Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark
One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the
fiscal year ended March 31, 2018
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the
transition period from __________ to __________
Commission
file number: 333-76435
WNC HOUSING TAX CREDIT FUND VI, L.P., Series 9
(Exact name of registrant as specified in its charter)
California
|
33-0974533
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
|
|
17782
Sky Park Circle,
|
92614-6404
|
Irvine,
CA
|
(Zip
code)
|
(Address
of principal executive offices)
|
|
(714)
662-5565
(Telephone
Number)
Securities
registered pursuant to Section 12(b) of the Act:
NONE
Securities
registered pursuant to section 12(g) of the Act:
UNITS
OF LIMITED PARTNERSHIP INTEREST
(Title
of Class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act
Yes_____
No___X__
Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes_____
No___X__
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes___X__ No______
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required
to submit and post such files).
Yes__X___
No__
Indicate
by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.☒
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definition of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer___ Accelerated filer___ Non-accelerated
filer___X__Smaller
reporting company_____
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes____
No__X__
State
the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked
price of such common equity, as of the last business day of the
registrant’s most recently completed second fiscal
quarter.
INAPPLICABLE
DOCUMENTS
INCORPORATED BY REFERENCE
List
hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which
the document is incorporated: (1) Any annual report to security
holders; (2) Any proxy or information statement; and (3) Any
prospectus filed pursuant to Rule 424(b) or (c) under the
Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to
security holders for fiscal year ended December 24,
1980).
NONE
PART
I.
Item 1. Business
Organization
WNC
Housing Tax Credit Fund VI, L.P., Series 9 (the
“Partnership”) is a California Limited Partnership
formed under the laws of the State of California on July 17, 2001
and commenced operations on August 3, 2001. The Partnership was
formed to acquire limited partnership interests in other limited
partnerships ("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 & Associates, Inc.
(“Associates” or the “General Partner”).
The chairman and the president of Associates own all of the
outstanding stock of Associates. The business of the Partnership is
conducted primarily through the General Partner, as the Partnership
has no employees of its own.
Pursuant
to a registration statement filed with the Securities and Exchange
Commission (“SEC”) on August 16, 2001, 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. As of the close of the public offering a total of 15,325
Partnership Units representing $15,316,125, net of dealer discounts
of $7,350 and volume discounts of $1,525, had been sold. Holders of
Partnership Units are referred to herein as “Limited
Partners”. As of March 31, 2018 and 2017, a total of 15,240
and 15,289 Partnership Units remain outstanding,
respectively.
The
Partnership shall continue in full force and effect until December
31, 2062 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.
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 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 July 17, 2001
(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.
Notwithstanding the preceding, circumstances beyond the control of
the General Partner or the Local General Partners may occur during
the ten-year credit delivery period and/or the Compliance Period,
which would require the Partnership to approve the disposition of a
Housing Complex prior to the end thereof, possibly resulting in
recapture of Low Income Housing Tax Credits.
1
The
Partnership invested in thirteen Local Limited Partnerships, ten of
which have been sold or otherwise disposed of as of March 31, 2018.
Each of these Local Limited Partnerships owns or owned a single
Housing Complex with the exception of one Local Limited Partnership
which owned three Housing Complexes, all of which were eligible for
the 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 generally must satisfy the “reasonable
belief” test to avoid recapture. Under Internal Revenue Code
Section 42, recapture shall not apply solely by reason of the
disposition of a building (or an interest therein) if it is
reasonably expected that such building will continue to be operated
as a qualified low-income building for the remaining Compliance
Period with respect to such building.
The
following table reflects the end of the ten-year credit delivery
period and the Compliance Period of each remaining Housing
Complex:
Local Limited Partnership Name
|
|
Expected last year of credit delivery
|
|
15-year Compliance Period
|
505
West Main Limited Partnership
|
|
2013
|
|
2017
|
North
Davison Partners 99 Limited Partnership
|
|
2013
|
|
2017
|
Oakview
Terrace Townhomes Limited Partnership
|
|
2013
|
|
2017
|
With
that in mind, the General Partner is continuing its review of the
Housing Complexes. The review considers many factors, including
extended use requirements (such as those due to mortgage
restrictions or state compliance agreements), the condition of the
Housing Complexes, Partnership cash flow, and the tax consequences
to the Limited Partners from the sale of the Housing
Complexes.
Upon
identifying those Housing Complexes with the highest potential for
a successful sale, refinancing or re-syndication, the Partnership
expects to proceed with efforts to liquidate them or the applicable
Local Limited Partnership Interests. The objective is to wind down
the Partnership after Low Income Housing Tax Credits are no longer
available. Local Limited Partnership Interests may be disposed of
at any time by the General Partner in its discretion. While
liquidation of the Housing Complexes or the applicable Local
Limited Partnership Interests continues to be evaluated, the
dissolution of the Partnership was not imminent as of March 31,
2018.
2
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.
As of March 31, 2017, the Partnership sold its Local Limited
Partnership interests in Byhalia Estates, L.P.
(“Byhalia”), Mendota I, L.P. (“Mendota”),
Villas of Palm, L.P. (“Villas of Palm”), Preservation
Partners III Limited Partnership (“Preservation”),
Calico Terrace Limited Partnership (“Calico Terrace”),
and McPherson Housing Associates, L.P. (“McPherson”).
The Compliance Periods for the sold Local Limited Partnerships have
been completed, therefore, there is no risk of recapture to the
investors of the Partnership.
During the year ended March 31, 2018, the Partnership sold its
Local Limited Partnership interest in Parker Estates, L.P.
(“Parker Estates”). Parker Estates was appraised for
$615,000 and had a mortgage balance of $836,452 as of December 31,
2016. The Partnership received $32,000 in cash proceeds which was
used to pay accrued asset management fees. The Partnership incurred
$2,850 in sales related expenses, which were netted against the
sale proceeds to calculate the gain on sale. The
Partnership’s investment balance is zero; therefore a gain of
$29,150 was recorded during the period. The Compliance Period for
Parker Estates has been completed; therefore there is no risk of
credit recapture to the investors of the Partnership.
During the year ended March 31, 2018, the Partnership sold its
Local Limited Partnership interest in Harbor Pointe, L.P
(“Harbor Pointe”). Harbor Pointe was appraised for
$1,190,000 and had a mortgage balance of $1,965,368 as of December
31, 2016. The Partnership received $45,000 in cash proceeds, of
which $43,500 was used to pay accrued asset management fees and
$1,500 was placed in the Partnership’s reserves for future
operating expenses. The Partnership incurred $2,648 in sales
related expenses which were netted against the sale proceeds to
calculate the gain on sale. The Partnership’s investment
balance is zero; therefore a gain of $42,352 was recorded during
the period. The Compliance Period for Harbor Pointe expires in
2018. Recapture Guarantee Surety Bonds were issued to the
Purchasers to guarantee the repayment of any recaptured tax credits
and interests arising from non-compliance as provided in Section 42
of the Internal Revenue Code after the date of the
sale.
During the year ended March 31, 2018, the Partnership sold its
Local Limited Partnership interest in Selman Place, L.P.
