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EX-32.2 - CERTIFICATION - WNC Housing Tax Credit Fund VI, L.P., Series 13wnc_ex322.htm
EX-31.1 - CERTIFICATION - WNC Housing Tax Credit Fund VI, L.P., Series 13wnc_ex321.htm
EX-31.2 - CERTIFICATION - WNC Housing Tax Credit Fund VI, L.P., Series 13wnc_ex312.htm
EX-31.1 - CERTIFICATION - WNC Housing Tax Credit Fund VI, L.P., Series 13wnc_ex311.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

S    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2015

OR

* TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number:  333-124115
 
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 13
(Exact name of registrant as specified in its charter)
 
California
20-2355224
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
 
17782 Sky Park Circle
 
92614-6404
Irvine, CA
(Zip Code)
(Address of principal executive offices)
 

(714) 662-5565
(Telephone number)

Securities registered pursuant to Section 12(b) of the Act:

NONE

Securities registered pursuant to section 12(g) of the Act:

UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)


 
 
 
 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
Yes_____ No___X__

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes_____ No ___X__

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes             No     X

 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes    X      No _____                                            

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer___ Accelerated filer___ Non-accelerated filer___X__ Smaller reporting company_____

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes____ No__X__


State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

INAPPLICABLE

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).

NONE

 
 

 
 
 
Page
 
 
PART I
 
     
3
5
13
13
Item 3.
Legal Proceedings
 
17
     
 
PART II
 
     
17
 
17
17
17
18
20
27
27
28
28
29
     
 
PART III
 
     
29
32
33
34
34
     
 
PART IV
 
     
35
     
42

 
 
2

 
 
PART 1.


Organization

WNC Housing Tax Credit Fund, VI, L.P., Series 13, a California Limited Partnership (the "Partnership"), was formed on February 7, 2005 under the laws of the State of California, and commenced operations on December 14, 2005.  The Partnership was formed to invest primarily in other limited partnerships or limited liability companies (the “Local Limited Partnerships”) which own multi-family housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits ("Low Income Housing Tax Credits"). The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complex. Each Local Limited Partnership is governed by its agreement of limited partnership or operating agreement (the “Local Limited Partnership Agreement”).

The general partner of the Partnership is WNC National Partners, LLC (the "General Partner").  The general partner of the General Partner is WNC & Associates, Inc. ("Associates"). The chairman and the president of Associates own all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates, as the Partnership and the General Partner have no employees of their own.

Pursuant to a registration statement filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 18, 2005, the Partnership commenced a public offering of 25,000 units of limited partnership interest (“Partnership Units”) at a price of $1,000 per Partnership Unit.  The required minimum offering amount of $1,400,000 was achieved by December 14, 2005.  Total subscriptions for 20,981 Partnership Units had been accepted, representing $20,965,400, which is net of volume discounts of $4,540 and dealer discounts of $11,060. Holders of Partnership Units are referred to herein as “Limited Partners.”  As of March 31, 2015 and 2014, a total of 20,951 and 20,971, respectively, Partnership Units remain outstanding. The General Partner has a 0.1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the Partnership and tax credits.  The Limited Partners will be allocated the remaining 99.9% interest in proportion to their respective investments.  This offering was closed on September 21, 2006.

The Partnership shall continue in full force and effect until December 31, 2070, unless terminated prior to that date, pursuant to the Partnership Agreement (as defined below) or law.

Description of Business

The Partnership's principal business objective is to provide its Limited Partners with Low Income Housing Tax Credits.  The Partnership's principal business therefore consists of investing as a limited partner or non-managing member in Local Limited Partnerships, each of which will own and operate a Housing Complex which will qualify for the Low Income Housing Tax Credits.  In general, under Section 42 of the Internal Revenue Code, an owner of low income housing can receive the Low Income Housing Tax Credits to be used to reduce Federal taxes otherwise due in each year of a ten-year credit period. Each Housing Complex is subject to a 15-year compliance period (the “Compliance Period”), and under state law may have to be maintained as low income housing for 30 or more years.
 
 
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As a consequence of the provisions of tax law in effect for dispositions of buildings prior to August 2008, in order to avoid recapture of Low Income Housing Tax Credits, the Partnership expected that it would not dispose of its interests in Local Limited Partnerships (“Local Limited Partnership Interests”) or approve the sale by any Local Limited Partnership of its Housing Complex prior to the end of the applicable Compliance Period. That provision of law was amended in 2008 (i) to provide that there would be no recapture on sale of a Low Income Housing Tax Credit building during the Compliance Period if it were reasonable to expect at the time of sale that the building would continue to be operated as qualified low income housing (see “Exit Strategy” below) and (ii) to eliminate the possibility of posting a bond against potential recapture.  The Partnership is not seeking to sell its Local Limited Partnership Interests.  And, because of (i) the nature of the Housing Complexes and the Local Limited Partnership Interests, (ii) the difficulty of predicting the resale market for low-income housing, (iii) the current economy, and (iv) the ability of lenders to disapprove of transfer, it is not possible at this time to predict when the liquidation of the Partnership's assets and the disposition of the proceeds, if any, in accordance with the Partnership's Agreement of Limited Partnership dated February 7, 2005 (the "Partnership Agreement"), would occur.  Furthermore, the codification of the economic substance doctrine as part of 2010 legislation has created some uncertainty about the deductibility of losses from low income housing that is not generating Low Income Housing Tax Credits, and this could have an adverse effect on the resale market for Housing Complexes and Local Limited Partnership Interests.  Until a Local Limited Partnership Interest or the related Housing Complex is sold, it is anticipated that the Local General Partner would continue to operate such Housing Complex.

The Partnership originally invested in ten Local Limited Partnerships, three of which have been sold or otherwise disposed of as of March 31, 2015. Each of these Local Limited Partnerships owns or owned a Housing Complex that is eligible for the Federal Low Income Housing Tax Credits. Certain Local Limited Partnerships may also benefit from additional government programs promoting low or moderate income housing.

Exit Strategy

The Compliance Period for a Housing Complex is generally 15 years following construction or rehabilitation completion. Associates was one of the first in the industry to offer syndicated investments in Low Income Housing Tax Credits.  The initial programs have completed their Compliance Periods.  Upon the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits.  A sale prior to the end of the Compliance Period must satisfy the reasonable belief test outlined above to avoid recapture.

The following table reflects the end of the ten-year credit period and the fifteen-year Compliance Period of each remaining Housing Complex:

Local Limited Partnership Name
Expected last
 year of credit delivery
15-year Expiration Date
     
909 4th YMCA, L.P.
2010
2014
Crestview Housing, L.P.
2022
2022
Davenport Housing VII, L.P.
2020
2024
FDI-Country Square, LTD
2017
2021
FDI-Park Place, LTD
2017
2021
Head Circle, L.P.
2016
2020
Pleasant Village, L.P.
2017
2021
 
With that in mind, the General Partner is continuing its review of the Housing Complexes, with special emphasis on the more mature Housing Complexes such as any that have satisfied the IRS compliance requirements.  The review considers many factors, including extended use requirements (such as those due to mortgage restrictions or state compliance agreements), the condition of the Housing Complexes, Partnership cash flow, and the tax consequences to the Limited Partners from the sale of the Housing Complexes.

During the year ended March 31, 2011, the Partnership sold two Local Limited Partnerships, Fernwood Meadows, L.P. (“Fernwood”) and Sierra’s Run, L.P., (“Sierra’s Run”), in order to generate sufficient equity to complete the purchase of additional Low Income Housing Tax Credits for Davenport VII, L.P. (“Davenport”).

Fernwood and Sierra’s Run will complete their Compliance Periods in 2022; therefore there is a risk of tax credit recapture.  The maximum exposure of recapture (excluding the interest and penalties related to the recapture) is $177,508 and $170,246, respectively, for Fernwood and Sierra’s Run, which equates to $16.57 per Partnership Unit in the aggregate.  Under the circumstances, the General Partner believes there is a reasonable expectation that each Local Limited Partnership will continue to be operated as qualified low income housing for the balance of its Compliance Period, and, accordingly, does not anticipate that there will be any recapture.

During the year ended March 31, 2015, the underlying Housing Complex of Grove Village Limited Partnership (“Grove Village”) was sold resulting in the termination of the Partnership’s Local Limited Partnership interest. Grove Village was appraised for $1,700,000 and had a mortgage note balance of $5,756,079 as of December 31, 2013. The sale price was $1,690,000, of which approximately $99,000 was used for third party brokerage fees, $239,000 was used for liens held by the City of Dallas for past due water and sewer fees, $36,000 was used for corporate liens, $77,000 was used for liens in litigation, $8,000 was paid to TDHCA, $129,000 was used to pay past due property taxes, $60,000 was used to pay past due payables, and $10,000 was used for prorated prepaid rents. Lastly there was $100,000 to remain in escrow for 60 days for any unforeseen payables or liens are brought forward. After a deduction of $7,944 in escrow expenses, $92,056 was reimbursed to the Partnership in April 2015. Of the balance, $625,000 was used for repayment of the mortgage note. Although the note was being carried on the books at $5,756,079, the note had been acquired by Associates for $625,000. The new loan holder accepted $625,000 as payment in full, although it was entitled to the full outstanding amount. The difference between $5,756,079 and $625,000 is cancelation of debt income and will flow through to the investors as such. It will appear on the 2015 Forms K-1, as will all results of the sale. To date, proceeds of $409,495 have been received by the Partnership, of which $306,244 was received during the year ended March 31, 2015. These proceeds are being held in the Partnership’s reserves and no distributions to partners are expected. The Partnership has incurred $43,509 approximately in sales related expenses which will be netted against the proceeds from the sale in calculating the gain on the sale. The Partnership’s investment balance in Grove Village immediately prior to the sale was zero; and $99,130 of capital contributions payable were written off resulting in a gain of $361,865. Additional gains could be recognized due to the cancellation of debt income. Due the fact that 8609’s were never obtained for Grove Village there is no applicable Compliance Period.

Subsequent to March 31, 2015, the Partnership entered into an Agreement to Gift with The Young Men’s Christian Association of Greater Seattle, a nonprofit corporation, for its Local Limited Partnership interest in 909 4th YMCA Limited Partnership (“909 4th”).  909 4th was appraised for $8,700,000 with an effective date in January 2015. The Partnership received reimbursements of $2,400 for appraisal expenses, $5,120 for legal fees, and $1,600 for sale valuation services. The Partnership incurred $2,660 of sales related expenses which were netted against the reimbursements from the sale in calculating the gain on sale. The investment balance was zero at the time of the sale of the Local Limited Partnership; therefore a gain of $6,460 was recorded during the period. The Compliance Period for 909 4th has expired so there is no risk of tax credit recapture to the investors.
 
 
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Subsequent to March 31, 2015, the underlying Housing Complex of Pleasant Village Limited Partnership (“Pleasant Village”) was sold, resulting in the termination of the Partnership’s Local Limited Partnership interest. Pleasant Village was appraised for $1,800,000 and had a mortgage note balance of $5,344,000 as of December 31, 2014. The sale price was $2,450,000,of which $109,000 was used for third party brokerage fees, $22,000 was used for  the LIHTC recapture bond, $9,000 was paid to TDHCA, $235,000 was used to pay past due property taxes, $32,000 was used for prorated prepaid rents, and $10,000 was used to pay title fees, escrow fees and sale related expenses. Lastly there was $272,000 to remain in escrow for up to 90 days for any unforeseen payables or liens that are brought forward. Sale proceeds of $1,760,418 was reimbursed to the Partnership, in which $625,000 was used for repayment of the mortgage note. Although the note was being carried on the books at $5,756,079, the note had been acquired by Pleasant Village Lending Partner, LLC for $625,000. The new loan holder accepted $625,000 as payment in full, although it was entitled to the full outstanding amount. The remaining $1,135,418 is being held in the Partnership’s reserves and no distributions to partners are expected due to the fact that the Partnerships liabilities exceed the cash received. The Partnership has incurred approximately $8,000 in sales related expenses which will be netted against the proceeds from the sale for calculating the gain on the sale.

Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or re-syndication, the Partnership expects to proceed with efforts to liquidate them or the applicable Local Limited Partnership Interests. The objective is to wind down the Partnership after Low Income Housing Tax Credits are no longer available. Local Limited Partnership Interests may be disposed of at any time by the General Partner in its discretion.

The proceeds from the disposition of any Housing Complex will be used first to pay debts and other obligations per the applicable Local Limited Partnership Agreement.  Any remaining proceeds will then be paid to the partners of the Local Limited Partnership, including the Partnership, in accordance with the terms of the applicable Local Limited Partnership Agreement.

The sale of a Housing Complex may be subject to other restrictions and obligations.  Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex.  Even if it does so, there can be no assurance that any amounts of cash will be distributed to the Limited Partners, as the proceeds first would be used to pay Partnership obligations and to fund reserves.  Similarly, there can be no assurance that the Partnership will be able to sell its Local Limited Partnership Interests, or that cash therefrom would be available for distribution to the Limited Partners.


Set forth below are the risks the Partnership believes are the most significant to the Limited Partners.  The Partnership and the Local Limited Partnerships operate in a continually changing business environment and, therefore, new risks emerge from time to time.  This section contains some forward-looking statements.  For an explanation of the qualifications and limitations on forward-looking statements, see Item 7.
 
(a)           Risks arising from the Internal Revenue Code rules governing Low Income Housing Tax Credits

Low Income Housing Tax Credits might not be available.  If a Housing Complex does not satisfy the requirements of Internal Revenue Code Section 42, then the Housing Complex will not be eligible for Low Income Housing Tax Credits.

               Low Income Housing Tax Credits might be less than anticipated. The Local General Partners will calculate the amount of the Low Income Housing Tax Credits. No opinion of counsel will cover the calculation of the amount of Low Income Housing Tax Credits. The IRS could challenge the amount of the Low Income Housing Tax Credits claimed for any Housing Complex under any of a number of provisions set forth in Internal Revenue Code Section 42. A successful challenge by the IRS would decrease the amount of the Low Income Housing Tax Credits from the amount paid for by the Partnership.

Low Income Housing Tax Credits may be recaptured if Housing Complexes are not owned and operated for 15 years. Housing Complexes must comply with Internal Revenue Code Section 42 for the 15-year Compliance Period. Low Income Housing Tax Credits will be recaptured with interest to the extent that a Housing Complex is not rented as low income housing or in some other way does not satisfy the requirements of Internal Revenue Code Section 42 during the Compliance Period

For these purposes, disposition includes transfer by way of foreclosure. It will be up to the Partnership to determine whether to post a bond. There is no obligation under the agreements with the Local Limited Partnerships that the Local Limited Partnerships must do so.
 
 
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There can be no assurance that recapture will not occur.  If it does, recapture will be a portion of all Low Income Housing Tax Credits taken in prior years for that Housing Complex, plus interest.  During the first 11 years of the Compliance Period, non-compliance results in one-third of the Low Income Housing Tax Credits up to that point for the particular Housing Complex being recaptured, plus interest.  Between years 12 and 15, the recapture is phased out ratably.

Sales of Housing Complexes are subject to limitations which may impact a Local Limited Partnership’s ability to sell its Housing Complex.  Each Local Limited Partnership executes an extended low income housing commitment with the state in which the Housing Complex is located.  The extended low income housing commitment states the number of years that the Local Limited Partnership and any subsequent owners must rent the Housing Complex as low income housing.  Under Federal law, the commitment must be for at least 30 years.  The commitment, actually agreed to, may be significantly longer than 30 years.  In prioritizing applicants for Low Income Housing Tax Credits, most states give additional points for commitment periods in excess of 30 years.  On any sale of the Housing Complex during the commitment period, the purchaser would have to agree to continue to rent the Housing Complex as low income housing for the duration of the commitment period.  This requirement reduces the potential market, and possibly the sales price, for the Housing Complexes.  The sale of a Housing Complex may be subject to other restrictions.  For example, Federal lenders or subsidizers may have the right to approve or disapprove a purchase of a Housing Complex.  Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex.  Even if it does so, there can be no assurance that any amount of cash will be distributed to the Limited Partners.  The Partnership would first use sale proceeds to pay obligations of the Partnership.  As a result, a material portion of the Low Income Housing Tax Credits may represent a return of the money originally invested in the Partnership.

As part of the recently enacted health care legislation, Congress has codified the economic substance doctrine. Because of its recent enactment, the full reach of this provision is unclear.  Inasmuch as Housing Complexes might offer no benefit to a purchaser other than tax benefits, it is possible that the economic substance doctrine could be interpreted to limit deduction of tax losses from Housing Complexes, which would be expected to have a significant adverse effect on the sale value of the Housing Complexes and the Local Limited Partnership Interests.

Limited Partners can only use Low Income Housing Tax Credits in limited amounts.  The ability of an individual or other non-corporate Limited Partner to claim Low Income Housing Tax Credits on his individual tax return is limited. For example, an individual Limited Partner can use Low Income Housing Tax Credits to reduce his tax liability on:

·
an unlimited amount of passive income, which is income from entities such as the Partnership, and
·
$25,000 in income from other sources.

However, the use of Low Income Housing Tax Credits by an individual against these types of income is subject to ordering rules, which may further limit the use of Low Income Housing Tax Credits.  Some corporate Limited Partners are subject to similar and other limitations. They include corporations which provide personal services, and corporations which are owned by five or fewer shareholders.

Any portion of a Low Income Housing Tax Credit which is allowed to a Limited Partner under such rules is then aggregated with all of the Limited Partner’s other business credits.  The aggregate is then subject to the general limitation on all business credits.  That limitation provides that a Limited Partner can use business credits to offset the Limited Partner’s annual tax liability equal to $25,000 plus 75% of the Limited Partner’s tax liability in excess of $25,000. However, there may be limits on the use business credits to offset any alternative minimum tax.  All of these concepts are extremely complicated.

(b)           Risks related to investment in Local Limited Partnerships and Housing Complexes

Because the Partnership has few investments, each investment will have a great impact on the Partnership’s results of operations.  Any single Housing Complex experiencing poor operating performance, impairment of value or recapture of Low Income Housing Tax Credits will have a significant impact upon the Partnership as a whole.
 
 
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The failure to pay mortgage debt could result in a forced sale of a Housing Complex. Each Local Limited Partnership leverages the Partnership’s investment therein by incurring mortgage debt. A Local Limited Partnership’s revenues could be less than its debt payments and taxes and other operating costs.  If so, the Local Limited Partnership would have to use working capital reserves, seek additional funds, or suffer a forced sale of its Housing Complex, which could include a foreclosure.  The same results could occur if government subsidies ceased.  Foreclosure would result in a loss of the Partnership’s capital invested in the Housing Complex.  Foreclosure could also result in a recapture of Low Income Housing Tax Credits, and a loss of Low Income Housing Tax Credits for the year in which the foreclosure occurs. If the Housing Complex is highly-leveraged, a relatively slight decrease in the rental revenues could adversely affect the Local Limited Partnership’s ability to pay its debt service requirements. Mortgage debt may be repayable in a self-amortizing series of equal installments or with a large balloon final payment.  Balloon payments maturing prior to the end of the anticipated holding period for the Housing Complex create the risk of a forced sale if the debt cannot be refinanced. There can be no assurance that additional funds will be available to any Local Limited Partnership if needed on acceptable terms or at all.

The Partnership does not control the Local Limited Partnerships and must rely on the Local General Partners. The Local General Partners will make all management decisions for the Local Limited Partnerships and the Housing Complexes.  The Partnership has very limited rights with respect to management of the Local Limited Partnerships. The Partnership will not be able to exercise any control with respect to Local Limited Partnership business decisions and operations. Consequently, the success of the Partnership will depend on the abilities of the Local General Partners.

