- ------------------------------------------------------------
Partnership's
Total Original Mortgage
Investment in Amount of Loans of Property
Local Limited Investment Local Limited and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ---------------------------------------------------------------------- ------------------------------------------------------------
Saw Mill Creek II
Limited Dividend
Housing Association
Limited Partnership, a
Michigan limited Vicksburg,
partnership Michigan 383,000 322,000 1,203,000 1,586,000 (142,000) 1,444,000
Selman Bainbridge,
Place, L.P. Georgia 1,679,000 1,329,000 2,401,000 4,304,000 (83,000) 4,221,000
Villas of Coon Rapids,
Palm L.P. Minnesota 241,000 - - - - -
------------ ------------- ----------- ----------- ----------- -----------
$ 11,543,000 $ 10,058,000 $ 18,709,000 $ 31,903,000 $ (1,313,000) $ 30,590,000
============ ============= =========== =========== =========== ===========
44
WNC Housing Tax Credit Fund VI, Series 9
Schedule III
Real Estate Owned by Local Limited Partnerships
-------------------------------------------------------------------------------------------
For the year ended December 31, 2003
-------------------------------------------------------------------------------------------
Partnership Name Rental Net Year Investment Estimated Useful
Income Income/(loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
505 West Main Limited
Partnership $ 357,000 $ (110,000) 2002 Completed 40
Byhalia Estates, L.P. 124,000 (1,000) 2002 Completed 40
Calico Terrace Limited
Partnership 140,000 (18,000) 2002 Completed 25
Harbor Pointe, L.P. 64,000 (105,000) 2001 Completed 40
McPherson Housing Associates
Limited Partnership 338,000 (229,000) 2002 Completed 40
Mendota I, L.P., an Illinois
limited partnership 466,000 (46,000) 2002 Completed 40
North Davison Partners 99
Limited Partnership, a South
Dakota Limited Partnership 130,000 (12,000) 2002 Completed 30
Oakview Terrace Townhomes
Limited Partnership 96,000 (37,000) 2002 Completed 40
Parker Estates, L.P., a
Mississippi limited partnership 175,000 15,000 2002 Completed 40
Preservation Partners III
Limited Partnership, an
Illinois limited partnership 116,000 (73,000) 2002 Completed 40
Saw Mill Creek II Limited
Dividend Housing Association
Limited Partnership, a
Michigan limited partnership 111,000 (79,000) 2002 Completed 27.5
Selman Place, L.P. 105,000 (81,000) 2001 Completed 40
Villas of Palm L.P. - - 2004 Completed 30
------------ -----------
$ 2,222,000 $ (776,000)
============ ===========
45
WNC Housing Tax Credit Fund VI L.P., Series 9
Schedule III
March 31, 2003
----------------------------- ------------------------------------------------------------
As of March 31, 2003 As of December 31, 2002
----------------------------- ------------------------------------------------------------
Partnership's
Total Original Mortgage
Investment in Amount of Loans of Property
Local Limited Investment Local Limited and Accumulated Net Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ---------------------------------------------------------------------- ------------------------------------------------------------
505 West Vermillion,
Main Limited South
Partnership Dakota $ 761,000 $ 685,000 $ 1,806,000 $ 3,891,000 $ (49,000) $ 3,842,000
Byhalia Byhalia,
Estates, L.P. Mississippi 244,000 183,000 591,000 967,000 (24,000) 943,000
Calico Terrace Calico
Limited Rock,
Partnership Arkansas 452,000 312,000 1,326,000 1,730,000 (11,000) 1,719,000
McPherson Housing
Associates McPherson,
Limited Partnership Kansas 1,770,000 1,695,000 2,157,000 3,930,000 (83,000) 3,847,000
Morris,
Illinois and
Mendota I, L.P, Mendota,
an Illinois Illinois and
limited partnership Plano,
Illinois 1,701,000 1,616,000 2,749,000 4,481,000 (112,000) 4,369,000
North Davison
Partners 99
Limited Partnership,
a South Mitchell,
Dakota Limited South
Partnership Dakota 482,000 410,000 673,000 949,000 (11,000) 938,000
Oakview Terrace North
Townhomes Branch,
Limited Partnership Minnesota 1,108,000 997,000 441,000 1,436,000 - 1,436,000
Parker
Estates, L.P., a
Mississippi limited Sunflower,
partnership Mississippi 328,000 246,000 939,000 1,363,000 (37,000) 1,326,000
Preservation
Partners III
Limited
Partnership, an
Illinois limited Monmouth,
partnership Illinois 579,000 492,000 821,000 1,362,000 (29,000) 1,333,000
Saw Mill Creek II
Limited Dividend
Housing Association
Limited Partnership, a
Michigan limited Vicksburg,
partnership Michigan 383,000 322,000 1,172,000 1,587,000 (53,000) 1,534,000
------------ ------------- ----------- ----------- ----------- -----------
$ 7,808,000 $ 6,958,000 $ 12,675,000 $ 21,696,000 $ (409,000) $ 21,287,000
============ ============= =========== =========== =========== ===========
46
WNC Housing Tax Credit Fund VI, Series 9
Schedule III
Real Estate Owned by Local Limited Partnerships
-------------------------------------------------------------------------------------------
For the year ended December 31, 2003
-------------------------------------------------------------------------------------------
Partnership Name Rental Net Year Investment Estimated Useful
Income Income/(loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
505 West Main Limited
Partnership $ 208,000 $ (74,000) 2002 Completed 40
Byhalia Estates, L.P. 101,000 - 2002 Completed 40
Calico Terrace Limited
Partnership 64,000 6,000 2002 Under construction 25
McPherson Housing Associates
Limited Partnership 199,000 (142,000) 2002 Completed 40
Mendota I, L.P.,an Illinois
limited partnership 478,000 30,000 2002 Completed 40
North Davison Partners 99
Limited Partnership 104,000 (22,000) 2002 Under construction 30
Oakview Terrace Townhomes
Limited Partnership - 3,000 2002 Under construction N/A
Parker Estates, L.P., a
Mississippi limited partnership 118,000 (26,000) 2002 Completed 40
Preservation Partners III
Limited Partnership, an
Illinois limited partnership 99,000 11,000 2002 Under construction 40
Saw Mill Creek II Limited
Dividend Housing Association
Limited Partnership, a
Michigan limited partnership 63,000 (41,000) 2002 Completed 27.5
------------ ------------
$ 1,434,000 $ (255,000)
============ ===========
47
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 9
By: WNC & Associates, Inc.,
General Partner
By: /s/ Wilfred N. Cooper, Jr.
--------------------------
Wilfred N. Cooper, Jr.,
President of WNC & Associates, Inc.
Date: February 23, 2005
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: February 23, 2005
By: /s/ Thomas J. Riha
------------------
Thomas J. Riha,
Senior Vice-President - Chief Financial Officer of
WNC & Associates, Inc. (principal financial officer and principal
accounting officer)
Date: February 23, 2005
By: /s/ Wilfred N. Cooper, Sr.
--------------------------
Wilfred N. Cooper, Sr.,
Chairman of the Board of WNC & Associates, Inc.
Date: February 23, 2005
By: /s/ David N. Shafer
-------------------
David N Shafer,
Director of WNC & Associates, Inc.
Date: February 23, 2005
48