(“Selman Place”). Selman Place was appraised for
$725,000 and had a mortgage balance of $2,201,010 as of December
31, 2016. The Partnership received $31,200 in cash proceeds, of
which $29,700 was used to pay accrued asset management fees and
$1,500 was placed in the Partnership’s reserves for future
operating expenses. The Partnership incurred $2,650 in sales
related expenses which were netted against the sale proceeds to
calculate the gain on sale. The Partnership’s investment
balance is zero; therefore a gain of $28,550 was recorded during
the period. The Compliance Period for Selman Place has been
completed; therefore there is no risk of credit recapture to the
investors of the Partnership.
During the year ended March 31, 2018, the Partnership sold its
Local Limited Partnership interest in Saw Mill Creek II Limited
Dividend Housing Association Limited Partnership (“Saw Mill
Creek”). Saw Mill Creek was appraised for $780,000 and had a
mortgage balance of $930,160 as of December 31, 2017. The
Partnership received $0 in cash proceeds, however, the Partnership
still owed $40,282 of capital contributions to Saw Mill Creek,
which was written off at the time of sale and included as part of
the gain on sale calculation. The Partnership incurred $2,050 in
sales related expenses, which were netted against the write-off of
capital contributions payable to calculate the gain on sale. The
Partnership’s investment balance is zero; therefore a gain of
$38,232 was recorded during the period. The Compliance Period for
Saw Mill Creek has been completed; therefore there is no risk of
credit recapture to the investors of the Partnership.
3
As of
March 31, 2018, the Partnership has
identified the following Local Limited Partnerships for possible
disposition.
Local Limited
Partnership
|
Debt at
12/31/17
|
Appraisal
Value
|
Estimated Sales
Price
|
Estimated
Sales Dates
|
Estimated Sale
Expenses
|
505 West Main,
L.P.
|
$1,349,536
|
$1,100,000
|
*
|
*
|
$450
|
North Davison
Partners 99, L.P.
|
505,282
|
480,000
|
*
|
*
|
750
|
Oakview Terrace
Townhomes, L.P.
|
1,370,811
|
925,000
|
*
|
*
|
1,500
|
*
Estimated price, and close date have yet to be determined. The
Local Limited Partnership is not under contract to be purchased as
of the report filing.
Item 1A. Risk Factors
Set
forth below are the risks the Partnership believes are the most
significant to the Limited Partners. The Partnership and the Local
Limited Partnerships operate in a continually changing business
environment and, therefore, new risks emerge from time to time.
This section contains some forward-looking statements. For an
explanation of the qualifications and limitations on
forward-looking statements, see Item 7.
(a)
Risks
arising from the Internal Revenue Code rules governing Low Income
Housing Tax Credits
Low Income Housing Tax Credits might not be
available. If a Housing Complex does not satisfy the
requirements of Internal Revenue Code Section 42, then the Housing
Complex will not be eligible for Low Income Housing Tax
Credits.
Low Income Housing Tax Credits might be less
than anticipated. The Local General Partners 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. Although each Housing Complex has completed its
Compliance Period, the IRS generally can audit an information
income tax return for a period of three years following the filing
date of the return. A determination by the IRS for the amount of
Low Income Housing Tax Credits taken for an open year could result
in a recapture of credits with interest. 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.
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.
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.
4
Sales of Housing Complexes after 15 years 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. In as much
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 of business credits to offset any alternative minimum tax. All
of these concepts are extremely complicated.
(b)
Risks
related to investment in Local Limited Partnerships and Housing
Complexes
Because the Partnership has few investments,
each investment will have a great impact on the Partnership’s
results of operations. Any single Housing Complex
experiencing poor operating performance, impairment of value or
recapture of Low Income Housing Tax Credits will have a significant
impact upon the Partnership as a whole.
The failure to pay mortgage debt could result
in a forced sale of a Housing Complex. Each Local Limited
Partnership leverages the Partnership’s investment therein by
incurring mortgage debt. A Local Limited Partnership’s
revenues could be less than its debt payments and taxes and other
operating costs. If so, the Local Limited Partnership would have to
use working capital reserves, seek additional funds, or suffer a
forced sale of its Housing Complex, which could include a
foreclosure. The same results could occur if government subsidies
ceased. Foreclosure would result in a loss of the
Partnership’s capital invested in the Housing Complex.
Foreclosure could also result in a recapture of Low Income Housing
Tax Credits and a loss of Low Income Housing Tax Credits for the
year in which the foreclosure occurs. If the Housing Complex is
highly-leveraged, a relatively slight decrease in the rental
revenues could adversely affect the Local Limited
Partnership’s ability to pay its debt service requirements.
Mortgage debt may be repayable in a self-amortizing series of equal
installments or with a large balloon final payment. Balloon
payments maturing prior to the end of the anticipated holding
period for the Housing Complex create the risk of a forced sale if
the debt cannot be refinanced. There can be no assurance that
additional funds will be available to any Local Limited Partnership
if needed on acceptable terms or at all.
5
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.
●
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.
6
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
were 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 of 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.
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, 2018, 2017, and 2016, 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, 2018, 2017, and 2016, impairment loss related to
investments in Local Limited Partnerships was $0 for all periods
presented.
7
(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,
●
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, and the
application of the alternative minimum tax to any specific Limited
Partner, or the calculation of the alternative minimum tax by any
Limited Partner. The alternative minimum tax could reduce the
tax benefits from an investment in the Partnership.
There
can be no assurance, therefore, that the IRS will not challenge
some of the tax positions adopted by the Partnership. The courts
could sustain an IRS challenge. An IRS challenge, if successful,
could have a detrimental effect on the Partnership’s ability
to realize its investment objectives.
Passive activity rules will limit deduction of
the Partnership’s losses and impose tax on interest
income. The Internal Revenue Code imposes limits on the
ability of most investors to claim losses from investments in real
estate. An individual may claim these so-called passive losses only
as an offset to income from investments in real estate or rental
activities. An individual may not claim passive losses as an offset
against other types of income, such as salaries, wages, dividends
and interest. These passive activity rules will restrict the
ability of most Limited Partners to use losses from the Partnership
as an offset of non-passive income.
The Partnership may earn interest income on
its reserves and loans. The passive activity rules generally
will categorize interest as portfolio income, and not passive
income. Passive losses cannot be used as an offset to portfolio
income. Consequently, a Limited Partner could pay tax liability on
portfolio income from the Partnership.
At risk rules might limit deduction of the
Partnership’s losses. If a significant portion of the
financing used to purchase Housing Complexes does not consist of
qualified nonrecourse financing, the “at risk” rules
will limit a Limited Partner’s ability to claim Partnership
losses to the amount the Limited Partner invests in the
Partnership. The “at risk” rules of the Internal
Revenue Code generally limit a Limited Partner’s ability to
deduct Partnership losses to the sum of:
●
the amount of cash
the Limited Partner invests in the Partnership, and
●
the Limited
Partner’s share of Partnership qualified nonrecourse
financing.
Qualified
nonrecourse financing is non-convertible, nonrecourse debt which is
borrowed from a government, or with exceptions, any person actively
and regularly engaged in the business of lending
money.
8
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.