Housing Complexes subsidized by other government programs are subject to additional rules which may make it difficult to operate and sell Housing Complexes.  Some or all of the Housing Complexes receive or may receive government financing or operating subsidies in addition to Low Income Housing Tax Credits.  The following are risks associated with some such subsidy programs:

·
Obtaining tenants for the Housing Complexes.  Government regulations limit the types of people who can rent subsidized housing. These regulations may make it more difficult to rent the residential units in the Housing Complexes.
·
Obtaining rent increases.  In many cases rents can only be increased with the prior approval of the subsidizing agency.
·
Limitations on cash distributions.  The amount of cash that may be distributed to owners of subsidized Housing Complexes is less than the amount that could be earned by the owners of non-subsidized Housing Complexes.
·
Limitations on sale or refinancing of the Housing Complexes.  A Local Limited Partnership may be unable to sell its Housing Complex or to refinance its mortgage loan without the prior approval of the lender or state allocating agency. The lender or state allocating agency may withhold such approval in the discretion of the lender or state allocating agency. Approval may be subject to conditions, including the condition that the purchaser continues to operate the property as affordable housing for terms which could be as long as 30 years or more. In addition, any prepayment of a mortgage may result in the assessment of a prepayment penalty.
·
Limitations on transfers of interests in Local Limited Partnerships.  The Partnership may be unable to sell its interest in a Local Limited Partnership without the prior approval of the lender or state allocating agency.  The lender or state allocating agency may withhold such approval in the discretion of the lender or state allocating agency.  Approval may be subject to conditions.
·
Limitations on removal and admission of Local General Partners.  The Partnership may be unable to remove a Local General Partner from a Local Limited Partnership except for cause, such as the violation of the rules of the lender or state allocating authority.  Regulations may prohibit the removal of a Local General Partner or permit removal only with the prior approval of the lender.  Regulations may also require approval of the admission of a successor Local General Partner even upon the death or other disability of a Local General Partner.
·
Limitations on subsidy payments. Subsidy payments may be fixed in amount and subject to annual legislative appropriations. The rental revenues of a Housing Complex, when combined with the maximum committed subsidy, may be insufficient to meet obligations. Congress or the state legislature, as the case may be, may fail to appropriate or increase the necessary subsidy.  In those events, the mortgage lender could foreclose on the Housing Complex unless a workout arrangement could be negotiated.
 
 
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·
Possible changes in applicable regulations.  Legislation may be enacted which adversely revises provisions of outstanding mortgage loans.  Such legislation has been enacted in the past.
·
Limited Partners may not receive distributions if Housing Complexes are sold. There is no assurance that Limited Partners will receive any cash distributions from the sale or refinancing of a Housing Complex. The price at which a Housing Complex is sold may not be high enough to pay the mortgage and other expenses at the Local Limited Partnership and Partnerships levels which must be paid at such time.  If that happens, a Limited Partner’s return would be derived only from the Low Income Housing Tax Credits and tax losses. Similar risks apply to sales of Local Limited Partnership Interests.

Uninsured casualties could result in losses and recapture. There are casualties which are either uninsurable or not economically insurable.  These include earthquakes, floods, wars and losses relating to hazardous materials or environmental matters.  If a Housing Complex experienced an uninsured casualty, the Partnership could lose both its invested capital and anticipated profits in such property.  Even if the casualty were an insured loss, the Local Limited Partnership might be unable to rebuild the destroyed property.  A portion of prior Low Income Housing Tax Credits could be recaptured and future Low Income Housing Tax credits could be lost if the Housing Complex was not restored within a reasonable period of time.  Any liability judgments against the Local Limited Partnership could exceed available insurance proceeds or otherwise materially and adversely affect the Local Limited Partnership. The cost of liability and casualty insurance has increased in recent years.  Casualty insurance has become more difficult to obtain and may require large deductible amounts.

Housing Complexes without financing or operating subsidies may be unable to pay operating expenses. If a Local Limited Partnership were unable to pay operating expenses, one result could be a forced sale of its Housing Complex.  If a forced sale occurs during the Compliance Period for a Housing Complex, a partial recapture of Low Income Housing Tax Credits could occur. In this regard, some of the Local Limited Partnerships may own Housing Complexes which have no subsidies other than Low Income Housing Tax Credits.  Those Housing Complexes do not have the benefit of below-market-interest-rate financing or operating subsidies which often are important to the feasibility of low income housing.  Those Housing Complexes rely solely on rents to pay expenses. However, in order for any Housing Complex to be eligible for Low Income Housing Tax Credits, it must restrict the rent which may be charged to tenants.  Over time, the expenses of a Housing Complex will increase.  If a Local Limited Partnership cannot increase its rents, it may be unable to pay increased operating expenses.

The Partnership’s investment protection policies will be worthless if the net worth of the Local General Partners is not sufficient to satisfy their obligations.  There is a risk that the Local General Partners will be unable to perform their financial obligations to the Partnership.  The General Partner has not established a minimum net worth requirement for the Local General Partners.  Rather, at the time of the Partnership’s investment, each Local General Partner demonstrated a net worth which the General Partner believed was appropriate under the circumstances. The assets of the Local General Partners are likely to consist primarily of real estate holdings and similar assets. The fair market value of these types of assets is difficult to estimate. These types of assets cannot be readily liquidated to satisfy the financial guarantees and commitments which the Local General Partners make to the Partnership.  Moreover, other creditors may have claims on these assets. No escrow accounts or other security arrangements will be established to ensure performance of a Local General Partner’s obligations. The cost to enforce a Local General Partner’s obligations may be high. If a Local General Partner does not satisfy its obligations the Partnership may have no remedy, or the remedy may be limited to removing the Local General Partner as general partner of the Local Limited Partnership.

Fluctuating economic conditions can reduce the value of real estate. The Partnership’s principal business objective is providing its Limited Partners with Low Income Housing Tax Credits, not the generation of gains from the appreciation of real estate held by the Local Limited Partnerships.    In its financial statements, the Partnership has carried its investments in Local Limited Partnerships at values equal to or less than the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership of its interests in the Local Limited Partnerships.  As of March 31, 2015, 2014 and 2013, the Partnership had reduced the carrying amount to $0 with respect to three, four and three of its investments, respectively.
 
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Any investment in real estate is subject to risks from fluctuating economic conditions. These conditions can adversely affect the ability to realize a profit or even to recover invested capital. Among these conditions are:

·
the general and local job market,
·
the availability and cost of mortgage financing,
·
monetary inflation,
·
tax, environmental, land use and zoning policies,
·
the supply of and demand for similar properties,
·
neighborhood conditions,
·
the availability and cost of utilities and water.

For each of the years ended March 31, 2015, 2014 and 2013, a loss in value of an investment in a Local Limited Partnership, other than a temporary decline, is recorded by the Partnership in its financial statements as an impairment loss. Impairment is measured by comparing the Partnership’s carrying amount in the investment to the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and any estimated residual value to the Partnership. For the years ended March 31, 2015, 2014 and 2013, impairment loss related to investments in Local Limited Partnerships was $728,957, $1,876,679 and $339,689, respectively.

If a loan made to a Local Limited Partnership is not repaid, the amount of capital available for investment would be reduced. The Partnership has or may make a loan to a Local Limited Partnership before the Partnership's acquisition of an interest therein. If the Partnership doesn't invest in the Local Limited Partnership, the Local Limited Partnership might not repay the loan. If the Local Limited Partnership doesn't repay the loan, the amount of capital available for investment in Local Limited Partnerships would be reduced.

 (c)           Tax risks other than those relating to tax credits

In addition to the risks pertaining specifically to Low Income Housing Tax Credits, there are other Federal income tax risks.  Additional Federal income tax risks associated with the ownership of Partnership Units and the operations of the Partnership and the Local Limited Partnerships include, but are not limited to, the following:

No opinion of counsel as to certain matters.  No legal opinion is obtained regarding matters:

·
the determination of which depends on future factual circumstances,
·
which are peculiar to individual Limited Partners, or
·
which are not customarily the subject of an opinion.

The more significant of these matters include:

·
allocating purchase price among components of a property, particularly as between buildings and fixtures, the cost of which is depreciable, and the underlying land, the cost of which is not depreciable,
·
characterizing expenses and payments made to or by the Partnership or a Local Limited Partnership,
·
identifying the portion of the costs of any Housing Complex which qualify for historic and other tax credits, and
·
applying to any specific Limited Partner the limitation on the use of tax credits and tax losses.  Limited Partners must determine for themselves the extent to which they can use tax credits and tax losses.

There can be no assurance, therefore, that the IRS will not challenge some of the tax positions adopted by the Partnership.  The courts could sustain an IRS challenge.  An IRS challenge, if successful, could have a detrimental effect on the Partnership’s ability to realize its investment objectives.

Passive activity rules will limit deduction of the Partnership’s losses and impose tax on interest income.   The Internal Revenue Code imposes limits on the ability of most investors to claim losses from investments in real estate.  An individual may claim these so-called passive losses only as an offset to income from investments in real estate or rental activities.  An individual may not claim passive losses as an offset against other types of income, such as salaries, wages, dividends and interest.  These passive activity rules will restrict the ability of most Limited Partners to use losses from the Partnership as an offset of non-passive income.
 
 
9

 

The Partnership may earn interest income on its reserves and loans.  The passive activity rules generally will categorize interest as portfolio income, and not passive income. Passive losses cannot be used as an offset to portfolio income.  Consequently, a Limited Partner could pay tax liability on portfolio income from the Partnership.

At risk rules might limit deduction of the Partnership’s losses.  If a significant portion of the financing used to purchase Housing Complexes does not consist of qualified nonrecourse financing, the “at risk” rules will limit a Limited Partner’s ability to claim Partnership losses to the amount the Limited Partner invests in the Partnership.  The “at risk” rules of the Internal Revenue Code generally limit a Limited Partner’s ability to deduct Partnership losses to the sum of:

·
the amount of cash the Limited Partner invests in the Partnership, and
·
the Limited Partner’s share of Partnership qualified nonrecourse financing.

Qualified nonrecourse financing is non-convertible, nonrecourse debt which is borrowed from a government, or with exceptions, any person actively and regularly engaged in the business of lending money.

Tax liability on sale of a Housing Complex or Local Limited Partnership Interest may exceed the cash available from the sale.  When a Local Limited Partnership sells a Housing Complex it will recognize gain. Such gain is equal to the difference between:

·
the sales proceeds plus the amount of indebtedness secured by the Housing Complex, and
·
the adjusted basis for the Housing Complex. The adjusted basis for a Housing Complex is its original cost, plus capital expenditures, minus depreciation.

Similarly, when the Partnership sells an interest in a Local Limited Partnership the Partnership will recognize gain. Such gain is equal to the difference between:

·
the sales proceeds plus the Partnership’s share of the amount of indebtedness secured by the Housing Complex, and
·
the adjusted basis for the interest.  The adjusted basis for an interest in a Local Limited Partnership is the amount paid for the interest, plus income allocations and cash distributions, less loss allocations.

Accordingly, gain will be increased by the depreciation deductions taken during the holding period for the Housing Complex.  In some cases, a Limited Partner could have a tax liability from a sale greater than the cash distributed to the Limited Partner from the sale.

Alternative minimum tax liability could reduce a Limited Partner’s tax benefits.  If a Limited Partner pays alternative minimum tax, the Limited Partner could suffer a reduction in benefits from an investment in the Partnership.  The application of the alternative minimum tax is personal to each Limited Partner.  Tax credits may not be utilized to reduce alternative minimum tax liability.

IRS could audit the returns of the Partnership, the Local Limited Partnerships or the Limited Partners. The IRS can audit the Partnership or a Local Limited Partnership at the entity level with regard to issues affecting the entity.  The IRS does not have to audit each Limited Partner in order to challenge a position taken by the Partnership or a Local Limited Partnership.  Similarly, only one judicial proceeding can be filed to contest an IRS determination.  A contest by the Partnership of any IRS determination might result in high legal fees.

An audit of the Partnership or a Local Limited Partnership also could result in an audit of a Limited Partner.  An audit of a Limited Partner’s tax returns could result in adjustments both to items that are related to the Partnership and to unrelated items.  The Limited Partner could then be required to file amended tax returns and pay additional tax plus interest and penalties.
 
 
10

 

A successful IRS challenge to tax allocations of the Partnership or a Local Limited Partnership would reduce the tax benefits of an investment in the Partnership.  Under the Internal Revenue Code, a partnership’s allocation of income, gains, deductions, losses and tax credits must have substantial economic effect.  Substantial economic effect is a highly-technical concept.  The fundamental principle is two-fold.  If a partner will benefit economically from an item of partnership income or gain, that item must be allocated to him so that he bears the correlative tax burden.  Conversely, if a partner will suffer economically from an item of partnership deduction or loss, that item must be allocated to him so that he bears the correlative tax benefit.  If a partnership’s allocations do not have substantial economic effect, then the partnership’s tax items are allocated in accordance with each partner’s interest in the partnership. The IRS might challenge the allocations made by the Partnership:

·
between the Limited Partners and the General Partner,
·
among the Limited Partners, or
·
between the Partnership and a Local General Partner.

If any allocations were successfully challenged, a greater share of the income or gain or a lesser share of the losses or tax credits might be allocated to the Limited Partners.  This would increase the tax liability or reduce the tax benefits to the Limited Partners.

Tax liabilities could arise in later years of the Partnership.  After a period of years following commencement of operations by a Local Limited Partnership, the Local Limited Partnership may generate profits rather than losses.  A Limited Partner would have tax liability on his share of such profits unless he could offset the income with:

·
unused passive losses from the Partnership or other investments, or
·
current passive losses from other investments.

In such circumstances, the Limited Partner would not receive a cash distribution from the Partnership with which to pay any tax liability.

IRS challenge to tax treatment of expenditures could reduce losses. The IRS may contend that fees and payments of the Partnership or a Local Limited Partnership:

·
should be deductible over a longer period of time or in a later year,
·
are excessive and may not be capitalized or deducted in full,
·
should be capitalized and not deducted, or
·
may not be included as part of the basis for computing tax credits.

Any such contention by the IRS could adversely impact, among other things:

·
the eligible basis of a Housing Complex used to compute Low Income Housing Tax Credits,
·
the adjusted basis of a Housing Complex used to compute depreciation,
·
the correct deduction of fees,
·
the amortization of organization and offering expenses and start-up expenditures.

If the IRS were successful in any such contention, the anticipated Low Income Housing Tax Credits and losses of the Partnership would be reduced, perhaps substantially.

Changes in tax law might reduce the value of Low Income Housing Tax Credits. Although all Low Income Housing Tax Credits are allocated to a Housing Complex at commencement of the 10-year credit period, there can be no assurance that future legislation may not adversely affect an investment in the Partnership. For example, legislation could reduce or eliminate the value of Low Income Housing Tax Credits.  In this regard, before 1986, the principal tax benefit of an investment in low income housing was tax losses.  These tax losses generally were used to reduce an investor’s income from all sources on a dollar-for-dollar basis.  Investments in low income housing were made in reliance on the availability of such tax benefits.  However, tax legislation enacted in 1986 severely curtailed deduction of such losses.
 
 
11

 

New administrative or judicial interpretations of the law might reduce the value of Low Income Housing Tax Credits.  Many of the provisions of the Internal Revenue Code related to low income housing and real estate investments have not been interpreted by the IRS in regulations, rulings or public announcements, or by the courts.  In the future, these provisions may be interpreted or clarified by the IRS or the courts in a manner adverse to the Partnership or the Local Limited Partnerships.  The IRS constantly reviews the Federal tax rules, and can revise its interpretations of established concepts.  Any such revisions could reduce or eliminate tax benefits associated with an investment in the Partnership.

State income tax laws may adversely affect the Limited Partners.  A Limited Partner may be required to file income tax returns and be subject to tax and withholding in each state or local taxing jurisdiction in which: a Housing Complex is located, the Partnership or a Local Limited Partnership engages in business activities, or the Limited Partner is a resident.  Corporate Limited Partners may be required to pay state franchise taxes.

The tax treatment of particular items under state or local income tax laws may vary materially from the Federal income tax treatment of such items.  Nonetheless, many of the Federal income tax risks associated with an investment in the Partnership may also apply under state or local income tax law.  The Partnership may be required to withhold state taxes from distributions or income allocations to Limited Partners in some instances.
 
(d)           Risks related to the Partnership and the Partnership Agreement

The Partnership may be unable to timely provide financial reports to the Limited Partners which would adversely affect their ability to monitor Partnership operations.  Historically, the Partnership has been unable to timely file and provide investors with all of its required periodic reports.  In some instances, the delay has been substantial.  Each Local General Partner is required to retain independent public accountants and to report financial information to the Partnership in a timely manner.  There cannot be any assurance that the Local General Partners will satisfy these obligations.  If not, the Partnership would be unable to provide to the Limited Partners in a timely manner its financial statements and other reports.  That would impact the Limited Partners’ ability to monitor Partnership operations.  The Partnership’s failure to meet its filing requirements under the Securities Exchange Act of 1934 could reduce the liquidity for the Partnership Units due to the unavailability of public information concerning the Partnership.  The failure to file could also result in sanctions imposed by the SEC.  Any defense mounted by the Partnership in the face of such sanctions could entail legal and other fees, which would diminish cash reserves.

Lack of liquidity of investment.  There is no public market for the purchase and sale of Partnership Units, and it is unlikely that one will develop.  Accordingly, Limited Partners may not be able to sell their Partnership Units promptly or at a reasonable price.  Partnership Units should be considered as a long-term investment because the Partnership is unlikely to sell any Local Limited Partnership Interests for at least 15 years.  Partnership Units cannot be transferred to tax-exempt or foreign entities, or through a secondary market.  The General Partner can deny effectiveness of a transfer if necessary to avoid adverse tax consequences from the transfer.  The General Partner does not anticipate that any Partnership Units will be redeemed by the Partnership.

The Limited Partners will not control the Partnership and must rely totally on the General Partner.  The General Partner will make all management decisions for the Partnership.  Management decisions include exercising powers granted to the Partnership by a Local Limited Partnership.  Limited Partners have no right or power to take part in Partnership management.

Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority.  The Partnership Agreement grants to Limited Partners owning more than 50% of the Partnership Units the right to:

·
remove the General Partner and elect a replacement general partner,
·
amend the Partnership Agreement,
·
terminate the Partnership.
 
 
12

 
 
Accordingly, a majority-in-interest of the Limited Partners could cause any such events to occur, even if Limited Partners owning 49% of the Partnership Units opposed such action.

Limitations on liability of the General Partner to the Partnership.  The ability of Limited Partners to sue the General Partner and its affiliates is subject to limitations.  The Partnership Agreement limits the liability of the General Partner and its affiliates to the Limited Partners.  The General Partner and its affiliates will not be liable to the Limited Partners for acts and omissions: performed or omitted in good faith, and performed or omitted in a manner which the General Partner reasonably believed to be within the scope of its authority and in the best interest of the Limited Partners, provided such conduct did not constitute negligence or misconduct.

Therefore, Limited Partners may be less able to sue the General Partner and its affiliates than would be the case if such provisions were not included in the Partnership Agreement.

Associates and its affiliates are serving as the general partners of many other partnerships.  Depending on their corporate area of responsibility, the officers of Associates initially devote approximately 5% to 50% of their time to the Partnership.  These individuals spend significantly less time devoted to the Partnership after the investment of the Partnership’s capital in Local Limited Partnerships.

The interests of Limited Partners may conflict with the interests of the General Partner and its affiliates.  The General Partner and its affiliates are committed to the management of more than 100 other limited partnerships that have investments similar to those of the Partnership.  The General Partner and its affiliates receive substantial compensation from the Partnership. The General Partner decides how the Partnership’s investments in Housing Complexes are managed, and when the investments will be sold. The General Partner may face a conflict in these circumstances because the General Partner’s share of fees and cash distributions from the transaction may be more or less than their expected share of fees if a Housing Complex was not sold. The Partnership has not developed any formal process for resolving conflicts of interest. However, the General Partner is subject to a fiduciary duty to exercise good faith and integrity in handling the affairs of the Partnership, and that duty will govern its actions in all such matters. Furthermore, the manner in which the Partnership can operate and sell investments is subject to substantial restrictions as outlined in the Partnership Agreement.