IRS could audit the returns of the
Partnership, the Local Limited Partnerships or the Limited
Partners. The IRS can audit the Partnership or a Local
Limited Partnership at the entity level with regard to issues
affecting the entity. The IRS does not have to audit each Limited
Partner in order to challenge a position taken by the Partnership
or a Local Limited Partnership. Similarly, only one judicial
proceeding can be filed to contest an IRS determination. A contest
by the Partnership of any IRS determination might result in high
legal fees.
An audit of the Partnership or a Local Limited
Partnership also could result in an audit of a Limited
Partner. An audit of a Limited Partner’s tax returns
could result in adjustments both to items that are related to the
Partnership and to unrelated items. The Limited Partner could then
be required to file amended tax returns and pay additional tax plus
interest and penalties.
A successful IRS challenge to tax allocations
of the Partnership or a Local Limited Partnership would reduce the
tax benefits of an investment in the Partnership. Under the
Internal Revenue Code, a partnership’s allocation of income,
gains, deductions, losses and tax credits must have substantial
economic effect. Substantial economic effect is a highly-technical
concept. The fundamental principle is two-fold. If a partner will
benefit economically from an item of partnership income or gain,
that item must be allocated to him so that he bears the correlative
tax burden. Conversely, if a partner will suffer economically from
an item of partnership deduction or loss, that item must be
allocated to him so that he bears the correlative tax benefit. If a
partnership’s allocations do not have substantial economic
effect, then the partnership’s tax items are allocated in
accordance with each partner’s interest in the partnership.
The IRS might challenge the allocations made by the
Partnership:
●
between the Limited
Partners and the General Partner,
●
among the Limited
Partners, or
●
between the
Partnership and a Local General Partner.
If any
allocations were successfully challenged, a greater share of the
income or gain or a lesser share of the losses or tax credits might
be allocated to the Limited Partners. This would increase the tax
liability or reduce the tax benefits to the Limited
Partners.
Tax liabilities could arise in later years of
the Partnership. After a period of years following
commencement of operations by a Local Limited Partnership, the
Local Limited Partnership may generate profits rather than losses.
A Limited Partner would have tax liability on his share of such
profits unless he could offset the income with:
●
unused passive
losses from the Partnership or other investments, or
●
current passive
losses from other investments.
In such
circumstances, the Limited Partner would not receive a cash
distribution from the Partnership with which to pay any tax
liability.
9
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.
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.
10
(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.
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.
11
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. These asset
management fees payable increased (decreased) by $(71,000),
$(10,000), and $86,000 for the years ended March 31, 2018, 2017,
and 2016, 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 $25,204 per year through the termination of the
Partnership, which must occur no later than December 31, 2062.
Though the amounts payable to the General Partner and/or its
affiliates are contractually currently payable, the Partnership
anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual obligations until capital
reserves are in excess of the aggregate of the existing contractual
obligations and anticipated future foreseeable obligations of the
Partnership. The Partnership would be adversely affected should the
General Partner and/or its affiliates demand current payment of the
existing contractual obligations and or suspend services for this
or any other reason.
Associates has
agreed to continue providing advances sufficient enough to fund the
operations and working capital requirements of the Partnership
through June 30, 2019.
Item 1B. Unresolved Staff Comments
Not
Applicable
Item 2. Properties
Through
its investments in Local Limited Partnerships, the Partnership
holds indirect ownership interests in the Housing Complexes. The
following table reflects the status of the four Housing Complexes
as of the dates or for the periods indicated:
12
WNC Housing Tax Credit Fund VI, L.P., Series
9
|
|||||||
|
|
|
|
|
|||
|
|
|
As of March 31, 2018
|
As of December 31, 2017
|
|||
Local Limited
Partnership Name
|
Location
|
General Partner Name
|
Partnership’s Total Investment in Local Limited
Partnership
|
Amount of Investment Paid to Date
|
Number of Units
|
Estimated Aggregate Low Income Housing Tax
Credits (1)
|
Mortgage Balances of Local Limited Partnership
|
505 West Main
Limited Partnership
|
Vermillion, South
Dakota
|
Crane & Fowler
Investments, L.L.C. & Sioux Falls Environmental Access,
Inc.
|
$709,000
|
$709,000
|
40
|
$1,087,000
|
$1,350,000
|
|
|
|
|
|
|
||
North Davison
Partners 99 Limited Partnership, a South Dakota Limited
Partnership
|
Mitchell, South
Dakota
|
Crane & Fowler
Investments, L.L.C. & Sioux Falls Environmental Access,
Inc.
|
470,000
|
470,000
|
20
|
684,000
|
505,000
|
|
|
|
|
|
|
||
Oakview Terrace
Townhomes Limited Partnership
|
North Branch,
Minnesota
|
Curtis G. Carlson
Co., Inc., M.F. Carlson Co., Inc., Robert B. Carlson
|
1,104,000
|
1,104,000
|
24
|
1,577,000
|
1,371,000
|
|
|
|
|
|
|
||
Saw Mill Creek II
Limited Dividend Housing Association Limited Partnership, a
Michigan Limited Partnership (2)
|
Vicksburg,
Michigan
|
Raymond T. Cato
& Christopher R. Cato
|
383,000
|
383,000
|
24
|
539,000
|
930,000
|
|
|
|
|
|
|
||
|
$2,666,000
|
$2,626,000
|
108
|
$3,887,000
|
$4,156,000
|
(1)
Represents
aggregate anticipated Low Income Housing Tax Credits to be received
over the 10-year credit period if Housing Complexes are retained
and rented in compliance with credit rules for the 15-year
Compliance Period. All of the anticipated Low Income Housing Tax
Credits have been received from the Local Limited Partnerships and
allocated to the Limited Partners and General Partner and are no
longer available to be allocated to the Partnership’s Limited
Partners.
(2)
The Local Limited
Partnership was disposed of subsequent to December 31, 2017, but
prior to March 31, 2018.
13
WNC
Housing Tax Credit Fund VI, L.P., Series 9
|
|||
|
|
||
|
For the Year
Ended December 31, 2017
|
||
Local Limited Partnership Name
|
Rental Income
|
Net Income (Loss)
|
Low Income Housing Tax Credits Allocated to
Partnership
|
|
|
|
|
505 West Main
Limited Partnership
|
$581,000
|
$40,000
|
40.84%
|
|
|
|
|
North Davison
Partners 99 Limited Partnership, a South Dakota Limited
Partnership
|
187,000
|
10,000
|
99.98%
|
|
|
|
|
Oakview Terrace
Townhomes Limited Partnership
|
204,000
|
(62,000)
|
99.98%
|
|
|
|
|
Saw Mill Creek II
Limited Dividend Housing Association Limited Partnership, a
Michigan Limited Partnership (1)
|
153,000
|
(26,000)
|
99.98%
|
|
|
|
|
|
$1,125,000
|
$(38,000)
|
|
|
|
|
|
(1)
The Local Limited Partnership was disposed of subsequent to
December 31, 2017, but prior to March 31, 2018.
14
WNC Housing Tax Credit Fund VI, L.P., Series 9
|
|
|
|||||
|
|
|
|
|
|
||
|
|
Occupancy Rates As of December 31,
|
|||||
Local Limited
Partnership Name
|
Location
|
General Partner Name
|
2017
|
2016
|
2015
|
2014
|
2013
|
|
|
|
|
|
|
|
|
505 West Main
Limited Partnership
|
Vermillion, South
Dakota
|
Crane & Fowler
Investments, L.L.C. & Sioux Falls Environmental Access,
Inc.
|
95%
|
98%
|
100%
|
90%
|
93%
|
|
|
|
|
|
|
||
Byhalia Estates, L.
P.
|
Byhalia,
Mississippi
|
SEMC,
Inc.
|
N/A
|
96%
|
96%
|
100%
|
100%
|
|
|
|
|
|
|
||
Calico Terrace
Limited Partnership
|
Calico Rock,
Arkansas
|
River Valley
Planning & Development Corp.
|
N/A
|
N/A
|
N/A
|
97%
|
93%
|
|
|
|
|
|
|
||
Harbor Pointe,
L.P.
|
Tifton,
Georgia
|
BC Holdings,
LLC
|
N/A
|
98%
|
98%
|
98%
|
98%
|
|
|
|
|
|
|
||
McPherson Housing
Associates L.P.
|
McPherson,
Kansas
|
ERC Properties,
Inc
|
N/A
|
N/A
|
92%
|
100%
|
96%
|
|
|
|
|
|
|
||
Mendota I, L.P. an
Illinois Limited Partnership
|
Tifton,
Georgia
|
BC Holdings,
LLC
|
N/A
|
N/A
|
N/A
|
99%
|
92%
|
|
|
|
|
|
|
||
North Davison
Partners 99 Limited Partnership, a South Dakota Limited
Partnership
|
Mitchell, South
Dakota
|
Crane & Fowler
Investments, L.L.C. & Sioux Falls Environmental Access,
Inc.
|
90%
|
95%
|
90%
|
100%
|
95%
|
|
|
|
|
|
|
||
Oakview Terrace
Townhomes L.P.
|
North Branch,
Minnesota
|
Curtis G. Carlson
Co., Inc., M.F. Carlson Co., Inc., Robert B. Carlson
|
100%
|
100%
|
100%
|
100%
|
71%
|
|
|
|
|
|
|
||
Parker Estates,
L.P., a Mississippi L.P.
|
Sunflower,
Mississippi
|
SEMC,
Inc.
|
N/A
|
97%
|
94%
|
94%
|
100%
|
|
|
|
|
|
|
||
Preservation
Partners III L.P.
|
Monmouth,
Illinois
|
Affordable Housing
Development Fund, Inc.
|
N/A
|
N/A
|
N/A
|
91%
|
88%
|
Saw Mill Creek II
Limited Dividend Housing Association L.P.
|
Vicksburg,
Michigan
|
Raymond T. Cato
& Christopher R. Cato
|
88%
|
88%
|
83%
|
92%
|
83%
|
|
|
|
|
|
|
||
Selman Place,
LP
|
Bainbridge,
Georgia
|
BC Holdings,
LC
|
N/A
|
100%
|
98%
|
98%
|
100%
|
|
|
|
|
|
|
||
Villas of Palm
L.P.
|
Coon Rapids,
Minnesota
|
Carolina
Corporation
|
N/A
|
N/A
|
N/A
|
100%
|
100%
|
|
|
|
|
|
|
||
Weighted
average
|
94%
|
97%
|
95%
|
97%
|
94%
|
15
N/A -
The Partnership sold its interest in the Local Limited Partnership
prior to the respective year end.
Item 3. Legal Proceedings
In
March 2018, Sioux Falls Environmental Access, Inc., the general
partner of both 505 West Main L.P. (“West Main”) and
North Davison Partners 99 L.P. (“North Davison”) filed
complaints (the “Complaints”) alleging, among other
things, breach of contract against WNC Housing Tax Credit Fund VI,
L.P. Series 9 (the “Partnership”) and WNC Housing, L.P.
(“WNC”) in the United States District Court of South
Dakota (the “Court”). Attempts to negotiate a
settlement were unsuccessful. The Partnership and WNC have answered
the Complaints and WNC filed third party complaints (the
“Third party Complaints”) against Crane & Fowler
Investments, LLC (“Crane”). The Third Party Complaints
allege, among other things, Crane’s breach of contract.
Currently, the matters are moving toward the discovery
phase.
Item 4. Mine Safety Disclosure
NOT
APPLICABLE
PART
II.
Item 5. Market for Registrant’s Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
Item 5a.
a)
The Partnership
Units are not traded on a public exchange but were 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, 2018,
there were 823 Limited Partners, and 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 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, 2018.
Item 5b. Use of Proceeds
NOT
APPLICABLE
Item 5c. Purchases of Equity Securities by the Issuer and
Affiliated Purchasers
NONE
16
Item 6. Selected Financial Data
Selected
balance sheet information for the Partnership is as
follows:
|
March 31,
|
||||
|
2018
|
2017
|
2016
|
2015
|
2014
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Cash
and cash equivalents
|
$88,104
|
$137,071
|
$160,310
|
$28,458
|
$50,173
|
Investments
in Local Limited Partnerships, net
|
-
|
-
|
-
|
-
|
-
|
Other
assets
|
1,800
|
3,900
|
-
|
-
|
-
|
|
|
|
|
|
|
Total Assets
|
$89,904
|
$140,971
|
$160,310
|
$28,458
|
$50,173
|
LIABILITIES
|
|
|
|
|
|
Payables
to Local Limited Partnerships
|
$-
|
$40,282
|
$40,282
|
$40,282
|
$40,282
|
Accrued
fees and expenses due to General Partner and
affiliates
|
1,604,717
|
1,678,914
|
1,699,257
|
1,627,724
|
1,478,031
|
|
|
|
|
|
|
Total Liabilities
|
1,604,717
|
1,719,196
|
1,739,539
|
1,668,006
|
1,518,313
|
|
|
|
|
|
|
PARTNERS' EQUITY (DEFICIT)
|
(1,514,813)
|
(1,578,225)
|
(1,579,229)
|
(1,639,548)
|
(1,468,140)
|
|
|
|
|
|
|
Total Liabilities and
Partners’ Equity (Deficit)
|
$89,904
|
$140,971
|
$160,310
|
$28,458
|
$50,173
|
17
Selected
results of operations, cash flows and other information for the
Partnership are as follows:
|
For the Years Ended March 31,
|
||||
|
2018
|
2017
|
2016
|
2015
|
2014
|
|
|
|
|
|
|
Loss
from operations (Note 1)
|
$(74,893)
|
$(106,910)
|
$(128,567)
|
$(171,418)
|
$(316,397)
|
Equity
in losses of Local Limited Partnerships
|
-
|
-
|
-
|
-
|
(79,448)
|
Gain
on sale of Local Limited Partnerships
|
138,284
|
107,874
|
188,845
|
-
|
-
|
Interest
income
|
21
|
40
|
41
|
10
|
10
|
Net income (loss)
|
$63,412
|
$1,004
|
$60,319
|
$(171,408)
|
$(395,835)
|
|
|
|
|
|
|
Net income (loss) allocated to:
|
|
|
|
|
|
General
Partner
|
$63
|
$1
|
$60
|
$(171)
|
$(396)
|
|
|
|
|
|
|
Limited
Partners
|
$63,349
|
$1,003
|
$60,259
|
$(171,237)
|
$(395,439)
|
|
|
|
|
|
|
Net income (loss) per Partnership Unit
|
$4.16
|
$0.07
|
$3.94
|
$(11.19)
|
$(25.83)
|
|
|
|
|
|
|
Outstanding weighted Partnership Units
|
15,240
|
15,289
|
15,302
|
15,302
|
15,312
|
Note 1 - Loss from operations for the years ended March 31, 2018,
2017, 2016, 2015, and 2014, include a charge for impairment losses
on investments in Local Limited Partnerships of $0, $0, $0, $0, and
$146,238, respectively (see Note 2 to the financial
statements).