The Partnership’s accrued payables consist primarily of the asset management fees payable to the General Partner and the capital contributions payable to Local Limited Partnerships.  The asset management fees payable increased by approximately $156,000, $164,000 and $164,000 for the years ended March 31, 2015, 2014 and 2013, respectively. The payables due to the Local Limited Partnerships increased (decreased) by approximately $(99,000), $0, and $0, for the years ended March 31, 2015, 2014 and 2013, respectively.  The Partnership’s future contractual cash obligations consist of its obligations to pay future annual asset management fees and the payables due to the Local Limited Partnerships.  The future annual asset management fees will equal approximately $116,000 per year through the termination of the Partnership, which must occur no later than December 31, 2070.  Though the amounts payable to the General Partner and/or its affiliates are contractually  currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual  obligations until capital reserves are in excess of the aggregate of the existing contractual obligations  and anticipated future foreseeable obligations of the Partnership. The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.

Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through August 31, 2016.


Not Applicable


Through its investments in Local Limited Partnerships, the Partnership holds indirect ownership interests in the Housing Complexes. The following table reflects the status of the Housing Complexes as of the dates or for the periods indicated:
 
 
13

 

             
       
As of March 31, 2015
   
As of December 31, 2014
 
Local Limited
Partnership Name
Location
General Partner Name
 
Partnership’s Total Investment in Local Limited Partnerships
   
Amount of Investment Paid to Date
   
Number of Units
   
Estimated
Aggregate Low Income Housing Tax Credits (1)
   
Mortgage Balances of Local Limited Partnership
 
909 4th YMCA,
L.P. (3)
Seattle,
Washington
YMCA of Greater Seattle
  $ 508,000     $ 508,000       20     $ 686,000     $ -  
                                             
Crestview Housing,
L.P.
Bigfork, Montana
American Covenant Senior Housing Foundation, Inc.
    1,973,000       1,885,000       24       2,268,000       684,000  
                                             
Davenport Housing
VII, L.P.
Davenport, Iowa
Shelter Resource Corporation
    4,744,000       4,499,000       20       6,029,000       530,000  
                                             
FDI-Country Square, LTD.
Lone Star, Texas
Fieser Holdings, Inc.
    605,000       605,000       24       823,000       579,000  
                                             
FDI-Park Place, LTD.
Bellville, Texas
Fieser Holdings, Inc.
    758,000       758,000       40       1,068,000       1,072,000  
                                             
Grove Village,
L.P. (2)
Dallas, Texas
Walker Guardian LLC
    N/A       N/A       232       -       5,464,000  
                                             
Head Circle, L.P.
Ruleville,
Mississippi
SEMC, Inc.
    464,000       464,000       38       657,000       1,362,000  
                                             
Pleasant Village,
L.P. (3)
Dallas, Texas
Walker Guardian LLC
    2,850,000       2,808,000       200       3,721,000       5,344,000  
                                             
        $ 11,902,000     $ 11,527,000       598     $ 15,252,000     $ 15,035,000  

(1) Represents aggregate anticipated Low Income Housing Tax Credits to be received over the 10 year credit period if the Housing Complexes are retained and rented in compliance with credit rules for the Compliance Period.  Approximately 73% of the anticipated Low Income Housing Tax Credits have been received from the Local Limited Partnerships.

(2) The Local Limited Partnership was disposed of subsequent to December 31, 2014, but prior to March 31, 2015.
 
(3) The Local LimitedPartnership was disposed of subsequent to March 31, 2015.
 
14

 
 
   
For the year ended December 31, 2014
 
Local Limited
Partnership Name
 
Rental Income
   
Net Income (Loss)
   
Low Income Housing Tax Credits Allocated to Partnership
 
                   
909 4th YMCA, L.P. (2)
  $ 679,000     $ 125,000       99.98 %
                         
Crestview Housing, L.P.
    121,000       205,000       99.98 %
                         
Davenport Housing VII, L.P.
    116,000       (180,000 )     99.98 %
                         
FDI-Country Square, LTD.
    141,000       (13,000 )     99.98 %
                         
FDI-Park Place, LTD.
    187,000       (26,000 )     99.98 %
                         
Grove Village, L.P. (1)
    849,000       (2,912,000 )     99.98 %
                         
Head Circle, L.P.
    282,000       (40,000 )     99.98 %
                         
Pleasant Village, L.P. (2)
    1,299,000       (1,782,000 )     99.98 %
                         
    $ 3,674,000     $ (4,623,000 )        
 
(1)  
The Local Limited Partnership was disposed of subsequent to December 31, 2014, but prior to March 31, 2015.
 
(2)  
The Local Limited Partnership was sold subsequent to March 31, 2015.
 
15

 
 
WNC Housing Tax Credit Fund VI, L.P., Series 13  
       
Occupancy Rates
As of December 31,
 
     
Local Limited Partnership Name
Location
General Partner Name
 
2014
   
2013
   
2012
   
2011
   
2010
 
                                   
909 4th YMCA, L.P.
Seattle, Washington
YMCA of Greater Seattle
    85 %     80 %     100 %     100 %     95 %
                                             
Crestview Housing,
L.P.
Bigfork, Montana
American Covenant Senior Housing Foundation, Inc.
    96 %     96 %     100 %     100 %     92 %
                                             
Davenport Housing
VII, L.P.
Davenport, Iowa
Shelter Resource Corporation
    100 %     100 %     100 %     95 %     95 %
                                             
FDI-Country
Square, LTD.
Lone Star, Texas
Fieser Holdings, Inc.
    100 %     88 %     100 %     96 %     100 %
                                             
FDI-Park Place,
LTD.
Bellville, Texas
Fieser Holdings, Inc.
    83 %     85 %     75 %     95 %     93 %
                                             
Fernwood
Meadows, L.P.
Fernley, Nevada
Fernwood Meadow, LLC
    N/A       N/A       N/A       N/A       N/A  
                                             
Grove Village, L.P.
Dallas, Texas
Walker Guardian LLC
    48 %     46 %     **       74 %     94 %
                                             
Head Circle, L.P.
Ruleville, Mississippi
SEMC, Inc.
    97 %     100 %     100 %     95 %     100 %
                                             
Pleasant Village, L.P.
Dallas, Texas
Walker Guardian LLC
    85 %     65 %     80 %     76 %     91 %
                                             
Sierra’s Run, L.P.
Fernley, Nevada
Sierra Run, LLC
    N/A       N/A       N/A       N/A       N/A  
          73 %     65 %     86 %     81 %     94 %

N/A – This Local Limited Partnership was sold as of the respective year end.
** The Partnership was unable to obtain the occupancy rate as of December 31, 2012
 
 
16

 


NOT APPLICABLE

PART II.



(a)
The Partnership Units are not traded on a public exchange but are being sold through a public offering.  It is not anticipated that any public market will develop for the purchase and sale of any Partnership Units and none exists.  Partnership Units can be assigned or otherwise transferred only if certain requirements in the Partnership Agreement are satisfied.

(b)  
At March 31, 2015, there were 959 Limited Partners, and there were no assignees of Partnership Units who were not admitted as Limited Partners.

(c)  
The Partnership was not designed to provide operating cash distributions to Limited Partners.  It is possible that the Partnership could make distributions from sale proceeds, if the Partnership is able to sell its Local Limited Partnership Interests or Housing Complexes for more than the related closing costs and any then accrued obligations of the Partnership.  There can be no assurance in this regard. Any such distributions would be made in accordance with the terms of the Partnership Agreement. For all periods presented, there were no cash distributions to the Limited Partners.

(d)  
No securities are authorized for issuance by the Partnership under equity compensation plans.

(e)  
The Partnership does not issue common stock.

(f)  
No unregistered securities were sold by the Partnership during the year ended March 31, 2015.


NOT APPLICABLE


NONE

 
17

 
 

Selected balance sheet information for the Partnership is as follows:

   
March 31,
 
   
2015
   
2014
   
2013
   
2012
   
2011
 
ASSETS
                             
                               
Cash and cash equivalents
  $ 325,510     $ 18,047     $ 161,924     $ 182,459     $ 2,357,819  
Investments in Local Limited Partnerships, net
    4,648,056       5,396,913       7,636,679       8,318,507       8,956,651  
Due from affiliates, net
    -       2,265,967       -       -       -  
Other Asset
    -       6,500       -       -       -  
                                         
     Total Assets
  $ 4,973,566     $ 7,687,427     $ 7,798,603     $ 8,500,966     $ 11,314,470  
                                         
LIABILITIES
                                       
                                         
Payables to Local Limited Partnerships
  $ 375,198     $ 474,328     $ 474,328     $ 474,328     $ 2,598,328  
Accrued fees and expenses due to General Partner and affiliates
    3,341,534       3,548,586       1,018,170       768,308       619,219  
                                         
    Total Liabilities
    3,716,732       4,022,914       1,492,498       1,242,636       3,217,547  
                                         
PARTNERS’ EQUITY
    1,256,834       3,664,513       6,306,105       7,258,330       8,096,923  
                                         
    Total Liabilities and Partners’ Equity
  $ 4,973,566     $ 7,687,427     $ 7,798,603     $ 8,500,966     $ 11,314,470  

 
18

 

Selected results of operations, cash flows, and other information for the Partnership are as follows:

   
For the Years Ended March 31,
 
   
2015
   
2014
   
2013
   
2012
   
2011
 
Loss from operations (Note 1)
  $ (2,755,058 )   $ (2,300,623 )   $ (678,906 )   $ (485,542 )   $ (349,683 )
Equity in losses of Local Limited Partnerships
    (14,547 )     (341,021 )     (273,439 )     (353,492 )     (713,926 )
Gain on sale of Local Limited Partnerships
    361,865       -       -       -       85,349  
Interest income
    61       52       120       441       3,142  
Net loss
  $ (2,407,679 )   $ (2,641,592 )   $ (952,225 )   $ (838,593 )   $ (975,118 )
                                         
Net loss allocated to:
                                       
   General Partner
  $ (2,408 )   $ (2,642 )   $ (952 )   $ (839 )   $ (975 )
                                         
   Limited Partners
  $ (2,405,271 )   $ (2,638,950 )   $ (951,273 )   $ (837,754 )   $ (974,143 )
                                         
Net loss  per Partnership Unit
  $ (114.80 )   $ (125.84 )   $ (45.36 )   $ (39.93 )   $ (46.43 )
 
                                       
Outstanding Weighted Partnership Units
    20,951       20,971       20,971       20,981       20,981  
 
Note 1 – Loss from operations for the years ended March 31, 2015, 2014, 2013, 2012 and 2011 includes a charge for impairment losses on investments in Local Limited Partnerships of $728,957 , $1,876,679, $339,689, $215,952, and $82,672, respectively (see Note 2 to the audited financial statements).

 
 
19

 
         
For the Years Ended March 31,
       
   
2015
   
2014
   
2013
   
2012
   
2011
 
Net cash provided by (used in):
                             
Operating activities
  $ (490,559 )   $ (4,141 )   $ (20,535 )   $ (51,360 )   $ (569,457 )
Investing activities
    1,194,631       (2,265,967 )     -       (2,124,000 )     2,248,640  
  Financing activities
    (396,609 )     2,126,231       -       -       -  
                                         
Net change in cash and cash equivalents
    307,463       (143,877 )     (20,535 )     (2,175,360 )     1,679,183  
                                         
Cash and cash equivalents, beginning of period
    18,047       161,924       182,459       2,357,819       678,636  
                                         
Cash and cash equivalents, end of period
  $ 325,510     $ 18,047     $ 161,924     $ 182,459     $ 2,357,819  

Low Income Housing Tax Credits per Partnership Unit were as follows for the year and period ended December 31:

   
2014
   
2013
   
2012
   
2011
   
2010
 
                               
Federal
  $ 51       51       51       51       88  
State
    -       -       -       -       -  
                                         
Total
  $ 51       51       51       51       88  
 

Forward Looking Statements

With the exception of the discussion regarding historical information, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other discussions elsewhere in this Form 10-K contain forward looking statements.  Such statements are based on current expectations subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations to differ materially from those projected or implied.  Further, certain forward-looking statements are based upon assumptions about future events which may not prove to be accurate.

Risks and uncertainties inherent in forward looking statements include, but are not limited to, the Partnership’s future cash flows and ability to obtain sufficient financing, level of operating expenses, conditions in the Low Income Housing Tax Credits property market and the economy in general, changes in law, rules and regulations, and legal proceedings.  Historical results are not necessarily indicative of the operating results for any future period.

Subsequent written and oral forward looking statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by cautionary statements in this Form 10-K and in other reports filed with the SEC.  The following discussion should be read in conjunction with the financial statements and the notes thereto included elsewhere in this filing.

 
20

 

Critical Accounting Policies and Certain Risks and Uncertainties

The Partnership believes that the following discussion addresses the Partnership’s most significant accounting policies, which are the most critical to aid in fully understanding and evaluating the Partnership’s reported financial results, and certain of the Partnership’s risks and uncertainties.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Method of Accounting for Investments in Local Limited Partnerships

The Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable.  Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the product of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and any estimated residual value to the Partnership.  If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and are being amortized over 27.5 years (See Notes 2 and 3 to the financial statements).

“Equity in losses of Local Limited Partnerships” for each year ended March 31 has been recorded by the Partnership based on the twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses from the Local Limited Partnerships allocated to the Partnership is not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended.

Distributions received from the Local Limited Partnerships are accounted for as a reduction of the investment balance.  Distributions received after the investment has reached zero are recognized as distribution income.

In accordance with the accounting guidance for the consolidation of variable interest entities, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.

Based on this guidance, the Local Limited Partnerships in which the Partnership invests meet the definition of a VIE because the owners of the equity at risk in these entities do not have the power to direct their operations. However, management does not consolidate the Partnership's interests in these VIEs, as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. The Partnership currently records the amount of its investment in these Local Limited Partnerships as an asset on its balance sheets, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Partnership's balance in investment in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss. The Partnership's exposure to loss on these Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners and their guarantee against credit recapture to the investors in the Partnership.
 
 
21

 

Income Taxes

The Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns.  The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. Income tax returns filed by the Partnership are subject to examination by the Internal Revenue Service for a period of three years. While no income tax returns are currently being examined by the Internal Revenue Service, tax years since 2011 remain open.
 
Certain Risks and Uncertainties

See Item 1A for a discussion of risks regarding the Partnership.

To date, certain Local Limited Partnerships have incurred significant operating losses and have working capital deficiencies.  In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partners may be required to sustain the operations of such Local Limited Partnerships.  If additional capital contributions are not made when they are required, the Partnership’s investment in certain of such Local Limited Partnerships could be lost, and the loss and recapture of the related Low Income Housing Tax Credits could occur.

Anticipated future and existing cash resources of the Partnership are not sufficient to pay existing liabilities of the Partnership.  However, substantially all of the existing liabilities of the Partnership are payable to the General Partner and/or its affiliates.  Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership.  The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.

Financial Condition

The Partnership’s assets at March 31, 2015 consisted of $326,000 in cash and cash equivalents and investments in Local Limited Partnerships of $4,648,000 (See “Method of Accounting for Investments in Local Limited Partnerships). Liabilities at March 31, 2015 consisted of $375,000 of payables due to Local Limited Partnerships and $3,342,000 of accrued fees and expenses due to General Partner and affiliates (See “Future Contractual Cash Obligations” below).
 
 
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Results of Operations

Year Ended March 31, 2015 Compared to Year Ended March 31, 2014 The Partnership’s net loss for the year ended March 31, 2015 of  $2,408,000, reflecting a decrease of $234,000 from the net loss experienced for the year ended  March 31, 2014 of $2,642,000. The decrease in net loss is partially due to an increase of $362,000 in gain on sale of Local Limited Partnership for the year ended March 31, 2015.  The gain and loss on sale of Local Limited Partnerships will vary from period to period depending on the values and sale prices of the housing complexes that have been identified for disposition and the closing dates of such transactions. There was an increase in accounting and legal fees of $294,000 for the year ended March 31, 2015 compared to the year ended March 31, 2014.  Legal and accounting expenses increased due to expenses related to the Appellate Hearing with the IRS regarding LIHTC’s for Pleasant Village and Grove Village.  Asset management fees decreased by $8,000 during the year ended March 31, 2015. The fees are calculated based on the value of invested assets, which decreased due to the sales of Local Limited Partnerships. Also, amortization decreased by $17,000 during the year ended March 31, 2015 due to the fact that intangibles were partially impaired during the first quarter, therefore decreasing the future amortization expense. Asset management expenses decreased by $7,000 during the year ended March 31, 2015. The asset management expenses vary from period to period depending on the number of site visits performed to the Local Limited Partnership from asset managers during the year.  Impairment loss decreased by $1,148,000 for the year ended March 31, 2015. Impairment loss varies from year to year depending on the operations of the Local Limited Partnerships and the amount of Low Income Housing Tax Credits that are allocated each year to the Partnership. Additionally, there was a $1,334,000 increase in write off of advances to Local Limited Partnership for the year ended March 31, 2015. The advances made to Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships.  The write off of other assets increased by $3,000 during the year ended March 31, 2015. Capitalized costs from potential disposition of Local Limited Partnership were expensed due to the length of time it has taken to dispose of the properties. Equity in losses decreased by $326,000 for the year ended March 31, 2015 due to operations of the underlying Housing Complexes fluctuating form period to period. Reporting fees increased by $2,000 and distribution income decreased by $1,000 for the year ended March 31, 2015 due to the fact that Local Limited Partnerships pay reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flows will allow for the payment.

Year Ended March 31, 2014 Compared to Year Ended March 31, 2013 The Partnership’s net loss for the year ended March 31, 2014 of  $2,642,000, reflecting an increase of $1,690,000 from the net loss experienced for the year ended  March 31, 2013 of  $952,000. The increase in net loss is partially due to an increase of $75,000 in legal and accounting fees for the year ended March 31, 2014.  Legal and accounting expenses increased due to expenses related to the Appellate Hearing with the IRS regarding LIHTC’s for Pleasant Village and Grove Village. Asset management expenses increased by $31,000 during the year ended March 31, 2014. The asset management expenses increased due to site visits performed to Pleasant Village from asset managers during the year ended March 31, 2014. Impairment loss increased by $1,537,000 for the year ended March 31, 2014. Impairment loss varies from year to year depending on the operations of the Local Limited Partnerships and the amount of Low Income Housing Tax Credits that are allocated each year to the Partnership. Also, amortization decreased by $47,000 during the year ended March 31, 2014 due to the fact that intangibles were partially impaired during the first quarter, therefore decreasing the future amortization expense. During the year ended March 31, 2014 other expenses increased by $37,000 due to consulting expenses incurred for Grove Village and Pleasant Village. Additionally, there was a $15,000 decrease in write off of advances to Local Limited Partnership for the year ended March 31, 2014. The advances made to Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships.   Equity in losses increased by $68,000 for the year ended March 31, 2014 due to operations of the underlying Housing Complexes fluctuating form period to period. Reporting fees decreased by $4,000 and distribution income increased by $1,000 for the year ended March 31, 2014 due to the fact that Local Limited Partnerships pay reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flows will allow for the payment.

Liquidity and Capital Resources

Year Ended March 31, 2015 Compared to Year Ended March 31, 2014 The net increase in cash during the year ended March 31, 2015 was 307,000 compared to a net decrease in cash during the year ended March 31, 2014 of $144,000. The change was partially due to the $263,000 net proceeds received for the disposition of the Local Limited Partnerships during the year ended March 31, 2015. Proceeds from sale of Local Limited Partnerships will vary from period to period depending on the values and sale prices of the housing complexes that have been identified for disposition and the closing dates of such transactions. During the year ended March 31, 2015 the Partnership advanced $1,068,000 to Local Limited Partnerships compared $2,266,000 advanced during the year ended March 31, 2014. The advances made to troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships. The Partnership paid $541,000 to the General Partner or an affiliate as reimbursement for operating expenses that were paid on the Partnership’s behalf during the year ended March 31, 2015 compared to the $10,000 reimbursed during the year ended March 31, 2014. During the year ended March 31, 2015, the Partnership received $918,000 of advances from the General Partner or affiliate compared to $2,126,000 received during the year ended March 31, 2014. The funds were used to make advances to the Local Limited Partnerships that were experiencing operational issues. Litigation settlement proceeds of $2,000,000 were received during the year ended March 31, 2015. In addition, the Partnership reimbursed the General Partner or affiliates $1,314,000 during the year ended March 31, 2015 for advances that had been made to the Partnership by the General Partner or an affiliate to aid the Partnership in providing funding to two Local Limited Partnerships which were experiencing operational issues. Reporting fees increased by $2,000 and distribution income decreased by $1,000 for the year ended March 31, 2015. The Local Limited Partnerships pay the reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flows will allow for payments.
 