18
|
For the Years Ended March 31,
|
||||
|
2018
|
2017
|
2016
|
2015
|
2014
|
|
|
|
|
|
|
Net cash and cash equivalents provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities
|
$(146,969)
|
$(131,113)
|
$(56,993)
|
$(21,715)
|
$4,259
|
Investing
activities
|
98,002
|
107,874
|
188,845
|
-
|
-
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
(48,967)
|
(23,239)
|
131,852
|
(21,715)
|
4,259
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of year
|
137,071
|
160,310
|
28,458
|
50,173
|
45,914
|
|
|
|
|
|
|
Cash and cash equivalents,
end of year
|
$88,104
|
$137,071
|
$160,310
|
$28,458
|
$50,173
|
Low
Income Housing Tax Credits per Partnership Unit were as follows for
the years ended December 31:
|
2017
|
2016
|
2015
|
2014
|
2013
|
|
|
|
|
|
|
Federal
|
$-
|
-
|
-
|
$2
|
$26
|
State
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
Total
|
$-
|
-
|
-
|
$2
|
$26
|
19
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Forward Looking Statements
With
the exception of the discussion regarding historical information,
this “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and other discussions
elsewhere in this Form 10-K contain forward looking statements.
Such statements are based on current expectations subject to
uncertainties and other factors which may involve known and unknown
risks that could cause actual results of operations to differ
materially from those projected or implied. Further, certain
forward-looking statements are based upon assumptions about future
events which may not prove to be accurate.
Risks
and uncertainties inherent in forward looking statements include,
but are not limited to, the Partnership’s future cash flows
and ability to obtain sufficient financing, level of operating
expenses, conditions in the Low Income Housing Tax Credits property
market and the economy in general, changes in law rules and
regulations, and legal proceedings. Historical results are not
necessarily indicative of the operating results for any future
period.
Subsequent
written and oral forward looking statements attributable to the
Partnership or persons acting on its behalf are expressly qualified
in their entirety by cautionary statements in this Form 10-K and in
other reports filed with the SEC. The following discussion should
be read in conjunction with the financial statements and the notes
thereto included elsewhere in this filing.
Critical Accounting Policies and Certain Risks and
Uncertainties
The
Partnership believes that the following discussion addresses the
Partnership’s most significant accounting policies, which are
the most critical to aid in fully understanding and evaluating the
Partnership’s reported financial results, and certain of the
Partnership’s risks and uncertainties.
Use of Estimates
The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could materially differ
from those estimates.
Method of Accounting for Investments in Local Limited
Partnerships
The
Partnership accounts for its investments in Local Limited
Partnerships using the equity method of accounting, whereby the
Partnership adjusts its investment balance for its share of the
Local Limited Partnerships’ results of operations and for any
contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local
Limited Partnership for possible impairment at least annually or
whenever events or changes in circumstances indicate that the
carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by the estimated
value derived by management, generally consisting of the product of
the remaining future Low Income Housing Tax Credits estimated to be
allocable to the Partnership and any estimated residual value to
the Partnership. If an investment is considered to be impaired, the
Partnership reduces the carrying value of its investment in any
such Local Limited Partnership. The accounting policies of the
Local Limited Partnerships, generally, are expected to be
consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of
the investment account and were being amortized over 30 years (See
Notes 2 and 3 to the financial statements).
20
“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.
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 2014 remain open.
21
Impact of Recent Accounting Pronouncements
In January 2014, the Financial Accounting Standards Board
(“FASB”) issued an amendment to the accounting and
disclosure requirements for investments in qualified affordable
housing projects. The amendments provide guidance on accounting for
investments by a reporting entity in flow-through limited liability
entities that manage or invest in affordable housing projects that
qualify for the low-income housing tax credit. The amendments
permit reporting entities to make an accounting policy election to
account for their investments in qualified affordable housing
projects using the proportional amortization method if certain
conditions are met. Under the proportional amortization method, an
entity amortizes the initial cost of the investment in proportion
to the tax credits and other tax benefits received, and recognizes
the net investment performance in the income statement as a
component of income tax expense (benefit). The amendments are
effective for interim and annual periods beginning after December
15, 2014 and should be applied retrospectively to all periods
presented. Early adoption is permitted. The adoption of this update
did not materially affect the Partnership's financial
statements.
In
February 2015, the FASB issued ASU No. 2015-02,
“Consolidation (Topic 810): Amendments to the Consolidation
Analysis”. In addition, in October 2016, the FASB issued ASU
No. 2016-17, “Consolidation (Topic 810): Interests Held
Through Related Parties That Are Under Common Control”, to
provide further clarification guidance to ASU No. 2015-02. 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
and ASU 2016-17 simplifies and improves GAAP by: eliminating the
presumption that a general partner should consolidate a limited
partnership, eliminating the indefinite deferral of FASB Statement
No. 167, thereby reducing the number of Variable Interest Entity
(VIE) consolidation models from four to two (including the limited
partnership consolidation model) and clarifying when fees paid to a
decision maker should be a factor to include in the consolidation
of VIEs. ASU 2015-02 is effective for periods beginning after
December 15, 2015. ASU 2016-17 is effective for periods beginning
after December 15, 2016. The adoption of these updates did not
materially affect the Partnership's financial
statements.
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, 2018 consisted of $88,000
in cash and cash equivalents and $2,000 in other assets.
Liabilities at March 31, 2018 consisted of $1,605,000 of
accrued fees and expenses due to General Partner and affiliates
(see “Future Contractual Cash Obligations”
below).
22
Year Ended March 31, 2018 Compared to Year Ended March 31,
2017 The Partnership’s net income for the year ended
March 31, 2018 was $63,000 reflecting an increase of $62,000 from
the net income experienced for the year ended March 31, 2017 of
$1,000. The change was largely due to gain on sale of a Local
Limited Partnership of $138,000 during the year ended March 31,
2018 compared to gain on sale of a Local Limited Partnership of
$108,000
Results
of Operations
for the
year ended March 31, 2017. The gain recorded by the Partnership can
vary depending on the sale prices and the value of the Housing
Complexes that are sold. Reporting fees decreased by $10,000 for
the year ended March 31, 2018 compared to the year ended March 31,
2017, and distribution income decreased by $7,000 for the year
ended March 31, 2018 compared to the year ended March 31, 2017.
Local Limited Partnerships pay the reporting fees and distribution
income to the Partnership when the Local Limited
Partnerships’ cash flows will allow for the payment.
Accounting and legal fees increased by $2,000 for the year ended
March 31, 2018 due to the timing of the accounting work performed.
Asset
management fees decreased by $57,000 during the year ended March
31, 2018 compared to the year ended March 31, 2017. The fees are
calculated based on the value of invested assets which decreased
due to the sale of Local Limited Partnerships.
Year Ended March 31, 2017 Compared to Year Ended March 31,
2016 The Partnership’s net income for the year ended
March 31, 2017 was $1,000 reflecting a decrease of $59,000 from the
net income experienced for the year ended March 31, 2016 of
$60,000. The change was largely due to gain on sale of a Local
Limited Partnership of $108,000 during the year ended March 31,
2017 compared to gain on sale of a Local Limited Partnership of
$189,000 for the year ended March 31, 2016. The gain recorded by
the Partnership can vary depending on the sale prices and the value
of the Housing Complexes that are sold. Reporting fees decreased by
$14,000 for the year ended March 31, 2017 compared to the year
ended March 31, 2016, and distribution income increased by $16,000
for the year ended March 31, 2017 compared to the year ended March
31, 2016. Local Limited Partnerships pay the reporting fees and
distribution income to the Partnership when the Local Limited
Partnerships’ cash flows will allow for the payment.
Accounting and legal fees decreased by $2,000 for the year ended
March 31, 2017 due to the timing of the accounting work performed.
Asset
management fees decreased by $10,000 during the year ended March
31, 2017 compared to the year ended March 31, 2016. The fees are
calculated based on the value of invested assets which decreased
due to the sale of Local Limited Partnerships.
Liquidity and Capital Resources
Year Ended March 31, 2018 Compared to Year Ended March 31,
2017 The net decrease in cash and cash equivalents during
the year ended March 31, 2018 was $49,000 compared to a net
decrease in cash and cash equivalents of $23,000 for the year ended
March 31, 2017. The
Partnership received $98,000 of disposition proceeds from the sale
of Local Limited Partnerships during the year ended March 31, 2018
compared to $108,000 of disposition proceeds received during the
year ended March 31, 2017. Proceeds received from
disposition vary from period to period depending on the sales
prices and the values of the Housing Complexes sold. During the
year ended March 31, 2018, the Partnership paid the General Partner
or an affiliate $58,000 for operating expenses paid on its behalf
and $112,000 in accrued asset management fees compared to $60,000
and $108,000 paid during the year ended March 31, 2017. Each
quarter the Partnership evaluates its cash position and determines
how much of operating expense reimbursements and accrued asset
management fees will be paid to the General Partner or
affiliates. The
Partnership also received $17,000 less in reporting fees and
distribution income for the year ended March 31, 2018 compared to
the year ended March 31, 2017 as discussed above.
23
Year Ended March 31, 2017 Compared to Year Ended March 31,
2016 The net decrease in cash and cash equivalents during
the year ended March 31, 2017 was $23,000 compared to a net
increase in cash and cash equivalents of $132,000 for the year
ended March 31, 2016. The Partnership received $108,000 of
disposition proceeds from the sale of Local Limited Partnerships
during the year ended March 31, 2017 compared to $189,000 of
disposition proceeds received during the year ended March 31,
2016. Proceeds received from disposition vary from period to
period depending on the sales prices and the values of the Housing
Complexes sold. During the year ended March 31, 2017, the
Partnership paid the General Partner or an affiliate $60,000 for
operating expenses paid on its behalf and $108,000 in accrued asset
management fees compared to $80,000 and $22,000 paid during the
year ended March 31, 2016. Each quarter the Partnership evaluates
its cash position and determines how much of operating expense
reimbursements and accrued asset management fees will be paid to
the General Partner or affiliates. The Partnership also
received $14,000 less in reporting fees and $16,000 more in
distribution income for the year ended March 31, 2017 compared to
the year ended March 31, 2016 as discussed above.
Future Contractual Cash Obligations
The
following table summarizes the Partnership’s future
contractual cash obligations as of March 31, 2018:
|
2019
|
2020
|
2021
|
2022
|
2023
|
Thereafter
|
Total
|
|
|
|
|
|
|
|
|
Asset management fees(1)
|
$1,629,921
|
$25,204
|
$25,204
|
$25,204
|
25,204
|
$982,956
|
$2,713,693
|
Total
contractual cash obligations
|
$1,629,921
|
$25,204
|
$25,204
|
$25,204
|
25,204
|
$982,956
|
$2,713,693
|
(1)
Asset management
fees are payable annually until termination of the Partnership,
which is to occur no later than December 31, 2062. The estimate of
the fees payable included herein assumes the retention of the
Partnership’s interest in all Housing Complexes owned at
March 31, 2018 until December 31, 2062. Amounts due to the General
Partner as of March 31, 2018 have been included in the 2019 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, see
Note 3 to the financial statements included elsewhere
herein.
24
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 audited financial
statements.
Item 7A. Quantitative and Qualitative Disclosures Above Market
Risk
NOT
APPLICABLE
Item 8. Financial Statements and Supplementary Date
25
Report of Independent Registered Public Accounting
Firm
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 9
Opinion on the Financial Statements
We have audited the accompanying balance sheets of WNC Housing Tax
Credit Fund VI, L.P., Series 9 (the "Partnership") as of March 31,
2018 and 2017, the related statements of operations, partners'
equity (deficit), and cash flows for each of the years in the
three-year period ended March 31, 2018, and the related notes
(collectively referred to as the “financial
statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of
the Partnership as of March 31, 2018 and 2017, and the results of
its operations and its cash flows for each of the years in the
three-year period ended March 31, 2018, in conformity with
accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the responsibility of the
Partnership’s management. Our responsibility is to express an
opinion on the Partnership’s financial statements based on
our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with
respect to the Partnership in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Partnership is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an
understanding of internal control over financial reporting, 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.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Supplemental Information
The schedule listed under Part IV, Item 15(a)(2) of Form 10-K
related to each of the three years in the period ended March 31,
2018 has been subjected to audit procedures performed in
conjunction with the audit of WNC Housing Tax Credit Fund VI, L.P.,
Series 9’s financial statements. The schedule is the
responsibility of the Partnership’s management. Our audit
procedures included determining whether the schedule reconciles to
the financial statements or the underlying accounting and other
records, as applicable, and performing procedures to test the
completeness and accuracy of the information presented in the
schedule. In forming our opinion on the schedule, we evaluated
whether the schedule, including its form and content, is presented
in conformity with the Securities and Exchange Commission’s
rules. In our opinion, the schedule is fairly stated, in all
material respects, in relation to the financial statements as a
whole.
We have served as the Partnership’s auditor since
2004.