 
23

 

Year Ended March 31, 2014 Compared to Year Ended March 31, 2013 The net decrease in cash during the year ended March  31, 2014 was $144,000 compared to a net decrease in cash during the year ended March 31, 2014 of $21,000. The change was due primarily to the fact that during the year ended March 31, 2014 the Partnership advanced $2,266,000 to Local Limited Partnerships compared $15,000 advanced during the year ended March 31, 2013. The advances made to troubled Local Limited Partnerships can vary each year depending on the operations of the individual Local Limited Partnerships. The Partnership paid $10,000 to the General Partner or an affiliate as reimbursement for operating expenses that were paid on the Partnership’s behalf during the year ended March 31, 2014 compared to the $15,000 reimbursed during the year ended March 31, 2013. During the year ended March 31, 2014, the Partnership received $2,126,000 of advances from the General Partner or affiliate. The funds were used to make advances to the Local Limited Partnerships that were experiencing operational issues. Reporting fees decreased by $4,000 and distribution income increased by $1,000 for the year ended March 31, 2014. The Local Limited Partnerships pay the reporting fees and distributions to the Partnership when the Local Limited Partnerships’ cash flows will allow for payments.

Accrued payables, which consist primarily of related party asset management fees due to the General Partner, increased (decreased) by approximately $(207,000), $2,530,000, and $250,000, for the years ended March 31, 2015, 2014 and 2013, respectively.

The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through August 31, 2016.

Other Matters

Davenport started construction in October 2006 and was scheduled to be completed in June 2008. Construction was delayed due to the original Local General Partner defaulting on his construction guarantee, and resulting in disputed mechanic liens on the property. In November 2008, a co-Local General Partner, Shelter Resource Corporation, was admitted into the Partnership, due to restrictions implemented by the Iowa Finance Authority (“IFA”). Subsequently, with IFA’s approval, the defaulting original Local General Partner was removed from the Partnership leaving Shelter Resource Corporation as the sole Local General Partner.

As of March 31, 2010, the property was 100% completed and a certificate of occupancy was granted for both buildings in December 2009. The Partnership engaged all sub-contractors to sign new construction contracts, along with lien releases for any and all work done after their engagement. During the year ended March 31, 2011, the Partnership voluntarily advanced $846,175 to Davenport for construction related costs. There were no additional advances made to Davenport due to the additional investment made, as discussed below.

The project was fully completed as of March 31, 2010 and it achieved stabilized operations by June 2010. In June 2010 the property achieved 85% occupancy and has maintained occupancy of 80% to 100% to the date of this filing. Davenport has been awarded state historical tax credits from the State of Iowa, federal historical credits and federal Low Income Housing Tax Credits. The State historical credits are given in the form of a refund check from the State in conjunction with the State tax return filing. The net amount of the check after applicable federal taxes will be contributed back to the property to help fund construction shortfalls. Davenport was also allocated additional federal Low Income Housing Tax Credits as well as federal historical tax credits. Upon the Limited Partners’ approval of the dispositions of Sierra Run’s and Fernwood, the Partnership made the additional investment in Davenport. See the exit strategy in Note 1 regarding the dispositions of Sierra’s Run and Fernwood. On July 1, 2010, the Partnership committed additional capital to Davenport in the amount of $2,490,651. This additional commitment generated $408,710 of federal historic credits and $3,582,550 of additional federal Low Income Housing Tax Credits which were allocated to the partners of the Partnership.

 
24

 

Grove Village Limited Partnership (“Grove Village”) and Pleasant Village Limited Partnership (“Pleasant Village”), both Texas limited partnerships in which the Partnership is a limited partner, were audited by the Internal Revenue Service (“IRS”) for tax years 2007, 2008 and 2009. In its findings of those audits, the IRS asserted that the low income housing tax credits (“LIHTCs”) for Grove Village and Pleasant Village should not have been claimed for those three years. As of the year-end for each of tax years 2007, 2008, 2009, and 2010 the IRS Forms 8609 had not been issued by the Texas Department of Housing & Community Affairs (“TDHCA”), which is contrary to the representation made by the general partner (the “Local General Partner”) of Grove Village and Pleasant Village on their respective tax returns.

An Appellate Hearing with the IRS was held on June 27, 2013. Thereafter, the Partnership received notification that the IRS Appeals Division ruled in favor of the IRS findings. The Partnership filed a Petition for Readjustment with the United States Tax Court for Pleasant Village. The Partnership did not file with the Tax Court for Grove Village. The Tax Court noticed a trial date of June 22, 2015, which has been extended to a date to be. The IRS US Attorney requested the Partnership to provide the IRS with documents sufficient to support the Partnership’s position to maintain the 2007, 2008 and 2009 tax credits.  The US Attorney will review the information and determine if a decision can be made without going to trial.  Counsel for the Partnership provided the IRS with the requested documents. 

In May 2013, the Local General Partner stopped making the mortgage payments for Grove Village and Pleasant Village without providing notice to the Partnership of its intent to do so. The lender issued a notice of default. To prevent the lender from commencing a foreclosure action against the properties and thereby eliminating any possibility of obtaining the Forms 8609 and the LIHTCs,  WNC National Partners, LLC (“General Partner”), the general partner of the Partnership, sought to protect the Partnership’s investment in Grove Village and Pleasant Village and purchased the mortgage loans to prevent foreclosure.

In June 2013, the Partnership filed a lawsuit against the Local General Partner and the guarantors of the LIHTCs. Discussions were commenced with the Local General Partner’s insurance carrier and counsel to determine whether a settlement of the claims could be reached. The Partnership settled with the Local General Partner regarding the contract claims for $2,000,000; on the Partnership’s books this amount was applied against receivables due from Local Limited Partnerships. The Partnership settled with the insurance carrier regarding the negligence claims and $1,300,000 was received in August 2015. This amount was applied against advance payable that had been made to the Partnership by the General Partner or affiliates.

During the year ended March 31, 2015, the underlying Housing Complex of Grove Village Limited Partnership (“Grove Village”) was sold resulting in the termination of the Partnership’s Local Limited Partnership interest. Grove Village was appraised for $1,700,000 and had a mortgage note balance of $5,756,079 as of December 31, 2013. The sale price was $1,690,000, of which approximately $99,000 was used for third party brokerage fees, $239,000 was used for liens held by the City of Dallas for past due water and sewer fees, $36,000 was used for corporate liens, $77,000 was used for liens in litigation, $8,000 was paid to TDHCA, $129,000 was used to pay past due property taxes, $60,000 was used to pay past due payables, and $10,000 was used for prorated prepaid rents. Lastly there was $100,000 to remain in escrow for 60 days for any unforeseen payables or liens are brought forward. After a deduction of $7,944 in escrow expenses, $92,056 was reimbursed to the Partnership in April 2015. Of the balance, $625,000 was used for repayment of the mortgage note. Although the note was being carried on the books at $5,756,079, the note had been acquired by Associates for $625,000. The new loan holder accepted $625,000 as payment in full, although it was entitled to the full outstanding amount. The difference between $5,756,079 and $625,000 is cancelation of debt income and will flow through to the investors as such. It will appear on the 2015 Forms K-1, as will all results of the sale. To date, proceeds of $409,495 have been received by the Partnership, of which $306,244 was received during the year ended March 31, 2015. These proceeds are being held in the Partnership’s reserves and no distributions to partners are expected. The Partnership has incurred $43,509 approximately in sales related expenses which will be netted against the proceeds from the sale in calculating the gain on the sale. The Partnership’s investment balance in Grove Village immediately prior to the sale was zero; and $99,130 of capital contributions payable were written off resulting in a gain of $361,865. Additional gains could be recognized due to the cancellation of debt income. Due the fact that 8609’s were never obtained for Grove Village there is no applicable Compliance Period.
 
 
25

 

Inasmuch as the Forms 8609 were never issued to Grove Village, there will be a recapture of the LIHTCs taken. The LIHTCs for Grove Village for 2007-2010 totaled approximately $1,590,000 and the estimated interest that will be imposed under the Internal Revenue Code and Treasury Regulations is approximately $426,000. The total of approximately $2,016,000 equates to $96 per Partnership Unit. In June 2015, the Investors received tax due notices from the IRS for the LIHTCs (with interest) allocated to each Limited Partner relative to Grove Village for tax years 2007, 2008 and 2009.  Using IRS guidelines, WNC calculated the interest to be charged by the IRS based on the maximum LIHTCs allocated to each Limited Partner whether or not the Limited Partner used those LIHTCs. Based on that calculation of the estimated interest owed to the US Treasury for the LIHTCs taken in 2007, 2008 and 2009, the Partnership provided a distribution check to each Limited Partner during September 2015, using funds from the Partnership, a portion of which were advanced from the General Partner.  The Partnership also allocated 2010 LIHTCs to the Limited Partners for Grove Village and those LIHTCs (with interest) are owed back to the US Treasury.

Through protracted and detailed discussions with HUD and TDHCA, the General Partner commenced repair work at Pleasant Village to clear the deficiencies so that Form 8609 could be issued.  Because repair work on Pleasant Village had commenced, the Partnership appealed to the United States Tax Court the IRS determination to pursue collection of the 2007, 2008 and 2009 LIHTCs for Pleasant Village.  As a result of WNC’s efforts and the expenditure of nearly $3 million using funds from the Partnership, a portion of which were advanced from the General Partner, Pleasant Village passed the HUD REAC Inspections in both June 2014 and in May 2015. In April 2015, WNC successfully obtained Form 8609 from TDHCA for Pleasant Village.

Pleasant Village has now received Form 8609, as stated above.  Therefore, Pleasant Village will amend its tax returns and allocate to the Partnership the 2011 – 2015 LIHTCs not previously allocated.  The Partnership, at the Partnership level, will add the LIHTCs for 2015 for all the Local Limited Partnerships invested in by the Partnership with the LIHTCs for Pleasant Village (for previous years), and net them against the 2010 Grove Village LIHTCs (with interest) that are owed back to the US Treasury.

Subsequent to March 31, 2015, the underlying Housing Complex of Pleasant Village Limited Partnership (“Pleasant Village”) was sold, resulting in the termination of the Partnership’s Local Limited Partnership interest. Pleasant Village was appraised for $1,800,000 and had a mortgage note balance of $5,344,000 as of December 31, 2014. The sale price was $2,450,000,of which $109,000 was used for third party brokerage fees, $22,000 was used for  the LIHTC recapture bond, $9,000 was paid to TDHCA, $235,000 was used to pay past due property taxes, $32,000 was used for prorated prepaid rents, and $10,000 was used to pay title fees, escrow fees and sale related expenses. Lastly there was $272,000 to remain in escrow for up to 90 days for any unforeseen payables or liens that are brought forward. Sale proceeds of $1,760,418 was reimbursed to the Partnership, in which $625,000 was used for repayment of the mortgage note. Although the note was being carried on the books at $5,756,079, the note had been acquired by Pleasant Village Lending Partner, LLC for $625,000. The new loan holder accepted $625,000 as payment in full, although it was entitled to the full outstanding amount. The remaining $1,135,418 is being held in the Partnership’s reserves and no distributions to partners are expected due to the fact that the Partnerships liabilities exceed the cash received. The Partnership has incurred approximately $8,000 in sales related expenses which will be netted against the proceeds from the sale for calculating the gain on the sale.

The Partnership continues to challenge the IRS position that the Tax Credits for 2007 – 2009 should be repaid for Pleasant Village. The matter was scheduled for trial in November 2015.  However, counsel for the IRS obtained a postponement to a date to be determined in early 2016. There is no guarantee that the IRS or the Court will rule in the Partnership's favor for tax years 2007, 2008 or 2009.

Subsequent to March 31, 2015, the Partnership entered into an Agreement to Gift with The Young Men’s Christian Association of Greater Seattle, a nonprofit corporation, for its Local Limited Partnership interest in 909 4th YMCA Limited Partnership (“909 4th”).  909 4th was appraised for $8,700,000 with an effective date in January 2015. The Partnership received reimbursements of $2,400 for appraisal expenses, $5,120 for legal fees, and $1,600 for sale valuation services. The Partnership incurred $2,660 of sales related expenses which were netted against the reimbursements from the sale in calculating the gain on sale. The investment balance was zero at the time of the sale of the Local Limited Partnership; therefore a gain of $6,460 was recorded during the period. The Compliance Period for 909 4th has expired so there is no risk of tax credit recapture to the investors.

 
26

 

Partnership’s Future Contractual Cash Obligations

The following table summarizes the Partnership’s future contractual cash obligations as of March 31, 2015:

   
2016
   
2017
   
2018
   
2019
   
2020
   
Thereafter
   
Total
 
                                           
Asset management fees (1)
  $ 3,457,961     $ 116,427     $ 116,427     $ 116,427     $ 116,427     $ 5,821,350     $ 9,745,019  
Payable to Local Limited
   Partnerships
    375,198       -       -       -       -       -       375,198  
Total contractual obligations
  $ 3,131,834     $ 116,427     $ 116,427     $ 116,427     $ 116,427     $ 5,821,350     $ 10,120,217  

(1)
Asset management fees are payable annually until termination of the Partnership, which is to occur no later than December 31, 2070. The estimate of the fees payable included herein assumes the retention of the Partnership’s interest in all Housing Complexes owned at March 31, 2015 until December 31, 2070. Amounts due to the General Partner as of March 31, 2015 have been included in the 2016 column.  The General Partner does not anticipate that these fees will be paid until such time as capital reserves are in excess of the aggregate of the existing contractual obligations and the anticipated future foreseeable obligations of the Partnership.

For additional information regarding our asset management fees and payables due to Local Limited Partnerships, see Notes 3 and 4 to the financial statements included elsewhere herein.

Off-Balance Sheet Arrangements

The Partnership has no off-balance sheet arrangements.

Exit Strategy

See Item 1 for information in this regard.

Impact of Recent Accounting Pronouncements

See footnote 1 to the financial statements.


NOT APPLICABLE


REZNICK OPINON
And:
Crestview IL – 12/31/2014, 2013, & 2012
Davenport Housing VII – 12/31/2013 & 2012
Head Circle – 12/31/2013 & 2012

 
27

 
 

Report of Independent Registered Public Accounting Firm
 
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 13

We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund VI, L.P., Series 13 (the "Partnership") as of March 31, 2015 and 2014, and the related statements of operations, partners’ equity (deficit), and cash flows for each of the years in the three-year period ended March 31, 2015. The Partnership’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of certain Local Limited Partnerships which investments represent $4,128,553 and $4,666,206 of the total Partnership assets as of March 31, 2015 and 2014, respectively, and $24,345, $(290,828) and $(249,258) of income (loss) of the total Partnership loss for the years ended March 31, 2015, 2014 and 2013, respectively. Those statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to those Local Limited Partnerships, is based solely on the reports of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, 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 13 as of March 31, 2015 and 2014 and the results of its operations and its cash flows for each of the years in the three-year period ended March 31, 2015 in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed under Item 15(a)(2) in the index related to each of the years in the three-year period ended March 31, 2015 is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule is the responsibility of WNC Housing Tax Credit Fund VI, L.P., Series 13’s management. This schedule has been subjected to the auditing procedures applied to the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial statement data required to be set forth therein in relation to the basic financial statements taken as a whole.
 

/s/ CohnReznick L.L.P.

Bethesda, Maryland
March 24, 2016
 
 
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F-8

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

BALANCE SHEETS
 
   
2015
   
2014
 
ASSETS
           
  Cash and cash equivalents
  $ 325,510     $ 18,047  
  Investments in Local Limited Partnerships, net (Notes 2 and 3)
    4,648,056       5,396,913  
  Due from affiliates, net (Note 6)
    -       2,265,967  
  Other assets
    -       6,500  
    Total Assets
  $ 4,973,566     $ 7,687,427  
                 
LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)
               
                 
Liabilities:
               
  Payables to Local Limited Partnerships (Note 5)
  $ 375,198     $ 474,328  
  Accrued fees and expenses due to General Partner and Affiliates (Note 3)
    3,341,534       3,548,586  
     Total Liabilities
    3,716,732       4,022,914  
                 
                 
Partners’ Equity (Deficit)
               
  General Partner
    (16,853 )     (14,445 )
  Limited Partners (25,000 Partnership Units authorized, 20,951 and 20,971 Partnership Units issued and outstanding, respectively)
    1,273,687       3,678,958  
                 
Total Partners’ Equity (Deficit)
    1,256,834       3,664,513  
                 
           Total Liabilities and Partners’ Equity (Deficit)
  $ 4,973,566     $ 7,687,427  
 
See accompanying notes to financial statements
 
 
F-9

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

STATEMENTS OF OPERATIONS
 
   
For the Years Ended March 31,
 
   
2015
   
2014
   
2013
 
Operating income:
                 
    Reporting fees
  $ 6,811     $ 4,791     $ 8,948  
    Distribution income
    -       1,016       216  
                         
   Total operating income
    6,811       5,807       9,164  
                         
Operating expenses and loss:
                       
    Amortization
    5,353       22,066       68,700  
    Asset management fees
    155,741       163,604       163,604  
Asset management expenses
    25,600       33,144       2,260  
    Accounting and legal fees
    449,230       155,436       80,580  
    Write off of advances to Local Limited Partnerships (Note 6)
    1,334,071       -       14,820  
    Write off of other assets
    3,250       -       -  
    Impairment loss
    728,957       1,876,679       339,689  
    Other
    59,667       55,501       18,417  
                         
      Total operating expenses and loss
    2,761,869       2,306,430       688,070  
                         
Loss from operations
    (2,755,058 )     (2,300,623 )     (678,906 )
                         
Equity in losses of Local Limited Partnerships
    (14,547 )     (341,021 )     (273,439 )
                         
Gain on sale of Local Limited Partnership
    361,865       -       -  
                         
Interest income
    61       52       120  
                         
Net loss
  $ (2,407,679 )   $ (2,641,592 )   $ (952,225 )
                         
Net loss allocated to:
                       
General Partner
  $ (2,408 )   $ (2,642 )   $ (952 )
                         
Limited Partners
  $ (2,405,271 )   $ (2,638,950 )   $ (951,273 )
                         
Net loss per Partnership Unit
  $ (114.80 )   $ (125.84 )   $ (45.36 )
                         
Outstanding weighted Partnership Units
    20,951       20,971       20,971  
 
See accompanying notes to financial statements
 
 
F-10

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)

For the Years Ended March 31, 2015, 2014 and 2013
 
   
General Partner
   
Limited Partners
   
Total
 
                   
Partners’ equity (deficit) at March 31, 2012
  $ (10,851 )   $ 7,269,181     $ 7,258,330  
                         
Net loss
    (952 )     (951,273 )     (952,225 )
                         
Partners’ equity (deficit) at March 31, 2013
    (11,803 )     6,317,908       6,306,105  
                         
Net loss
    (2,642 )     (2,638,950 )     (2,641,592 )
                         
Partners’ equity (deficit) at March 31, 2014
    (14,445 )     3,678,958       3,664,513  
                         
Net loss
    (2,408 )     (2,405,271 )     (2,407,679 )
                         
Partners’ equity (deficit) at
                       
March 31, 2015
  $ (16,853 )   $ 1,273,687     $ 1,256,834  
 
See accompanying notes to financial statements
 
 
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WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

STATEMENTS OF CASH FLOWS

For the Years Ended March 31, 2015, 2014 and 2013
 
   
2015
   
2014
   
2013
 
Cash flows from operating activities:
                 
  Net loss
  $ (2,407,679 )   $ (2,641,592 )   $ (952,225 )
      Adjustments to reconcile net loss to net cash used in operating activities:
                       
      Amortization
    5,353       22,066       68,700  
      Equity in losses of Local Limited Partnerships
    14,547       341,021       273,439  
      Impairment loss
    728,957       1,876,679       339,689  
      (Increase) decrease in other assets
    6,500       (6,500 )     -  
      Gain on sale of Local Limited Partnership
    (361,865 )                
      Increase in accrued fees and expenses due to General Partner and affiliates
    189,557       404,185       249,862  
              -       -  
      Write off of advances to Local Limited Partnerships     1,334,071       -       14,820  
                         
Net cash used in operating activities
    (490,559 )     (4,141 )     (20,535 )
                         
Cash flows from investing activities:
                       
    Advances to Local Limited Partnerships
    (1,068,104 )     (2,265,967 )     (14,820 )
    Reimbursement of advances made to Local Limited Partnerships
    2,000,000       -       -  
Net proceeds from sale of Local Limited Partnerships
    262,735       -       -  
                         
Net cash used in investing activities
    1,194,631       (2,265,967 )     (14,820
                         
Cash flows from financing activities:
                       
Advances received from General Partner and affiliates
    917,830       2,126,231       -  
    Reimbursement of advances received from General Partner and affiliates
    (1,314,439 )     -       -  
                         
Net cash provided by (used in) by financing activities     (396,609 )     2,126,231       -  
                         
Net increase (decrease) in cash and cash equivalents
    307,463       (143,877 )     (20,535 )
                         
Cash and cash equivalents, beginning of period
    18,047       161,924       182,459  
                         
Cash and cash equivalents, end of period
  $ 325,510     $ 18,047     $ 161,924  
                         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
                       
    Taxes paid   $ 800     $ 800     $ 800  
                         
NONCASH INVESTING AND FINANCING ACTIVITIES:
                       
Write-off of payables to Local Limited Partnerships due to sale of Local Limited Partnership
    99,130       -       -  
 
See accompanying notes to financial statements
 
 
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WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

WNC Housing Tax Credit Fund VI, L.P., Series 13, a California Limited Partnership (the “Partnership”), was formed on February 7, 2005 under the laws of the State of California, and commenced operations on December 14, 2005. The Partnership was formed to invest primarily in other limited partnerships and limited liability companies (the “Local Limited Partnerships”) which own multi-family housing complexes (“Housing Complexes”) that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”).  The local general partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility for maintaining, operating and managing the Housing Complex. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local Limited Partnership Agreement”).