/s/ Cohn Reznick, LLP
Bethesda, Maryland
Report Date: June 26, 2018
26
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
BALANCE SHEETS
|
March 31,
|
|
|
|
|
|
2018
|
2017
|
ASSETS
|
|
|
Cash and cash
equivalents
|
$88,104
|
$137,071
|
Investments
in Local Limited Partnerships, net (Notes 2 and
3)
|
-
|
-
|
Other
assets
|
1,800
|
3,900
|
|
|
|
Total
Assets
|
$89,904
|
$140,971
|
|
|
|
LIABILITIES
AND PARTNERS’ DEFICIT
|
|
|
|
|
|
Liabilities:
|
|
|
Payables
to Local Limited Partnerships (Note 5)
|
$-
|
$40,282
|
Accrued
fees and expenses due to General Partner and affiliates (Note
3)
|
1,604,717
|
1,678,914
|
|
|
|
Total
Liabilities
|
1,604,717
|
1,719,196
|
|
|
|
Partners’
Deficit
|
|
|
General
Partner
|
(15,538)
|
(15,601)
|
Limited
Partners (25,000 Partnership Units authorized; 15,240 and 15,289
Partnership Units issued and outstanding,
respectively)
|
(1,499,275)
|
(1,562,624)
|
|
|
|
Total
Partners’ Deficit
|
(1,514,813)
|
(1,578,225)
|
|
|
|
Total
Liabilities and Partners’ Deficit
|
$89,904
|
$140,971
|
See
accompanying notes to financial statements
27
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
|
For the Years Ended March 31,
|
||
|
2018
|
2017
|
2016
|
|
|
|
|
Operating
income:
|
|
|
|
Reporting
fees
|
$3,269
|
$13,221
|
$26,720
|
Distribution
income
|
9,264
|
16,275
|
-
|
|
|
|
|
Total
operating income
|
12,533
|
29,496
|
26,720
|
Operating
expenses:
|
|
|
|
Asset
management fees (Note 3)
|
41,524
|
98,350
|
108,112
|
Accounting
and legal fees
|
30,495
|
28,477
|
30,350
|
Other
|
15,407
|
9,579
|
16,825
|
|
|
|
|
Total
operating expenses
|
87,426
|
136,406
|
155,287
|
|
|
|
|
Loss
from operations
|
(74,893)
|
(106,910)
|
(128,567)
|
|
|
|
|
Gain
on sale of Local Limited Partnerships
|
138,284
|
107,874
|
188,845
|
Interest
income
|
21
|
40
|
41
|
|
|
|
|
Net
income
|
$63,412
|
$1,004
|
$60,319
|
|
|
|
|
Net
income allocated to:
|
|
|
|
General
Partner
|
$63
|
$1
|
$60
|
Limited
Partners
|
$63,349
|
$1,003
|
$60,259
|
|
|
|
|
Net
income per Partnership Unit
|
$4.16
|
$0.07
|
$3.94
|
|
|
|
|
Outstanding
weighted Partnership Units
|
15,240
|
15,289
|
15,302
|
See
accompanying notes to financial statements
28
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
STATEMENTS OF PARTNERS’ EQUITY (DEFICIT)
For the Years Ended March 31, 2018, 2017 and 2016
|
General
Partner
|
Limited
Partners
|
Total
|
|
|
|
|
Partners’
deficit at March 31, 2015
|
$(15,662)
|
$(1,623,886)
|
$(1,639,548)
|
|
|
|
|
Net
income
|
60
|
60,259
|
60,319
|
|
|
|
|
Partners’
deficit at March 31, 2016
|
(15,602)
|
(1,563,627)
|
(1,579,229)
|
|
|
|
|
Net
income
|
1
|
1,003
|
1,004
|
|
|
|
|
Partners’
deficit at March 31, 2017
|
(15,601)
|
(1,562,624)
|
(1,578,225)
|
|
|
|
|
Net
income
|
63
|
63,349
|
63,412
|
|
|
|
|
Partners’
deficit at March 31, 2018
|
$(15,538)
|
$(1,499,275)
|
$(1,514,813)
|
See
accompanying notes to financial statements
29
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
|
For The Years Ended March 31,
|
||
|
|
|
|
|
2018
|
2017
|
2016
|
|
|
|
|
Cash flows from
operating activities:
Net
income
|
$63,412
|
$1,004
|
$60,319
|
Adjustments
to reconcile net income to net cash used in operating
activities:
|
|
|
|
(Increase)
decrease in other assets
|
2,100
|
(3,900)
|
-
|
Gain
on sale of Local Limited Partnerships
|
(138,284)
|
(107,874)
|
(188,845)
|
Increase (decrease) in accrued fees and expenses
due
to General Partner and affiliates
|
(74,197)
|
(20,343)
|
71,533
|
|
|
|
|
Net
cash used in operating activities
|
(146,969)
|
(131,113)
|
(56,993)
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
Net
proceeds from sale of Local Limited Partnerships
|
98,002
|
107,874
|
188,845
|
|
|
|
|
Net cash provided by investing activities
|
98,002
|
107,874
|
188,845
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
(48,967)
|
(23,239)
|
131,852
|
|
|
|
|
Cash
and cash equivalents, beginning of year
|
137,071
|
160,310
|
28,458
|
|
|
|
|
Cash
and cash equivalents, end of year
|
$88,104
|
$137,071
|
$160,310
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
Taxes
paid
|
$800
|
$800
|
$800
|
NONCASH
INVESTING AND FINANCING ACTIVITY
Payables
to Local Limited Partnerships decreased and gain on sale of Local
Limited Partnerships increased by $40,282 due to the sale of one
Local Limited Partnership.
See
accompanying notes to financial statements
30
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Years Ended March 31, 2018, 2017 and 2016
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization
WNC
Housing Tax Credit Fund VI, L.P., Series 9 (the
“Partnership”) is a California Limited Partnership
formed under the laws of the State of California on July 17, 2001,
and commenced operations on August 3, 2001. The Partnership was
formed to acquire limited partnership interests in other limited
partnerships ("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 & Associates, Inc.
(“Associates” or the “General Partner”).
The chairman and the president of Associates own all of the
outstanding stock of Associates. The business of the Partnership is
conducted primarily through the General Partner, as the Partnership
has no employees of its own.
The
Partnership shall continue in full force and effect until December
31, 2062 unless terminated prior to that date pursuant to the
partnership agreement or law.
The
financial statements include only activity relating to the business
of the Partnership, and do not give effect to any assets that the
partners may have outside of their interests in the Partnership, or
to any obligations, including income taxes, of the
partners.
The
partnership agreement authorized the sale of up to 25,000 units of
limited partnership interest (“Partnership Units”) at
$1,000 per Partnership Unit. The offering of Partnership Units has
concluded, with 15,325 Partnership Units representing subscriptions
in the amount of $15,316,125, net of dealer discounts of $7,350 and
volume discounts of $1,525, being accepted. As of March 31, 2018
and 2017, respectively, 15,240 and 15,289 Units remain outstanding.
The General Partner has a 0.1% interest in operating profits and
losses, taxable income and losses, cash available for distribution
from the Partnership and Low Income Housing Tax Credits of the
Partnership. The investors (the “Limited Partners”) in
the Partnership will be allocated the remaining 99.9% of these
items in proportion to their respective investments.
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 its 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.