The general partner of the Partnership is WNC National Partners, LLC (the “General Partner”).  The general partner of the General Partner is WNC & Associates, Inc. (“Associates”).  The chairman and the president of Associates owns all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates, as the Partnership and General Partner have no employees of their own.

The Partnership shall continue in full force and effect until December 31, 2070, unless terminated prior to that date, pursuant to the partnership agreement or law.

The financial statements include only activity relating to the business of the Partnership and do not give effect to any assets that the partners may have outside of their interests in the Partnership, or to any obligations, including income taxes of the partners.

Pursuant to a registration statement filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 18, 2005, the Partnership commenced a public offering of 25,000 units of limited partnership interest (“Partnership Units”) at a price of $1,000 per Partnership Unit.  The required minimum offering amount of $1,400,000 was achieved by December 14, 2005.  Total subscriptions for 20,981 Partnership Units had been accepted, representing $20,965,400, which is net of volume discounts of $4,540 and dealer discounts of $11,060. Holders of Partnership Units are referred to herein as “Limited Partners.” As of March 31, 2015 and 2014, a total of 20,951 and 20,971 Partnership Units, respectively, remain outstanding. The General Partner has a 0.1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the Partnership and tax credits.  The Limited Partners will be allocated the remaining 99.9% interest in proportion to their respective investments.  This offering was closed on September 21, 2006.

The proceeds from the disposition of any of the Housing Complexes will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement.  Any remaining proceeds will then be paid to the partners of the Local Limited Partnership, including the Partnership, in accordance with the terms of the particular Local Limited Partnership Agreement.  The sale of a Housing Complex may be subject to other restrictions and obligations.  Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex.  Even if it does so, there can be no assurance that any significant amounts of cash will be distributed to the Partnership.  Should such distributions occur, the Limited Partners will be entitled to receive distributions from the proceeds remaining after payment of Partnership obligations and funding reserves, equal to their capital contributions and their return on investment (as defined in the Partnership Agreement).  The General Partner would then be entitled to receive proceeds equal to their capital contributions from the remainder.  Any additional sale or refinancing proceeds will be distributed 90% to the Limited Partners (in proportion to their respective investments) and 10% to the General Partner.
 
 
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WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Risks and Uncertainties

An investment in the Partnership and the Partnership’s investments in Local Limited Partnerships and their Housing Complexes are subject to risks.  These risks may impact the tax benefits of an investment in the Partnership, and the amount of proceeds available for distribution to the Limited Partners, if any, on liquidation of the Partnership’s investments. Some of those risks include the following:

The Low Income Housing Tax Credits rules are extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Tax Credits and the fractional recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax Credits that an individual can use is limited to the tax liability due on the person’s last $25,000 of taxable income. The Local Limited Partnerships may be unable to sell the Housing Complexes at a price which would result in the Partnership realizing cash distributions or proceeds from the transaction.  Accordingly, the Partnership may be unable to distribute any cash to its Limited Partners. Low Income Housing Tax Credits may be the only benefit from an investment in the Partnership.

The Partnership has invested in a limited number of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership’s ability to satisfy its investment objectives.  Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15 years (the “Compliance Period”), the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture of prior Low Income Housing Tax Credits, and a loss of the Partnership’s investment in the Housing Complex would occur. The Partnership is a limited partner or non-managing member of each Local Limited Partnership. Accordingly, the Partnership will have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the Local General Partners. Neither the Partnership’s investments in Local Limited Partnerships, nor the Local Limited Partnerships’ investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes; difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes; limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations on subsidy programs; and possible changes in applicable regulations.  Uninsured casualties could result in loss of property and Low Income Housing Tax Credits and recapture of Low Income Housing Tax Credits previously taken. The value of real estate is subject to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies, supply and demand of similar properties, and neighborhood conditions, among others.

The ability of Limited Partners to claim tax losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax treatment of tax items. The amount of Low Income Housing Tax Credits and tax losses allocable to the Limited Partners could be reduced if the IRS were successful in such a challenge.  The alternative minimum tax could reduce tax benefits from an investment in the Partnership.  Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the Housing Complexes.
 
 
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WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

The Partnership currently has insufficient working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through March 31, 2017.

Anticipated future and existing cash resources of the Partnership are not sufficient to pay existing liabilities of the Partnership. A significant portion of the existing liabilities are the payables to Local Limited Partnerships and those payables are the first priority to be paid. If the Partnership does not have enough cash to pay those liabilities the General Partner or an affiliate will fund the necessary cash to pay the liabilities.  The remaining portion of the payables is due to the General Partner or an affiliate. Though the amounts payable to the General Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership.  The Partnership would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual obligations and or suspend services for this or any other reason.

No trading market for the Partnership Units exists or is expected to develop. Limited Partners may be unable to sell their Partnership Units except at a discount and should consider their Partnership Units to be a long-term investment. Individual Limited Partners will have no recourse if they disagree with actions authorized by a vote of the majority of Limited Partners.

Exit Strategy

The Compliance Period for a Housing Complex is generally 15 years following construction or rehabilitation completion. Associates was one of the first in the industry to offer syndicated investments in Low Income Housing Tax Credits.  The initial programs have completed their Compliance Periods.  Upon the sale of a Local Limited Partnership Interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits.  A sale prior to the end of the Compliance Period must satisfy the reasonable belief test to avoid recapture.

With that in mind, the General Partner is continuing its review of the Housing Complexes. The review considers many factors, including extended use requirements (such as those due to mortgage restrictions or state compliance agreements), the condition of the Housing Complexes, Partnership cash flow, and the tax consequences to the Limited Partners from the sale of the Housing Complexes.

During the year ended March 31, 2011, the Partnership sold two Local Limited Partnerships, Fernwood Meadows, L.P. (“Fernwood”) and Sierra’s Run, L.P. (“Sierra’s Run”) for disposition in order to generate sufficient equity to complete the purchase of additional low income housing tax credits for Davenport Housing VII, L.P.  (“Davenport”, see Note 2 to the audited financial statements).  

Fernwood and Sierra’s Run will complete their Compliance Periods in 2022; therefore there is a risk of tax credit recapture.  The maximum exposure of recapture (excluding the interest and penalties related to the recapture) is $177,508 and $170,246, respectively, for Fernwood and Sierra’s Run, which equates to $16.57 per Partnership Unit in the aggregate.  Under the circumstances, the General Partner believes there is a reasonable expectation that each Local Limited Partnership will continue to be operated as qualified low income housing for the balance of its Compliance Period, and, accordingly, does not anticipate that there will be any recapture.

During the year ended March 31, 2015, the underlying Housing Complex of Grove Village Limited Partnership (“Grove Village”) was sold resulting in the termination of the Partnership’s Local Limited Partnership interest. Grove Village was appraised for $1,700,000 and had a mortgage note balance of $5,756,079 as of December 31, 2013. The sale price was $1,690,000, of which approximately $99,000 was used for third party brokerage fees, $239,000 was used for liens held by the City of Dallas for past due water and sewer fees, $36,000 was used for corporate liens, $77,000 was used for liens in litigation, $8,000 was paid to TDHCA, $129,000 was used to pay past due property taxes, $60,000 was used to pay past due payables, and $10,000 was used for prorated prepaid rents. Lastly there was $100,000 to remain in escrow for 60 days for any unforeseen payables or liens are brought forward. After a deduction of $7,944 in escrow expenses, $92,056 was reimbursed to the Partnership in April 2015. Of the balance, $625,000 was used for repayment of the mortgage note. Although the note was being carried on the books at $5,756,079, the note had been acquired by Associates for $625,000. The new loan holder accepted $625,000 as payment in full, although it was entitled to the full outstanding amount. The difference between $5,756,079 and $625,000 is cancelation of debt income and will flow through to the investors as such. It will appear on the 2015 Forms K-1, as will all results of the sale. To date, proceeds of $409,495 have been received by the Partnership, of which $306,244 was received during the year ended March 31, 2015. These proceeds are being held in the Partnership’s reserves and no distributions to partners are expected. The Partnership has incurred $43,509 approximately in sales related expenses which will be netted against the proceeds from the sale in calculating the gain on the sale. The Partnership’s investment balance in Grove Village immediately prior to the sale was zero; and $99,130 of capital contributions payable were written off resulting in a gain of $361,865. Additional gains could be recognized due to the cancellation of debt income. Due the fact that 8609’s were never obtained for Grove Village there is no applicable Compliance Period.
 
Subsequent to March 31, 2015, the Partnership entered into an Agreement to Gift with The Young Men’s Christian Association of Greater Seattle, a nonprofit corporation, for its Local Limited Partnership interest in 909 4th YMCA Limited Partnership (“909 4th”).  909 4th was appraised for $8,700,000 with an effective date in January 2015. The Partnership received reimbursements of $2,400 for appraisal expenses, $5,120 for legal fees, and $1,600 for sale valuation services. The Partnership incurred $2,660 of sales related expenses which were netted against the reimbursements from the sale in calculating the gain on sale. The investment balance was zero at the time of the sale of the Local Limited Partnership; therefore a gain of $6,460 was recorded during the period. The Compliance Period for 909 4th has expired so there is no risk of tax credit recapture to the investors.

Subsequent to March 31, 2015, the underlying Housing Complex of Pleasant Village Limited Partnership (“Pleasant Village”) was sold, resulting in the termination of the Partnership’s Local Limited Partnership interest. Pleasant Village was appraised for $1,800,000 and had a mortgage note balance of $5,344,000 as of December 31, 2014. The sale price was $2,450,000,of which $109,000 was used for third party brokerage fees, $22,000 was used for  the LIHTC recapture bond, $9,000 was paid to TDHCA, $235,000 was used to pay past due property taxes, $32,000 was used for prorated prepaid rents, and $10,000 was used to pay title fees, escrow fees and sale related expenses. Lastly there was $272,000 to remain in escrow for up to 90 days for any unforeseen payables or liens that are brought forward. Sale proceeds of $1,760,418 was reimbursed to the Partnership, in which $625,000 was used for repayment of the mortgage note. Although the note was being carried on the books at $5,756,079, the note had been acquired by Pleasant Village Lending Partner, LLC for $625,000. The new loan holder accepted $625,000 as payment in full, although it was entitled to the full outstanding amount. The remaining $1,135,418 is being held in the Partnership’s reserves and no distributions to partners are expected due to the fact that the Partnerships liabilities exceed the cash received. The Partnership has incurred approximately $8,000 in sales related expenses which will be netted against the proceeds from the sale for calculating the gain on the sale.
 
 
F-15

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
 
Upon identifying those Housing Complexes with the highest potential for a successful sale, refinancing or syndication after termination of the ten-year credit period, the Partnership expects to proceed with efforts to liquidate them with the objective of winding down the Partnership. Local Limited Partnership Interests may be disposed of any time by the General Partner at its discretion.

The proceeds from the disposition of any of the Housing Complexes will be used first to pay debts and other obligations per the respective Local Limited Partnership Agreement.  Any remaining proceeds will then be paid to the partners of the Local Limited Partnership, including the Partnership, in accordance with the terms of the particular Local Limited Partnership Agreement. The sale of a Housing Complex may be subject to other restrictions and obligations.  Accordingly, there can be no assurance that a Local Limited Partnership will be able to sell its Housing Complex.  Even if it does so, there can be no assurance that any significant amounts of cash will be distributed to the Partnership, as the proceeds first would be used to pay Partnership obligations and funding of reserves.

Method of Accounting For Investments in Local Limited Partnerships

The Partnership accounts for its investments in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received. The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such investment may not be recoverable.  Recoverability of such investment is measured by the estimated value derived by management, generally consisting of the product of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual value to the Partnership.  If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part of the investment account and are being amortized over 27.5 years. (See Notes 2 and 3 to the financial statements)

“Equity in losses of Local Limited Partnerships” for each year ended March 31 has been recorded by the Partnership based on the twelve months of reported results provided by the Local Limited Partnerships for each year ended December 31. Equity in losses from the Local Limited Partnerships allocated to Partnership is not recognized to the extent that the investment balance would be adjusted below zero. If the Local Limited Partnerships report net income in future years, the Partnership will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during the period(s) the equity method was suspended.
 
 
F-16

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Distributions received by the Partnership are accounted for as a reduction of the investment balance.  Distributions received after the investment has reached zero are recognized as income. As of March 31, 2015 and 2014, three and four, respectively, of the investment balances had reached zero.

In accordance with the accounting guidance for the consolidation of variable interest entities, the Partnership determines when it should include the assets, liabilities, and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further, the guidance requires continual reconsideration of the primary beneficiary of a VIE.
 
Based on this guidance, the Local Limited Partnerships in which the Partnership invests meet the definition of a VIE because the owners of the equity at risk in these entities do not have the power to direct their operations. However, management does not consolidate the Partnership’s interests in these VIEs, as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered most significant to the economic performance of these entities. The Partnership currently records the amount of its investment in these Local Limited Partnerships as an asset on its balance sheets, recognizes its share of partnership income or losses in the statements of operations, and discloses how it accounts for material types of these investments in its financial statements. The Partnership’s balance in investment in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized on these investments, represents its maximum exposure to loss. The Partnership’s exposure to loss on these Local Limited Partnerships is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local General Partners and their guarantee against credit recapture to the investors in the Partnership.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could materially differ from those estimates.

Cash and Cash Equivalents

The Partnership considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.  As of December 31, 2014 and March 31, 2014, the Partnership had $16,296 and $17,217 in cash equivalents, respectively.

Reporting Comprehensive Income

The Partnership had no items of other comprehensive income for all periods presented.

Net Loss Per Partnership Unit

Net loss per Partnership Unit includes no dilution and is computed by dividing loss allocated to Limited Partners by the weighted average Partnership Units outstanding during the period.  Calculation of diluted net loss per Partnership Unit is not required.
 
 
F-17

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Income Taxes

The Partnership has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns.  The Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required to file and does file tax returns with
the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered for disclosure. Income tax returns filed by the Partnership are subject to examination by the Internal Revenue Service for a period

of three years. While no income tax returns are currently being examined by the Internal Revenue Service, tax years since 2011 remain open.

Revenue Recognition

The Partnership is entitled to receive reporting fees from the Local Limited Partnerships.  The intent of the reporting fees is to offset (in part) administrative costs incurred by the Partnership in corresponding with the Local Limited Partnerships. Due to the uncertainty of the collection of these fees, the Partnership recognizes reporting fees as collections are made.

Amortization

Acquisition fees and costs included in investments in Local Limited Partnerships are being amortized over 27.5 years using the straight-line method. Amortization expense for the years ended March 31, 2015, 2014 and 2013 was $5,353, $22,066 and $68,700, respectively. Future estimated amortization expense for each of the years through March 31, 2019 is $4,964.

Impairment

The Partnership reviews its investments in Local Limited Partnership for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of such investments may not be recoverable. Impairment is measured by comparing the Partnership’s carrying amount in the investment to the sum of the total amount of the remaining future Low Income Housing Tax Credits estimated to be allocated to the Partnership and the estimated residual value to the Partnership. For the years ended March 31, 2015, 2014 and 2013, impairment loss related to investments in Local Limited Partnerships was $696,069, $568,391, and $339,689, respectively.

The Partnership also evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. During the years ended March 31, 2015, 2014 and 2013, an impairment loss of $32,888, $1,308,288, and $0, respectively, was recorded against related intangibles.

Impact of Recent Accounting Pronouncements

In January 2014, the FASB issued an amendment to the accounting and disclosure requirements for investments in qualified affordable housing projects. The amendments provide guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received, and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments are effective for interim and annual periods beginning after December 15, 2014 and should be applied retrospectively to all periods presented. Early adoption is permitted. The adoption of this update is not expected to materially affect the Partnership's financial statements.
 
 
F-18

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
 
In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis”. This will improve certain areas of consolidation guidance for reporting organizations that are required to evaluate whether to consolidate certain legal entities such as limited partnerships, limited liability corporations and securitization structures. ASU 2015-02 simplifies and improves GAAP by: eliminating the presumption that a general partner should consolidate a limited partnership, eliminating the indefinite deferral of FASB Statement No. 167, thereby reducing the number of Variable Interest Entity (VIE) consolidation models from four to two (including the limited partnership consolidation model) and clarifying when fees paid to a decision maker should be a factor to include in the consolidation of VIEs. ASU 2015-02 will be effective for periods beginning after December 15, 2015. The Partnership is currently evaluating the potential impact of the adoption of this guidance on its financial statements.

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

As of March 31, 2015 and 2014, the Partnership has acquired limited partnership interests in 7 and 8 Local Limited Partnerships, respectively, each of which owns one Housing Complex consisting of an aggregate of 366 and 598 apartment units, respectively. The respective Local General Partners of the Local Limited Partnerships manage the day-to-day operations of the entities. Significant Local Limited Partnership business decisions require approval from the Partnership.  The Partnership, as a limited partner, is entitled to 99.98%, as specified in the Local Limited Partnership agreements, of the operating profits and losses, taxable income and losses and Low Income Housing Tax Credits of the Local Limited Partnerships.

The Partnership's investments in Local Limited Partnerships as shown in the balance sheets at March 31, 2015 and 2014 is approximately $14,754,000 and $8,906,000, respectively, greater than the Partnership's equity at the preceding December 31 as shown in the Local Limited Partnerships’ combined financial statements presented below. This difference is primarily due to acquisition, selection and other costs related to the acquisition of the investments which have been capitalized in the Partnership’s investment account and capital contributions payable to the Local Limited Partnerships which were netted against partner capital in the Local Limited Partnerships’ financial statements.

At March 31, 2015 and 2014, the investment accounts in certain Local Limited Partnerships have reached a zero balance. Consequently, a portion of the Partnerships’ estimate of its share of losses for the years ended March 31, 2015, 2014 and 2013, amounting to approximately $4,607,000, $3,351,000, and $2,477,000, respectively, have not been recognized. As of March 31, 2015, the aggregate share of net losses not recognized by the Partnership amounted to $6,678,000.

The Partnership reviews its investments in Local Limited Partnership for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value of such investments may not be recoverable. Recoverability is measured by a comparison of the carrying amount of the investment to the sum of the total amount of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investment.  For the years ended March 31, 2015, 2014 and 2013, impairment loss related to investments in Local Limited Partnerships was $696,069, $568,391 and $339,689, respectively.
 
 
F-19

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

The Partnership also evaluates its intangibles for impairment in connection with its investments in Local Limited Partnerships. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and any estimated residual value of the investments. During year ended March 31, 2015, 2014 and 2013, an impairment loss of $32,888, $1,308,288 and $0, respectively, was recorded against related intangibles.

The following is a summary of the equity method activity of the investments in Local Limited Partnerships for the periods presented:

   
For the Years Ended March 31,
 
   
2015
   
2014
   
2013
 
Investments per balance sheet, beginning of year
  $ 5,396,913     $ 7,636,679     $ 8,318,507  
Equity in losses of Local Limited Partnerships
    (14,547 )     (341,021 )     (273,439 )
Impairment loss
    (728,957 )     (1,876,679 )     (339,689 )
Amortization of acquisition fees and costs
    (5,353 )     (22,057 )     (68,664 )
Amortization of warehouse interest and costs
    -       (9 )     (36 )
                         
Investments per balance sheet, end of year
  $ 4,648,056     $ 5,396,913     $ 7,636,679  

   
For the Years
Ended March 31,
 
   
2015
   
2014
   
2013
 
                   
Investments in Local Limited Partnerships, net
  $ 4,550,057     $ 5,260,673     $ 6,170,085  
Acquisition fees and costs, net of accumulated amortization of $3,723, $4,891, and $422,487
    97,999       136,240       1,465,803  
Warehouse interest and costs, net of accumulated amortization of $0 , $0, and $248
    -       -       791  
Investments per balance sheet, end of year
  $ 4,648,056     $ 5,396,913     $ 7,636,679  
 
 
F-20

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

The financial information from the individual financial statements of the Local Limited Partnerships include rental and interest subsidies.  Rental subsidies are included in total revenues and interest subsidies are generally netted against interest expense. Approximate combined condensed financial information from the individual financial statements of the Local Limited Partnerships as of December 31 and for the years then ended is as follows:

COMBINED CONDENSED BALANCE SHEETS

   
2014
   
2013
 
ASSETS
           
Buildings and improvements, net of accumulated depreciation of $8,595,000 ,$14,028,000, respectively
  $ 28,814,000     $ 34,974,000  
Land
    828,000       1,906,000  
Other assets
    1,656,000       1,376,000  
     Total Assets
  $ 31,298,000     $ 38,256,000  
                 
LIABILITIES
               
                 
Mortgage and construction loans payable
  $ 15,035,000     $ 17,361,000  
Due to related parties
    9,689,000       8,284,000  
Other liabilities
    10,952,000       5,390,000  
      Total Liabilities
    35,676,000       31,035,000  
                 
PARTNERS’ EQUITY
               
                 
WNC Housing Tax Credit Fund VI, L.P., Series 13
    (10,106,000 )     (3,509,000 )
Other partners
    5,727,000       10,730,000  
          Total Partners’ Equity
    (4,379,000 )     7,221,000  
                  Total Liabilities and Partners’ Equity
  $ 31,298,000     $ 38,256,000  

COMBINED CONDENSED STATEMENTS OF OPERATIONS

   
2014
   
2013
   
2012
 
                   
Revenues
  $ 4,471,000     $ 4,544,000     $ 4,443,000  
                         
Expenses:
                       
Operating expenses
    4,565,000       4,697,000       3,744,000  
  Interest expense
    1,719,000       867,000       1,494,000  
  Impairment loss
    1,890,000       1,767,000       -  
  Depreciation and amortization
    920,000       799,000       1,970,000  
                         
Total expenses
    9,094,000       8,130,000       7,208,000  
                         
Net loss
  $ (4,623,000 )   $ (3,586,000 )   $ (2,765,000 )
                         
Net loss allocable to the Partnership
  $ (4,622,000 )   $ (3,586,000 )   $ (2,764,000 )
                         
Net loss recorded by the Partnership
  $ (15,000 )   $ (341,000 )   $ (273,000 )
 
 
F-21

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

Certain Local Limited Partnerships have incurred operating losses and/or have working capital deficiencies. In the event these Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership and/or the Local General Partner may be required to sustain the operations of such Local Limited Partnerships.  If additional capital contributions are not made when they are required, the Partnership's investment in certain Local Limited Partnerships could be impaired, and the loss and recapture of the related Low Income Housing Tax Credits could occur.

Troubled Housing Complex

Davenport started construction in October 2006 and was scheduled to be completed in June 2008. Construction was delayed due to the original Local General Partner defaulting on his construction guarantee, and resulting in disputed mechanic liens on the property. In November 2008, a co-Local General Partner, Shelter Resource Corporation, was admitted into the Partnership, due to restrictions implemented by the Iowa Finance Authority (“IFA”). Subsequently, with IFA’s approval, the defaulting original Local General Partner was removed from the Partnership leaving Shelter Resource Corporation as the sole Local General Partner.

As of March 31, 2010, the property was 100% completed and a certificate of occupancy was granted for both buildings in December 2009. The Partnership engaged all sub-contractors to sign new construction contracts, along with lien releases for any and all work done after their engagement. During the year ended March 31, 2011, the Partnership voluntarily advanced $846,175 to Davenport for construction related costs. There were no additional advances made to Davenport due to the additional investment made, as discussed below.

The project was fully completed as of March 31, 2010 and it achieved stabilized operations by June 2010. In June 2010 the property achieved 85% occupancy and has maintained occupancy of 80% to 100% to the date of this filing. Davenport has been awarded state historical tax credits from the State of Iowa, federal historical credits and federal Low Income Housing Tax Credits. The State historical credits are given in the form of a refund check from the State in conjunction with the State tax return filing. The net amount of the check after applicable federal taxes will be contributed back to the property to help fund construction shortfalls. Davenport was also allocated additional federal Low Income Housing Tax Credits as well as federal historical tax credits. Upon the Limited Partners’ approval of the dispositions of Sierra Run’s and Fernwood, the Partnership made the additional investment in Davenport. See the exit strategy in Note 1 regarding the dispositions of Sierra’s Run and Fernwood. On July 1, 2010, the Partnership committed additional capital to Davenport in the amount of $2,490,651. This additional commitment generated $408,710 of federal historic credits and $3,582,550 of additional federal Low Income Housing Tax Credits which were allocated to the partners of the Partnership.

Grove Village Limited Partnership (“Grove Village”) and Pleasant Village Limited Partnership (“Pleasant Village”), both Texas limited partnerships in which the Partnership is a limited partner, were audited by the Internal Revenue Service (“IRS”) for tax years 2007, 2008 and 2009. In its findings of those audits, the IRS asserted that the low income housing tax credits (“LIHTCs”) for Grove Village and Pleasant Village should not have been claimed for those three years. As of the year-end for each of tax years 2007, 2008, 2009, and 2010 the IRS Forms 8609 had not been issued by the Texas Department of Housing & Community Affairs (“TDHCA”), which is contrary to the representation made by the general partner (the “Local General Partner”) of Grove Village and Pleasant Village on their respective tax returns.

An Appellate Hearing with the IRS was held on June 27, 2013. Thereafter, the Partnership received notification that the IRS Appeals Division ruled in favor of the IRS findings. The Partnership filed a Petition for Readjustment with the United States Tax Court for Pleasant Village. The Partnership did not file with the Tax Court for Grove Village. The Tax Court noticed a trial date of June 22, 2015, which has been extended to a date to be determined. The IRS US Attorney requested the Partnership to provide the IRS with documents sufficient to support the Partnership’s position to maintain the 2007, 2008 and 2009 tax credits.  The US Attorney will review the information and determine if a decision can be made without going to trial.  Counsel for the Partnership provided the IRS with the requested documents.
 
 
F-22

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
 
In May 2013, the Local General Partner stopped making the mortgage payments for Grove Village and Pleasant Village without providing notice to the Partnership of its intent to do so. The lender issued a notice of default. To prevent the lender from commencing a foreclosure action against the properties and thereby eliminating any possibility of obtaining the Forms 8609 and the LIHTCs,  WNC National Partners, LLC (“General Partner”), the general partner of the Partnership, sought to protect the Partnership’s investment in Grove Village and Pleasant Village and purchased the mortgage loans to prevent foreclosure.

In June 2013, the Partnership filed a lawsuit against the Local General Partner and the guarantors of the LIHTCs. Discussions were commenced with the Local General Partner’s insurance carrier and counsel to determine whether a settlement of the claims could be reached. The Partnership settled with the Local General Partner regarding the contract claims for $2,000,000; on the Partnership’s books this amount was applied against receivables due from Local Limited Partnerships. The Partnership settled with the insurance carrier regarding the negligence claims and $1,300,000 was received in August 2015. This amount was applied against advance payable that had been made to the Partnership by the General Partner or affiliates.

During the year ended March 31, 2015, Grove Village Limited Partnership was sold resulting in the termination of the Partnership’s Local Limited Partnership interest. Grove Village was appraised for $1,700,000 and had a mortgage note balance of $5,756,079 as of December 31, 2013. The sale price was $1,690,000, of which approximately $99,000 was used for third party brokerage fees, $239,000 was used for liens held by the City of Dallas for past due water and sewer fees, $36,000 was used for corporate liens, $77,000 was used for liens in litigation, $8,000 was paid to TDHCA, $129,000 was used to pay past due property taxes, $60,000 was used to pay past due payables, and $10,000 was used for prorated prepaid rents. Lastly there was $100,000 to remain in escrow for 60 days for any unforeseen payables or liens are brought forward. After a deduction of $7,944 in escrow expenses, $92,056 was reimbursed to the Partnership in April 2015. Of the balance, $625,000 was used for repayment of the mortgage note. Although the note was being carried on the books at $5,756,079, the note had been acquired by Associates for $625,000. The new loan holder accepted $625,000 as payment in full, although it was entitled to the full outstanding amount. The difference between $5,756,079 and $625,000 is cancelation of debt income and will flow through to the investors as such. It will appear on the 2015 Forms K-1, as will all results of the sale. To date, proceeds of $409,495 have been received by the Partnership, of which $306,244 was received during the year ended March 31, 2015. Theses proceeds are being held in the Partnership’s reserves and no distributions to partners are expected. The Partnership has incurred $43,509 approximately in sales related expenses which will be netted against the proceeds from the sale in calculating the gain on the sale. The Partnership’s investment balance in Grove Village immediately prior to the sale was zero; and $99,130 of capital contributions payable were written off resulting in a gain of $361,865. Additional gains could be recognized due to the cancellation of debt income. Due the fact that 8609’s were never obtained for Grove Village there is no applicable Compliance Period.

Inasmuch as the Forms 8609 were never issued to Grove Village, there will be a recapture of the LIHTCs taken. The LIHTCs for Grove Village for 2007-2010 totaled approximately $1,590,000 and the estimated interest that will be imposed under the Internal Revenue Code and Treasury Regulations is approximately $426,000. The total of approximately $2,016,000 equates to $96 per Partnership Unit. In June 2015, the Investors received tax due notices from the IRS for the LIHTCs (with interest) allocated to each Limited Partner relative to Grove Village for tax years 2007, 2008 and 2009.  Using IRS guidelines, WNC calculated the interest to be charged by the IRS based on the maximum LIHTCs allocated to each Limited Partner whether or not the Limited Partner used those LIHTCs. Based on that calculation of the estimated interest owed to the US Treasury for the LIHTCs taken in 2007, 2008 and 2009, the Partnership provided a distribution check to each Limited Partner during September 2015, using funds from the Partnership, a portion of which were advanced from the General Partner.  The Partnership also allocated 2010 LIHTCs to the Limited Partners for Grove Village and those LIHTCs (with interest) are owed back to the US Treasury.
 
 
F-23

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued

Through protracted and detailed discussions with HUD and TDHCA, the General Partner commenced repair work at Pleasant Village to clear the deficiencies so that Form 8609 could be issued.  Because repair work on Pleasant Village had commenced, the Partnership appealed to the United States Tax Court the IRS determination to pursue collection of the 2007, 2008 and 2009 LIHTCs for Pleasant Village.  As a result of WNC’s efforts and the expenditure of nearly $3 million using funds from the Partnership, a portion of which were advanced from the General Partner, Pleasant Village passed the HUD REAC Inspections in both June 2014 and in May 2015. In April 2015, WNC successfully obtained Form 8609 from TDHCA for Pleasant Village.

Pleasant Village has now received Form 8609, as stated above.  Therefore, Pleasant Village will amend its tax returns and allocate to the Partnership the 2011 – 2015 LIHTCs not previously allocated.  The Partnership, at the Partnership level, will add the LIHTCs for 2015 for all the Local Limited Partnerships invested in by the Partnership with the LIHTCs for Pleasant Village (for previous years), and net them against the 2010 Grove Village LIHTCs (with interest) that are owed back to the US Treasury.

Subsequent to March 31, 2015, the underlying Housing Complex of Pleasant Village Limited Partnership (“Pleasant Village”) was sold, resulting in the termination of the Partnership’s Local Limited Partnership interest. Pleasant Village was appraised for $1,800,000 and had a mortgage note balance of $5,344,000 as of December 31, 2014. The sale price was $2,450,000,of which $109,000 was used for third party brokerage fees, $22,000 was used for  the LIHTC recapture bond, $9,000 was paid to TDHCA, $235,000 was used to pay past due property taxes, $32,000 was used for prorated prepaid rents, and $10,000 was used to pay title fees, escrow fees and sale related expenses. Lastly there was $272,000 to remain in escrow for up to 90 days for any unforeseen payables or liens that are brought forward. Sale proceeds of $1,760,418 was reimbursed to the Partnership, in which $625,000 was used for repayment of the mortgage note. Although the note was being carried on the books at $5,756,079, the note had been acquired by Pleasant Village Lending Partner, LLC for $625,000. The new loan holder accepted $625,000 as payment in full, although it was entitled to the full outstanding amount. The remaining $1,135,418 is being held in the Partnership’s reserves and no distributions to partners are expected due to the fact that the Partnerships liabilities exceed the cash received. The Partnership has incurred approximately $8,000 in sales related expenses which will be netted against the proceeds from the sale for calculating the gain on the sale.

The Partnership continues to challenge the IRS position that the Tax Credits for 2007 – 2009 should be repaid for Pleasant Village. The matter was scheduled for trial in November 2015.  However, counsel for the IRS obtained a postponement to a date to be determined in early 2016.  There is no guarantee that the IRS or the Court will rule in the Partnership's favor for tax years 2007, 2008 or 2009.

NOTE 3 - RELATED PARTY TRANSACTIONS

Under the terms of the Partnership Agreement, the Partnership has paid or is obligated to the General Partner or its affiliates for the following items:

 
Acquisition fees of 7% of the gross proceeds from the sale of Partnership Units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships.  As of March 31, 2015 and 2014, the Partnership had incurred cumulative acquisition fees of $1,468,670 which were included in investments in Local Limited Partnerships. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and the estimated residual value of the investments. If an impairment loss related to the acquisition expenses is recorded, the accumulated amortization is reduced to zero at that time. As of March 31, 2015, the fees have been fully amortized or impaired.

 
F-24

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 3 - RELATED PARTY TRANSACTIONS, continued

Non-accountable acquisition costs of 2% of the gross proceeds from the sale of Partnership Units as an expense reimbursement in connection with the acquisition of Local Limited Partnerships.  As of March 31, 2015 and 2014, the Partnership incurred cumulative acquisition costs of $419,620 which were included in investments in Local Limited Partnerships.  Accumulated amortization of these capitalized costs was $3,723  and $4,891, as of March 31, 2015 and 2014, respectively. Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership and the estimated residual value of the investments. If an impairment loss related to the acquisition expenses is recorded, the accumulated amortization is reduced to zero at that time.

An annual asset management fee accrues in an amount equal to 0.5% of the Invested Assets of the Partnership, as defined.  “Invested Assets” is defined as the sum of the Partnership’s Investment in Local Limited Partnerships, plus the reserves of the Partnership of up to 5% of gross Partnership Unit sales proceeds, and the Partnership’s allocable share of the amount of the mortgage loans and other debts related to the Housing Complexes owned by such Local Limited Partnerships.  Management fees of $155,741, 163,604 and $163,604 were incurred during the years ended March 31, 2015, 2014 and 2013, respectively. No payments were made during any of the years ended March 31, 2015, 2014 and 2013.

The Partnership will reimburse the General Partner or its affiliates for operating expenses incurred on behalf of the Partnership and paid for by the General Partner or its affiliates on behalf of the Partnership. Operating expense reimbursements were $540,942, $10,000 and $15,038, during the years ended March 31, 2015, 2014 and 2013, respectively.

A subordinated disposition fee will be paid in an amount equal to 1% of the sales price of real estate sold.  Payment of this fee is subordinated to the Limited Partners receiving a return on investment (as defined in the Partnership Agreement) and is payable only if the General Partner or its affiliates render services in the sales effort.  No disposition fees have been incurred for the three years presented.

WNC Holding, LLC (“Holding”), a wholly owned subsidiary of Associates, acquires investments in Local Limited Partnerships using funds from a secured warehouse line of credit.  Such investments are warehoused by Holding until transferred to syndicated partnerships as investors are identified.  The transfer of the warehoused investments is typically achieved through the admittance of the syndicated partnership as the Limited Partner of the Local Limited Partnership and the removal of Holding as the Limited Partner.  Consideration paid to Holding for the transfer of its interest in the Local Limited Partnership generally consists of cash reimbursement of capital contribution installment(s) paid to the Local Limited Partnerships by Holding, assumption of the remaining capital contributions payable due to the Local Limited Partnership and financing costs and interest charged by Holding. As of all periods presented, the Partnership incurred financing costs of $772 and interest of $267 which are included in investments in Local Limited Partnerships.  Impairment on the intangibles is measured by comparing the Partnership’s total investment balance after impairment of investments in Local Limited Partnerships to the sum of the total of the remaining Low Income Housing Tax Credits allocated to the Partnership. If an impairment loss related to the capitalized warehouse interest and costs are recorded, the accumulated amortization is reduced to zero at that time. As of March 31, 2015, the financing costs and interest were fully amortized or impaired.

Payables to General Partner or an affiliates amounting to $1,729,622 and $2,216,231, respectively, at March 31, 2015 and 2014 represent advances that had been made to the Partnership by the General Partner or an affiliate to aid the Partnership in providing funding to two Local Limited Partnerships which were experiencing operational issues.

 
F-25

 

WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 3 - RELATED PARTY TRANSACTIONS, continued

The accrued fees and expenses due to General Partner and affiliates consist of the following at:

   
March 31,
 
   
2015
   
2014
 
Asset management fee payable
  $ 1,247,164     $ 1,091,423  
Reimbursements for expenses paid by the General Partner or an affiliate
    364,748       330,932  
Payable to General Partner or affiliates
    1,729,622       2,126,231  
                 
    Total
  $ 3,341,534     $ 3,548,586  

The Partnership currently has insufficient working capital to fund its operations.  Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital requirements of the Partnership through March 31, 2017.
 
 
F-26

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly operations for the years ended March 31 (rounded):
 
   
June 30
   
September 30
   
December 31
   
March 31
 
                         
2015
                       
                         
Income
  $ -     $ -     $ 4,000     $ 3,000  
                                 
Operating expenses and loss
    (835,000 )     (1,288,000 )     (292,000 )     (347,000 )
                                 
Loss from operations
    (835,000 )     (1,288,000 )     (288,000 )     (344,000 )
                                 
Equity in income (losses) of Local Limited Partnerships
    (74,000 )     (74,000 )     (74,000 )     207,000  
                                 
Gain on sale of Local Limited Partnership
    -       -       -       362,000  
                                 
Net income (loss)
    (909,000 )     (1,362,000 )     (362,000 )     225,000  
                                 
Net income (loss) available to Limited Partners
    (908,000 )     (1,361,000 )     (361,000 )     225,000  
                                 
Net income (loss) per Partnership Unit
    (43 )     (65 )     (17 )     10  
 
 
   
June 30
   
September 30
   
December 31
   
March 31
 
                         
2014
                       
                         
Income
  $ -     $ -     $ 4,000     $ 2,000  
                                 
Operating expenses and loss
    (1,945,000 )     (266,000 )     (1,180,000 )     1,085,000 (*)
                                 
Income (loss) from operations
    (1,945,000 )     (266,000 )     (1,176,000 )     1,087,000  
                                 
Equity in losses of Local Limited Partnerships
    (68,000 )     (68,000 )     (56,000 )     (149,000 )
                                 
Net income (loss)
    (2,013,000 )     (334,000 )     (1,232,000 )     938,000  
                                 
Net income (loss) available to Limited Partners
    (2,011,000 )     (334,000 )     (1,231,000 )     937,000  
                                 
Net income (loss) per Partnership Unit
    (96 )     (16 )     (59 )     45  

(*) Estimated bad debt expenses recorded in second and third quarters were reversed during fourth quarter due to the anticipation of settlement and disposition proceeds.
 
 
F-27

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), continued

   
June 30
   
September 30
   
December 31
   
March 31
 
2013
 
                       
Income
  $ -     $ -     $ -     $ 9,000  
                                 
Operating expenses and loss
    (428,000 )     (75,000 )     (63,000 )     (122,000 )
                                 
Loss from operations
    (428,000 )     (75,000 )     (63,000 )     (113,000 )
                                 
Equity in losses of Local Limited Partnerships
    (88,000 )     (88,000 )     (88,000 )     (9,000 )
                                 
Net loss
    (516,000 )     (163,000 )     (151,000 )     (122,000 )
                                 
Net loss available to Limited Partners
    (515,000 )     (163,000 )     (151,000 )     (122,000 )
                                 
Net loss per Partnership Unit
    (25 )     (8 )     (7 )     (5 )
 
 
F-28

 
 
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS – CONTINUED

For the Years Ended March 31, 2015, 2014 and 2013
 
NOTE 5 – PAYABLES TO LOCAL LIMITED PARTNERSHIPS

Payables to Local Limited Partnerships amounting to $375,198 and $474,328 at March 31, 2015 and 2014, respectively, represent amounts which are due at various times based on conditions specified in the Local Limited Partnership agreements.  These contributions are payable in installments and are generally due upon the Local Limited Partnerships achieving certain operating and development benchmarks (generally within two years of the Partnership’s initial investment). The payables to Local Limited Partnerships are subject to adjustment in certain circumstances.

NOTE 6 –ADVANCES TO LOCAL LIMITED PARTNERSHIPS

The Partnership is not obligated to fund advances to the Local Limited Partnerships. Occasionally, when Local Limited Partnerships encounter operational issues the Partnership may decide to advance funds to assist the Local Limited Partnership with its operational issues.

As of March 31, 2015 and 2014, the Partnership advanced $759,336 to Davenport Housing VII, L.P., in which the Partnership is a limited partner. All advances were reserved in full in the year they were advanced.

As of March 31, 2015, the Partnership advanced $814,649 and $2,519,422 to Grove Village, L.P., and Pleasant Village, L.P., respectively, in which the Partnership is a limited partner. During the year ended March 31, 2015, $160,423 and $908,045 was advanced to Grove Village, L.P. and Pleasant Village L.P., respectively. Settlement proceeds of $2,000,000 from the Local General Partner were applied against the advances during the year ended March 31, 2015. Total advances of $1,334,071 were written off due to collectability, and $29,482 was written off due to Grove Village disposition as of March 31, 2015.

NOTE 7 – SUBSEQUENT EVENTS

Subsequent to March 31, 2015, the Partnership entered into an Agreement to Gift with The Young Men’s Christian Association of Greater Seattle, a nonprofit corporation, for its Local Limited Partnership interest in 909 4th YMCA Limited Partnership (“909 4th”).  909 4th was appraised for $8,700,000 with an effective date in January 2015. The Partnership received reimbursements of $2,400 for appraisal expenses, $5,120 for legal fees, and $1,600 for sale valuation services. The Partnership incurred $2,660 of sales related expenses which were netted against the reimbursements from the sale in calculating the gain on sale. The investment balance was zero at the time of the sale of the Local Limited Partnership; therefore a gain of $6,460 was recorded during the period. The Compliance Period for 909 4th has expired so there is no risk of tax credit recapture to the investors.

Subsequent to March 31, 2015, the underlying Housing Complex of Pleasant Village Limited Partnership (“Pleasant Village”) was sold, resulting in the termination of the Partnership’s Local Limited Partnership interest. Pleasant Village was appraised for $1,800,000 and had a mortgage note balance of $5,344,000 as of December 31, 2014. The sale price was $2,450,000,of which $109,000 was used for third party brokerage fees, $22,000 was used for  the LIHTC recapture bond, $9,000 was paid to TDHCA, $235,000 was used to pay past due property taxes, $32,000 was used for prorated prepaid rents, and $10,000 was used to pay title fees, escrow fees and sale related expenses. Lastly there was $272,000 to remain in escrow for up to 90 days for any unforeseen payables or liens that are brought forward. Sale proceeds of $1,760,418 was reimbursed to the Partnership, in which $625,000 was used for repayment of the mortgage note. Although the note was being carried on the books at $5,756,079, the note had been acquired by Pleasant Village Lending Partner, LLC for $625,000. The new loan holder accepted $625,000 as payment in full, although it was entitled to the full outstanding amount. The remaining $1,135,418 is being held in the Partnership’s reserves and no distributions to partners are expected due to the fact that the Partnerships liabilities exceed the cash received. The Partnership has incurred approximately $8,000 in sales related expenses which will be netted against the proceeds from the sale for calculating the gain on the sale.
 
 
F-29

 
 

NONE


(a)           Evaluation of disclosure controls and procedures

As of the end of the periods covered by this report, the Partnership’s General Partner, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer of Associates, carried out an evaluation of the effectiveness of the Partnership’s “disclosure controls and procedures” as defined in Securities Exchange Act of 1934 Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the periods covered by this report, the Partnership’s disclosure controls and procedures were not effective to ensure that material information required to be disclosed in the Partnership’s periodic report filings with SEC is recorded, processed, summarized and reported within the time period specified by the SEC’s rules and forms, consistent with the definition of “disclosure controls and procedures” under the Securities Exchange Act of 1934.

The Partnership must rely on the Local Limited Partnerships to provide the Partnership with certain information necessary to the timely filing of the Partnership’s periodic reports. Factors in the accounting at the Local Limited Partnerships have caused delays in the provision of such information during past reporting periods, and resulted in the Partnership’s inability to file its periodic reports in a timely manner.

Once the Partnership has received the necessary information from the Local Limited Partnerships, the Chief Executive Officer and the Chief Financial Officer of Associates believe that the material information required to be disclosed in the Partnership’s periodic report filings with SEC is effectively recorded, processed, summarized and reported, albeit not in a timely manner. Going forward, the Partnership will use the means reasonably within its power to impose procedures designed to obtain from the Local Limited Partnerships the information necessary to the timely filing of the Partnership’s periodic reports.

(b)           Management’s annual report on internal control over financial reporting

The management of Associates is responsible for establishing and maintaining for the Partnership adequate internal control over financial reporting as that term is defined in Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f), and for performing an assessment of the effectiveness of internal control over financial reporting as of March 31, 2015. The internal control process of Associates, as it is applicable to the Partnership, was designed to provide reasonable assurance to Associates regarding the preparation and fair presentation of published financial statements, and includes those policies and procedures that:

(1)  
Pertain to the maintenance of records that in reasonable detail acc
urately and fairly reflect the transactions and dispositions of the assets of the Partnership;
(2)  
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States, and that the Partnership’s receipts and expenditures are being made only in accordance with authorization of the management of Associates; and
(3)  
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Partnership’s assets that could have a material effect on the financial statements.

All internal control processes, no matter how well designed, have inherent limitations. Therefore, even those processes determined to be effective can provide only reasonable assurance with respect to the reliability of financial statement preparation and presentation. Further, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
 
 
28

 
 
Management of Associates assessed the effectiveness of its internal control over financial reporting, as it is applicable to the Partnership, as of the end of the Partnership’s most recent fiscal year. In making this assessment, it used the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment, management of Associates concluded that, for the reasons set forth above under “Disclosure controls and procedures”, the internal control over financial reporting, as it is applicable to the Partnership, was not effective as of March 31, 2015. This annual report does not include an attestation report of the Partnership’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Partnership’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Partnership to provide only management’s report in this annual report.

For purposes of the Securities Exchange Act of 1934, the term “material weakness” is a deficiency, or a combination of deficiencies, in a reporting company’s internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.  For the reasons discussed above in this Item 9A, sub-section (a) under the caption “Evaluation of disclosure controls and procedures,” the Partnership’s internal control over financial reporting has not been effective in permitting timely reporting of the Partnership’s financial information.  Accordingly, the management of Associates believes that this inability to generate timely reports constitutes a material weakness in its internal control over financial reporting.

(c)           Changes in internal controls

There were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended March 31, 2015 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.


NONE


(a)
Identification of Directors, (b) Identification of Executive Officers, (c) Identification of Certain Significant Employees, (d) Family Relationships, and (e) Business Experience

The Partnership has no directors, executives officers or employees of its own.  The business of the Partnership is conducted primarily through Associates.  Associates is a California corporation which was organized in 1971.  The following biographical information is presented for the officers and employees of Associates with principal responsibility for the Partnership’s affairs.

WNC & Associates, Inc. is a California corporation which was organized in 1971. Its officers and significant employees are:

Wilfred N. Cooper, Sr.
Chairman
Wilfred N. Cooper, Jr.
President, Chief Executive Officer and Secretary
Michael J. Gaber
Executive Vice President and Chief Operating Officer
David N. Shafer, Esq.
Executive Vice President
Melanie R. Wenk, CPA
Senior Vice President – Chief Financial Officer
Darrick Metz
Senior Vice President – Originations
Christine A. Cormier
Senior Vice President – Investor Relations
Anand Kannan
Senior Vice President – Development
Gregory S. Hand
Senior Vice President – Underwriting
Anil Advani
Senior Vice President – Private Label Funds
 
In addition to Wilfred N. Cooper, Sr., the directors of WNC & Associates, Inc. are Wilfred N. Cooper, Jr., Kay L. Cooper and Jennifer E. Cooper.
 
 
29

 
 
Wilfred N. Cooper, Sr. is the founder and Chairman of the Board of Directors of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a general partner in some of the partnerships previously sponsored by WNC & Associates, Inc. Mr. Cooper has been actively involved in the affordable housing industry since 1968. Previously, during 1970 and 1971, he was founder and a principal of Creative Equity Development Corporation, a predecessor of WNC & Associates, Inc., and of Creative Equity Corporation, a real estate investment firm. For 12 years before that, Mr. Cooper was employed by Rockwell International Corporation, last serving as its manager of housing and urban developments where he had responsibility for factory-built housing evaluation and project management in urban planning and development. He has testified before committees of the U.S. Senate and the U.S. House of Representatives on matters pertaining to the affordable housing industry. Mr. Cooper is a Life Director of the National Association of Home Builders (“NAHB”), a National Trustee for NAHB’s Political Action Committee, and a past Chairman of NAHB’s Multifamily Council. He is a Life Trustee of the National Housing Conference, and a co-founder and Director Emeritus of the California Housing Consortium. He is the husband of Kay Cooper and the father of Wilfred N. Cooper, Jr. Mr. Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree.

Wilfred N. Cooper, Jr. is President, Chief Executive Officer, Secretary, a Director, and a member of the Investment Committee, of WNC & Associates, Inc. He is President and a Director of, and a registered principal with, WNC Capital Corporation. He has been involved in real estate investment and acquisition activities since 1988 when he joined WNC & Associates, Inc. Previously, he served as a Government Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper serves on the Orange County Advisory Board of U.S. Bank, the Board of Trustees of NHC, the Editorial Advisory Board of Tax Credit Advisor, and the Tax Policy Council of the National Trust for Historic Preservation. He is a member of the Urban Land Institute and of Vistage International, a global network of business leaders and chief executives. He is the son of Wilfred Cooper, Sr. and Kay Cooper. Mr. Cooper graduated from The American University in 1985 with a Bachelor of Arts degree.

Michael J. Gaber is an Executive Vice President, Chief Operating Officer, chair of the Investment Committee, and oversees the Property Acquisition and Investment Management groups, of WNC & Associates, Inc. Mr. Gaber has been involved in real estate acquisition, valuation and investment activities since 1989 and has been associated with WNC & Associates, Inc. since 1997. Prior to joining WNC & Associates, Inc., he was involved in the valuation and classification of major assets, restructuring of debt and analysis of real estate taxes with a large financial institution. Mr. Gaber is a member of the Housing Credit Group of NAHB and of National Housing and Rehabilitation Association (“NH&RA”). Mr. Gaber graduated from the California State University, Fullerton in 1991 with a Bachelor of Science degree in business administration – finance.

David N. Shafer is an Executive Vice President, a member of the Investment Committee, and oversees the New Markets Tax Credit group, of WNC & Associates, Inc. He is a registered representative with WNC Capital Corporation. Mr. Shafer has been active in the real estate industry since 1984. Before joining WNC & Associates, Inc. in 1990, he was engaged as an attorney in the private practice of law with a specialty in real estate and taxation. Mr. Shafer is a Director and past President of the California Council of Affordable Housing, a Director of the Council for Affordable and Rural Housing and a member of the State Bar of California. Mr. Shafer graduated from the University of California at Santa Barbara in 1978 with a Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris Doctor degree (cum laude) and from the University of San Diego in 1986 with a Master of Laws degree in taxation.

Melanie R. Wenk is Senior Vice President – Chief Financial Officer of WNC & Associates, Inc. She oversees WNC’s corporate and partnership accounting group, which is responsible for SEC reporting and New Markets Tax Credit compliance. Prior to joining WNC in 2003, Ms. Wenk was associated as a public accountant with BDO Seidman, LLP. She graduated from the California Polytechnic State University, Pomona in 1999 with a Bachelor of Science degree in accounting.

Darrick Metz is Senior Vice President – Originations of WNC & Associates, Inc. He has been involved in multifamily property underwriting, acquisition and investment activities since 1991. Prior to joining WNC in 1999, he was employed by a Minnesota development company specializing in tax credit and market rate multifamily projects. Mr. Metz also worked with the Minnesota Housing Finance Agency (“MHFA”), where he held the position of Senior Housing Development Officer. While at MHFA, he was responsible for the allocation of tax credits, HOME funds and state loan products. Mr. Metz is active in the Qualified Allocation Plan Tax Credit Advisory Committee for the Wisconsin Housing and Economic Development Authority, a member of MHFA’s Multifamily Technical Assistance and a board member of NH&RA. He graduated from St. Cloud State University in 1993 with a Bachelor of Science degree in finance/economics.
 
 
30

 
 
Christine A. Cormier is Senior Vice President – Investor Relations of WNC & Associates, Inc. and oversees multi-investor fund equity raising and closings as well as the marketing group. She is a registered representative with WNC Capital Corporation. Ms. Cormier has been active in the real estate industry since 1985. Prior to joining WNC in 2008, Ms. Cormier was with another major tax credit syndicator for over 12 years where she was the Managing Director of investor relations. Ms. Cormier graduated from Bentley University in 1982 with a Bachelor of Science degree (summa cum laude) in accounting and computer science.

Anand Kannan is Senior Vice President – Development of WNC & Associates, Inc. and leads the preservation and development teams for Community Preservation Partners, LLC. Prior to joining WNC in 2011, Mr. Kannan served as Associate Director at Vitus Group (previously Pacific Housing Advisors, Inc.), where he developed or consulted on affordable housing projects across the country. His expertise is in the acquisition and rehabilitation of existing low-income housing projects that are or will be financed by tax-exempt bonds, tax credits, and other government subsidies. Prior to his tenure at Vitus Group, Mr. Kannan was associated with Novogradac & Company LLP. Mr. Kannan graduated from the University of California at Berkeley in 2002 with a Bachelor of Arts degree in economics with an emphasis in accounting.

Gregory S. Hand is Senior Vice President – Underwriting of WNC & Associates, Inc. and oversees the property underwriting activities. Mr. Hand has been involved in real estate analysis, development and management since 1987. Prior to joining WNC in 1998, he was a portfolio asset manager with a national tax credit sponsor with responsibility for the management of $200 million in assets. Prior to that, he was a finance manager with The Koll Company and a financial analyst with The Irvine Company. Mr. Hand graduated from Iowa State University in 1987 with a Bachelor of Business Administration degree in finance.

Anil Advani is Senior Vice President – Private Label Funds of WNC & Associates, Inc. He oversees all activities pertaining to private label funds, including structuring, originations, underwriting and acquisitions. Mr. Advani has 16 years of experience in affordable housing. Prior to joining WNC in 2011 and rejoining WNC in 2013, he worked for major tax credit syndicators where he was involved in the originations, structuring, and placement to institutional investors of local limited partnership investments. Prior to that, he was associated with a major accounting firm performing due diligence reviews of tax credit investments on behalf of institutional investors. Mr. Advani graduated from the University of Texas at Austin in 1993 with a Bachelor of Arts degree in economics and from The American University – Washington College of Law in 1996 with a Juris Doctor degree.

(g)  
Involvement in Certain Legal Proceedings

None.

(h)  
Promoters and Control Persons

Inapplicable.

(i)  
Audit Committee Financial Expert, and (i) Identification of the audit Committee

Neither the Partnership nor Associates has an audit committee.

(j)  
 Changes to Nominating Procedures

Inapplicable.

(k)  
Compliance With Section 16(a) of the Exchange Act

None.

(l)  
Code of Ethics

 
Associates has adopted a Code of Ethics which applies to the Chief Executive Officer and Chief Financial Officer of Associates.  The Code of Ethics will be provided without charge to any person who requests it.  Such requests should be directed to:  Investor Relations at (714)662-5565 extension 187.

 
31

 
 

The General Partner and its affiliates are not permitted under Section 5.6 of the Partnership’s Agreement of Limited Partnership (the “Agreement,” incorporated as Exhibit 3.1 to this report) to receive any salary, fees, profits, distributions or allocations from the Partnership or any Local Limited Partnership in which the Partnership invests except as expressly allowed by the Agreement.  The compensation and other economic benefits to the General Partner and its affiliates provided for in the Agreement are summarized below.

(a)  Compensation for Services

For services rendered by the General Partner or an Affiliate of the General Partner in connection with the administration of the affairs of the Partnership, the General Partner or any such Affiliates shall receive from the Partnership an annual Asset Management Fee in an amount not to exceed 0.5% of that portion of Invested Assets in Local Limited Partnerships which are attributable to apartment units receiving Government Assistance.  "Invested Assets" means the sum of the Partnership's original investment in Local Limited Partnerships and the Partnership's allocable share of mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships. Accrued but unpaid asset management fees for any year are deferred without interest and are payable in subsequent years from any funds available to the Partnership after payment of all other costs and expenses of the Partnership, including any capital reserves then determined by the General Partner to no longer be necessary to be retained by the Partnership, or from the proceeds of a sale or refinancing of Partnership assets.  Fees of $155,741, $163,604 and $163,604 were incurred during the years ended March 31, 2015, 2014 and 2013, respectively. No payments were made during the years ended March 31, 2015, 2014 and 2013.

Subject to a number of terms and conditions set forth in the Agreement, the General Partner and its Affiliates may be entitled to compensation for services actually rendered or to be rendered in connection with (i) selecting, evaluating, structuring, negotiating and closing the Partnership's investments in Local Limited Partnership Interests, (ii) the acquisition or development of Properties for the Local Limited Partnerships, or (iii) property management services actually rendered by the General Partners or their Affiliates respecting the Housing Complexes owned by Local Limited Partnerships.  No property management services were rendered and no compensation was payable for such services during the periods covered by this report.
 
(b)  Operating Expenses

Reimbursement to a General Partner or any of its Affiliates of Operating Cash Expenses is subject to specific restrictions in Section 5.3.3 of the Partnership’s Agreement of Limited Partnership (the “Agreement,” incorporated as Exhibit 3.1 to this report).  The Agreement defines “Operating Cash Expenses” as

“ . . . the amount of cash disbursed by the Partnership . . . in the ordinary course of business for the payment of its operating expenses, such as expenses for management, utilities, repair and maintenance, insurance, investor communications, legal, accounting, statistical and bookkeeping services, use of computing or accounting equipment, travel and telephone expenses, salaries and direct expenses of Partnership employees while engaged in Partnership business, and any other operational and administrative expenses necessary for the prudent operation of the Partnership. Without limiting the generality of the foregoing, Operating Cash Expenses shall include fees paid by the Partnership to any General Partner or any Affiliate of a General Partner permitted by this Agreement and the actual cost of goods, materials and administrative services used for or by the Partnership, whether incurred by a General Partner, an Affiliate of a General Partner or a non-Affiliated Person in performing the foregoing functions. As used in the preceding sentence, actual cost of goods and materials means the actual cost of goods and materials used for or by the Partnership and obtained from entities not Affiliated with a General Partner, and actual cost of administrative services means the pro rata cost of personnel (as if such persons were employees of the Partnership) associated therewith, but in no event to exceed the Competitive amount.”

The Agreement provides that no such reimbursement shall be permitted for services for which a General Partner or any of its Affiliates is entitled to compensation by way of a separate fee.  Furthermore, no such reimbursement is to be made for (a) rent or depreciation, utilities, capital equipment or other such administrative items, and (b) salaries, fringe benefits, travel expenses and other administrative items incurred or allocated to any "controlling person" of a General Partner or any Affiliate of a General Partner. For the purposes of Section 5.3.4, "controlling person" includes, but is not limited to, any person, however titled, who performs functions for a General Partner or any Affiliate of a General Partner similar to those of: (1) chairman or member of the board of directors; (2) executive management, such as president, vice president or senior vice president, corporate secretary or treasurer; (3) senior management, such as the vice president of an operating division who reports directly to executive management; or (4) those holding 5% or more equity interest in such General Partner or any such Affiliate of a General Partner or a person having the power to direct or cause the direction of such General Partner or any such Affiliate of a General Partner, whether through the ownership of voting securities, by contract or otherwise.
 
 
32

 
 
The unpaid operating expenses reimbursable to the General Partner or its affiliates were $364,748, $330,932 and $90,351, for the years ended March 31, 2015, 2014 and 2013, respectively. The Partnership reimbursed the General Partner or its affiliates for operating expenses of $540,942, $10,000 and $15,038 during the years ended March 31, 2015, 2014 and 2013, respectively.

(c)   Interest in Partnership

The General Partner receives .10% of the Partnership’s allocated Low Income Housing Tax Credits, which approximated $1,080 for each of the years ended December 31, 2015, 2014, and 2013. The General Partner is also entitled to receive .10% of the Partnership’s operating income or losses, gain or loss from the sale of property and operating cash distributions. There were no distributions of operating cash to the General Partner during the years ended March 31, 2015, 2014 and 2013. The General Partner has an interest in sale or refinancing proceeds as follows: after the Limited Partners have received a return of their capital, General Partner may receive an amount equal to its capital contribution, less any prior distribution of such proceeds, then the General Partner may receive 10% and the Limited Partners 90% of any remaining proceeds. There were no such distributions of cash to the General Partner during the years ended March 31, 2015, 2014 and 2013.

(d)   Subordinated Disposition Fee

The General Partner may receive a subordinated disposition fee in an amount equal to 1% of the sale price of real estate sold by the Local Limited Partnerships.  Payment of this fee is subordinated to the Limited Partners receiving distributions equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and is payable only if services are rendered in the sales effort.  No such fee was incurred for all periods presented.

(e)  Compensation Committee Interlocks and Insider Participation

The Partnership has no compensation committee.

(f)  Compensation Committee Report

The Partnership has no compensation committee.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

(a)  
Securities Authorized for Issuance Under Equity Compensation Plans

The Partnership has no compensation plans under which interests in the Partnership are authorized for issuance.

(b)  
Security Ownership of Certain Beneficial Owners

 
No person is known to own beneficially in excess of 5% of the outstanding Partnership Units.

(c)  
Security Ownership of Management

Neither the General Partner, Associates, its affiliates, nor any of the officers or directors of the General Partner, Associates, or its affiliates own directly or beneficially any Partnership Units.

 
33

 
 
(d)  
Changes in Control

The management and control of the General Partner and of Associates may be changed at any time in accordance with their respective organizational documents, without the consent or approval of the Limited Partners.  In addition, the Partnership Agreement provides for the admission of one or more additional and successor General Partners in certain circumstances.

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.


(a)  
The General Partner manages all of the Partnership's affairs.  The transactions with the General Partner are    primarily in the form of fees paid by the Partnership for services rendered to the Partnership, reimbursement of expenses, and the General Partner’s interest in the Partnership, as discussed in Item 11 and in the notes to the Partnership’s financial statements.

(b)  
The Partnership has no directors.


The following is a summary of fees paid to the Partnership’s principal independent registered public accounting firm for the years ended March 31:

   
2015
   
2014
 
             
Audit Fees
  $ 25,200     $ 21,900  
Audit-related Fees
    -       -  
Tax Fees
    -       -  
All Other Fees
    -       -  
TOTAL
  $ 25,200     $ 21,900  

The Partnership has no Audit Committee. All audit services and any permitted non-audit services performed by the Partnership’s independent auditors are preapproved by the General Partner.
 
 
34

 
 
 
PART IV.


(a)(1)           List of financial statements included in Part II hereof:

 
Reports of Independent Registered Public Accounting Firms
 
Balance Sheets, March 31, 2015 and 2014
 
Statements of Operations for the years ended March 31, 2015, 2014 and 2013
 
Statements of Partners’ Equity (Deficit) for the years ended March 31, 2015, 2014 and 2013
 
Statements of Cash Flows for the years ended March 31, 2015, 2014 and 2013
 
Notes to Financial Statements

(a)(2)           List of Financial statement schedules:

Schedule III - Real Estate Owned by Local Limited Partnerships

(a)(3)           Exhibits

3.1
Agreement of Limited Partnership dated February 7, 2005 filed in the Post-Effective Amendment No. 1 on July 11, 2006 is hereby incorporated herein by reference as exhibit3.1

31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14 and 15d-14 (filed herewith)

31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14 and 15d-14 (filed herewith)

32.1
Section 1350 Certification of the Chief Executive Officer.  (filed herewith)

32.2 
Section 1350 Certification of the Chief Financial Officer.  (filed herewith)

99.1 
Financial Statements of Davenport Housing VII. L.P. for the year ended December 31, 2014, 2013, and2012 together with Independent Auditors’ Report thereon; a significant subsidiary of the Partnership.

99.2 
Financial Statements of Crestview Housing, L.P. for the year ended December 31, 2014, together withIndependent Auditors’ Report thereon; a significant subsidiary of the Partnership.
 
101.
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets at March 31, 2015 and2014, (ii) the Statements of Operations for the years ended March 31, 2015, 2014 and 2013, (iii) the statements of Partners’ Equity (Deficit) for the years ended March 31, 2015, 2014 and 2013, (iv) the Statements of Cash Flows for the years ended March 31, 2015, 2014 and 2013 and (v) the Notes to Financial Statements
 
Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.

 
35

 
 
WNC Housing Tax Credit Fund VI, L.P., Series 13
   
Schedule III
   
Real Estate Owned by Local Limited Partnerships
   
March 31, 2015
             
 
     
As of March 31, 2015
   
Initial Cost to Partnership
    As of December 31, 2014  
Local Limited Partnership Name
Location
 
Total Investment in Local Limited Partnership
   
Amount of Investment Paid to Date
   
Land
   
Building & Improvements
   
Cost Capitalized Subsequent to Acquisition
   
Mortgage Balances of Local Limited Partnerships
   
Land
   
Building & Equipment
   
Accumulated Depreciation
   
Net Book Value
 
909 4th YMCA, L.P. (3)
Seattle, Washington
  $ 508,000     $ 508,000     $ -     $ 16,649,000     $ -           $ -     $ -     $ 16,649,000     $ 5,612,000     $ 11,037,000  
                                                                                         
Crestview Housing, L.P.
Bigfork, Montana
    1,973,000       1,885,000       215,000       2,474,000       302,000             684,000       250,000       2,741,000       469,000       2,522,000  
                                                                                         
Davenport Housing VII, L.P.
Davenport, Iowa
    4,744,000       4,499,000       50,000       6,231,000       361,000             530,000       50,000       6,592,000       855,000       5,787,000  
                                                                                         
 
FDI-Country Square, LTD.
 
Lone Star, Texas
    605,000         605,000       18,000       1,359,000       45,000             579,000       18,000       1,404,000       378,000       1,044,000  
                                                                                         
                                                                                         
FDI-Park Place, LTD.
Bellville, Texas
    758,000       758,000       50,000       2,023,000       94,000             1,072,000       50,000       2,117,000       434,000       1,733,000  
                                                                                         
Grove Village,
L.P. (2)
Dallas, Texas
    N/A       N/A       877,000       9,625,000       (8,812,000 )     (1 )     5,464,000       183,000       1,507,000       -       1,690,000  
                                                                                           
Head Circle, L.P.
Ruleville,
Mississippi
    464,000       464,000       54,000       1,914,000       -               1,362,000       54,000       1,914,000       762,000       1,206,000  
                                                                                           
Pleasant Village, L.P. (3)
Dallas, Texas
    2,850,000       2,808,000       811,000       8,690,000       (4,793,000 )     (1 )     5,344,000       223,000       4,485,000       85,000       4,623,000  
                                                                                           
      $ 11,902,000     $ 11,527,000     $ 2,075,000     $ 48,965,000     $ (12,803,000 )           $ 15,035,000     $ 828,000     $ 37,409,000     $ 8,595,000     $ 29,642,000  

(1)  
Impairment charge recorded as a result of a permanent decline in value.
(2)  
The Local Limited Partnership was disposed of subsequent to December 31, 2014, but prior to March 31, 2015.
(3)  
The Local Limited Partnership was disposed of subsequent to March 31, 2015.
 
36

 
 
WNC Housing Tax Credit Fund VI, L.P., Series 13
Schedule III
Real Estate Owned by Local Limited Partnerships
                 
March 31, 2015
                   
 
   
For the Year Ended December 31, 2014
 
 
Local Limited
Partnership Name
 
Rental Income
   
Net Income (Loss)
   
Year Investment Acquired
   
Status
 
Estimated Useful Life (Years)
 
909 4th YMCA, L.P. (2)
  $ 679,000     $ 125,000       2006  
Completed
    40  
                                   
Crestview Housing, L.P.
    121,000       205,000       2007  
Completed
    40  
                                   
Davenport Housing VII, L.P.
    116,000       (180,000 )     2007  
Completed
    40  
                                   
FDI-Country Square, LTD.
    141,000       (13,000 )     2006  
Completed
    40  
                                   
FDI-Park Place, LTD.
    187,000       (26,000 )     2006  
Completed
    40  
                                   
Grove Village, L.P. (1)
    849,000       (2,912,000 )     2006  
Completed
    27.5  
                                   
Head Circle, L.P.
    282,000       (40,000 )     2006  
Completed
    27.5  
                                   
Pleasant Village, L.P. (2)
    1,299,000       (1,782,000 )     2006  
Completed
    27.5  
                                   
    $ 3,674,000     $ (4,623,000 )                  
 
(1)  
The Local Limited Partnership was disposed of subsequent to December 31, 2014, but prior to March 31, 2015
(2)  
The Local Limited Partnership was disposed of subsequent to March 31, 2015


 
37

 
 
WNC Housing Tax Credit Fund VI, L.P., Series 13
 
Schedule III
 
Real Estate Owned by Local Limited Partnerships
 
March 31, 2014
           
 
     
As of March 31, 2014
   
Initial Cost to Partnership
   
As of December 31, 2013
 
Local Limited Partnership Name
Location
 
Total Investment in Local Limited Partnership
   
Amount of Investment Paid to Date
   
Land
   
Building & Improvements
   
Cost Capitalized Subsequent to Acquisition
   
Mortgage Balances of Local Limited Partnerships
   
Land
   
Building & Equipment
   
Accumulated Depreciation
   
Net Book Value
 
909 4th
YMCA, L.P.
Seattle, Washington
  $ 508,000     $ 508,000     $ -     $ 16,649,000     $ -     $ -     $ -     $ 16,649,000     $ 5,231,000     $ 11,418,000  
                                                                                   
Crestview Housing, L.P.
Bigfork, Montana
    1,973,000       1,885,000       215,000       2,474,000       302,000       694,000       250,000       2,741,000       389,000       2,602,000  
                                                                                   
Davenport Housing
VII, L.P.
Davenport, Iowa
    4,744,000       4,499,000       50,000       6,231,000       359,000       539,000       50,000       6,590,000       685,000       5,955,000  
                                                                                   
FDI-Country Square, LTD.
 
Lone Star, Texas
    605,000         605,000       18,000       1,359,000       40,000       598,000       18,000       1,399,000       330,000       1,087,000  
                                                                                   
                                                                                   
FDI-Park Place, LTD.
Bellville, Texas
    758,000       758,000       50,000       2,023,000       65,000       1,093,000       50,000       2,088,000       375,000       1,763,000  
                                                                                   
Grove Village,
L.P. (2)
Dallas, Texas
    3,043,000       2,944,000       877,000       9,625,000       (26,000 )(1)     5,743,000       823,000       9,653,000       3,398,000       7,078,000  
                                                                                   
Head Circle, L.P.
Ruleville,
Mississippi
    464,000       464,000       54,000       1,914,000       -       1,382,000       54,000       1,914,000       697,000       1,271,000  
                                                                                   
Pleasant Village, L.P.
Dallas, Texas
    2,850,000       2,808,000       811,000       8,690,000       (872,000 )(1)     7,312,000       661,000       7,968,000       2,923,000       5,706,000  
                                                                                   
      $ 14,945,000     $ 14,471,000     $ 2,075,000     $ 48,965,000     $ (132,000 )   $ 17,361,000     $ 1,906,000     $ 49,002,000     $ 14,028,000     $ 36,880,000  

(1)  
Impairment charge recorded as a result of a permanent decline in value.
(2)  
The Local Limited Partnership was identified for sale as of March 31, 2014.
 
 
38

 
 
WNC Housing Tax Credit Fund VI, L.P., Series 13
Schedule III
Real Estate Owned by Local Limited Partnerships
             
March 31, 2014
               
 
   
For the Year Ended December 31, 2013
 
Local Limited
Partnership Name
 
Rental
Income
   
Net Income
(Loss)
   
Year Investment Acquired
 
Status
 
Estimated Useful Life (Years)
 
                           
                           
909 4th YMCA, L.P.
  $ 670,000     $ 93,000       2006  
Completed
    40  
                                   
Crestview Housing, L.P.
    122,000       (67,000 )     2007  
Completed
    40  
                                   
Davenport Housing VII, L.P.
    117,000       (178,000 )     2007  
Completed
    40  
                                   
FDI-Country Square, LTD.
    137,000       (5,000 )     2006  
Completed
    40  
                                   
FDI-Park Place, LTD.
    178,000       (45,000 )     2006  
Completed
    40  
                                   
Grove Village, L.P. (1)
    1,555,000       (860,000 )     2006  
Completed
    27.5  
                                   
Head Circle, L.P.
    284,000       (32,000 )     2006  
Completed
    27.5  
                                   
Pleasant Village, L.P.
    1,394,000       (2,492,000 )     2006  
Completed
    27.5  
                                   
    $ 4,457,000     $ (3,586,000 )                  
 
(1)  
The Local Limited Partnership was identified for sale as of March 31, 2014.
 
 
39

 
 
WNC Housing Tax Credit Fund VI, L.P., Series 13
 
Schedule III
 
Real Estate Owned by Local Limited Partnerships
 
March 31, 2013
           
 
     
As of March 31, 2013
   
Initial Cost to Partnership
   
As of December 31, 2012
 
Local Limited Partnership Name
Location
 
Total Investment in Local Limited Partnership
   
Amount of Investment Paid to Date
   
Land
   
Building & Improvements
   
Cost Capitalized Subsequent to Acquisition
   
Mortgage Balances of Local Limited Partnerships
   
Land
   
Building, Construction in Progress & Equipment
   
Accumulated Depreciation
   
Net Book Value
 
909 4th
YMCA, L.P.
Seattle, Washington
  $ 508,000     $ 508,000     $ -     $ 16,649,000     $ -     $ -     $ -     $ 16,649,000     $ 4,851,000     $ 11,798,000  
                                                                                   
Crestview Housing, L.P.
Bigfork, Montana
    1,973,000       1,885,000       215,000       2,474,000       35,000       702,000       250,000       2,474,000       319,000       2,405,000  
                                                                                   
Davenport Housing VII, L.P.
Davenport, Iowa
    4,744,000       4,499,000       50,000       6,231,000       311,000       549,000       50,000       6,542,000       515,000       6,077,000  
                                                                                   
FDI-Country Square, LTD.
Lone Star, Texas
    605,000         605,000       18,000       1,359,000       36,000       614,000       18,000       1,395,000       282,000       1,131,000  
                                                                                   
FDI-Park
Place, LTD.
Bellville, Texas
    758,000       758,000       50,000       2,023,000       28,000       1,112,000       50,000       2,051,000       321,000       1,780,000  
                                                                                   
Grove Village, L.P.
Dallas, Texas
    3,043,000       2,944,000       877,000       9,625,000       505,000       5,776,000       1,370,000       9,637,000       3,461,000       7,546,000  
                                                                                   
Head Circle, L.P.
Ruleville,
Mississippi
    464,000       464,000       54,000       1,914,000       -       1,401,000       54,000       1,914,000       632,000       1,336,000  
                                                                                   
Pleasant Village,
L.P.
Dallas, Texas
    2,850,000       2,808,000       811,000       8,690,000       426,000       7,337,000       1,271,000       8,656,000       2,671,000       7,256,000  
                                                                                   
      $ 14,945,000     $ 14,471,000     $ 2,075,000     $ 48,965,000     $ 1,341,000     $ 17,491,000     $ 3,063,000     $ 49,318,000     $ 13,052,000     $ 39,329,000  
 
 
40

 

 
WNC Housing Tax Credit Fund VI, L.P., Series 13
           
Schedule III
                 
Real Estate Owned by Local Limited Partnerships
             
March 31, 2013
               
 
   
For the Year Ended December 31, 2012
 
 
 
Local Limited
Partnership Name
 
 
 
Rental Income
   
 
Net Income (Loss)
   
Year Investment Acquired
 
 
 
Status
 
Estimated Useful Life (Years)
 
                           
909 4th YMCA, L.P.
  $ 661,000     $ 58,000       2006  
Completed
    40  
                                   
Crestview Housing, L.P.
    124,000       (4,000 )     2007  
Completed
    40  
                                   
Davenport Housing VII, L.P.
    114,000       (167,000 )     2007  
Completed
    40  
                                   
FDI-Country Square, LTD.
    125,000       (19,000 )     2006  
Completed
    40  
                                   
FDI-Park Place, LTD.
    186,000       (6,000 )     2006  
Completed
    40  
                                   
Grove Village, L.P.
    1,404,000       (1,357,000 )     2006  
Completed
    27.5  
                                   
Head Circle, L.P.
    271,000       (78,000 )     2006  
Completed
    27.5  
                                   
Pleasant Village, L.P.
    1,296,000       (1,192,000 )     2006  
Completed
    27.5  
                                   
    $ 4,181,000     $ (2,765,000 )                  

 
41

 
 


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 13

By:          WNC National Partners, LLC
General Partner




By:          /s/ Wilfred N. Cooper, Jr.
Wilfred N. Cooper, Jr.,
President of WNC & Associates, Inc.

Date:       March 24, 2016

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:       March 24, 2016

By:           /s/ Melanie R. Wenk
Melanie R. Wenk,
Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc. (principal financial officer and principal accounting officer)

Date:       March 24, 2016

By:           /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr.,
Chairman of the Board of WNC & Associates, Inc.

Date:       March 24, 2016

By:           /s/ Kay L. Cooper
Kay L. Cooper
Director of WNC & Associates, Inc.

Date:       March 24, 2016
 
 
 
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