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:
31
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the Years Ended March 31, 2018, 2017 and 2016
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
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.
The
Partnership currently has insufficient working capital to fund its
operations. Associates has agreed to continue providing advances
sufficient enough to fund the operations and working capital
requirements of the Partnership through June 30, 2019.
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.
32
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017 and 2016
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
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 could result in recapture if certain conditions
are not met. All of the remaining Housing Complexes have completed
their Compliance Period as of March 31, 2018.
With
that in mind, the General Partner is continuing its review of the
Housing Complexes. The review considers many factors, including
extended use requirements (such as those due to mortgage
restrictions or state compliance agreements), the condition of the
Housing Complexes, Partnership cash flow, and the tax consequences
to the Limited Partners from the sale of the Housing
Complexes.
Upon
identifying those Housing Complexes with the highest potential for
a successful sale, refinancing or re-syndication, the Partnership
expects to proceed with efforts to liquidate them or the applicable
Local Limited Partnership Interests. The objective is to wind down
the Partnership after Low Income Housing Tax Credits are no longer
available. Local Limited Partnership Interests may be disposed of
at any time by the General Partner in its discretion. While
liquidation of the Housing Complexes continues to be evaluated, the
dissolution of the Partnership was not imminent as of March 31,
2018.
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 of 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.
As of March 31, 2017, the Partnership sold its Local Limited
Partnership interests in Byhalia Estates, L.P.
(“Byhalia”), Mendota I, L.P. (“Mendota”),
Villas of Palm, L.P. (“Villas of Palm”), Preservation
Partners III Limited Partnership (“Preservation”),
Calico Terrace Limited Partnership (“Calico Terrace”),
and McPherson Housing Associates, L.P. (“McPherson”).
The Compliance Periods for the sold Local Limited Partnerships have
been completed, therefore, there is no risk of recapture to the
investors of the Partnership.
During the year ended March 31, 2018, the Partnership sold its
Local Limited Partnership interest in Parker Estates, L.P.
(“Parker Estates”). Parker Estates was appraised for
$615,000 and had a mortgage balance of $836,452 as of December 31,
2016. The Partnership received $32,000 in cash proceeds which was
used to pay accrued asset management fees. The Partnership incurred
$2,850 in sales related expenses, which were netted against the
sale proceeds to calculate the gain on sale. The
Partnership’s investment balance is zero; therefore a gain of
$29,150 was recorded during the period. The Compliance Period for
Parker Estates has been completed; therefore there is no risk of
credit recapture to the investors of the Partnership.
During the year ended March 31, 2018, the Partnership sold its
Local Limited Partnership interest in Harbor Pointe, L.P
(“Harbor Pointe”). Harbor Pointe was appraised for
$1,190,000 and had a mortgage balance of $1,965,368 as of December
31, 2016. The Partnership received $45,000 in cash proceeds, of
which $43,500 was used to pay accrued asset management fees and
$1,500 was placed in the Partnership’s reserves for future
operating expenses. The Partnership incurred $2,648 in sales
related expenses which were netted against the sale proceeds to
calculate the gain on sale. The Partnership’s investment
balance is zero; therefore a gain of $42,352 was recorded during
the period. The Compliance Period for Harbor Pointe expires in
2018. Recapture Guarantee Surety Bonds were issued to the
Purchasers to guarantee the repayment of any recaptured tax credits
and interests arising from non-compliance as provided in Section 42
of the Internal Revenue Code after the date of the
sale.
33
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017 and 2016
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
During the year ended March 31, 2018, the Partnership sold its
Local Limited Partnership interest in Selman Place, L.P.
(“Selman Place”). Selman Place was appraised for
$725,000 and had a mortgage balance of $2,201,010 as of December
31, 2016. The Partnership received $31,200 in cash proceeds, of
which $29,700 was used to pay accrued asset management fees and
$1,500 was placed in the Partnership’s reserves for future
operating expenses. The Partnership incurred $2,650 in sales
related expenses which were netted against the sale proceeds to
calculate the gain on sale. The Partnership’s investment
balance is zero; therefore a gain of $28,550 was recorded during
the period. The Compliance Period for Selman Place has been
completed; therefore there is no risk of credit recapture to the
investors of the Partnership.
During the year ended March 31, 2018, the Partnership sold its
Local Limited Partnership interest in Saw Mill Creek II Limited
Dividend Housing Association Limited Partnership (“Saw Mill
Creek”). Saw Mill Creek was appraised for $780,000 and had a
mortgage balance of $930,160 as of December 31, 2017. The
Partnership received $0 in cash proceeds, however, the Partnership
still owed $40,282 of capital contributions to Saw Mill Creek,
which was written off at the time of sale and included as part of
the gain on sale calculation. The Partnership incurred $2,050 in
sales related expenses, which were netted against the write-off of
capital contributions payable to calculate the gain on sale. The
Partnership’s investment balance is zero; therefore a gain of
$38,232 was recorded during the period. The Compliance Period for
Saw Mill Creek has been completed; therefore there is no risk of
credit recapture to the investors of the Partnership.
As of
March 31, 2018, the Partnership has
identified the following Local Limited Partnerships for possible
disposition.
Local Limited
Partnership
|
Debt at
12/31/17
|
Appraisal
Value
|
Estimated Sales
Price
|
Estimated
Sales Dates
|
Estimated Sale
Expenses
|
505 West Main,
L.P.
|
$1,349,536
|
$1,100,000
|
*
|
*
|
$450
|
North Davison
Partners 99, L.P.
|
505,282
|
480,000
|
*
|
*
|
750
|
Oakview Terrace
Townhomes, L.P.
|
1,370,811
|
925,000
|
*
|
*
|
1,500
|
*
Estimated price, and close date have yet to be determined. The
Local Limited Partnership is not under contract to be purchased as
of the report filing.
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 sum 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 were being amortized over 30 years (See
Notes 2 and 3).
34
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017 and 2016
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
“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 General Partners are accounted for as a
reduction of the investment balance. Distributions received after
the investment has reached zero are recognized as distribution
income. As of March 31, 2018 and 2017, all of the investment
balances in Local Limited Partnerships 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 March 31, 2018 and 2017, respectively, the
Partnership had $88,104 and $137,071 in cash and cash
equivalents.
Reporting Comprehensive Income
The
Partnership had no items of other comprehensive income for all
periods presented.
35
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017 and 2016
NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued
Net Income Per Partnership Unit
Net
income per Partnership Unit includes no dilution and is computed by
dividing income allocated to Limited Partners by the weighted
average Partnership Units outstanding during the period.
Calculation of diluted net income per Partnership Unit is not
required.
Income Taxes
The
Partnership has elected to be treated as a pass-through entity for
income tax purposes and, as such, is not subject to income taxes.
Rather, all items of taxable income, deductions and tax credits are
passed through to and are reported by its owners on their
respective income tax returns. The Partnership’s federal tax
status as a pass-through entity is based on its legal status as a
partnership. Accordingly, the Partnership is not required to take
any tax positions in order to qualify as a pass-through entity. The
Partnership is required to file and does file tax returns with the
Internal Revenue Service and other taxing authorities. Accordingly,
these financial statements do not reflect a provision for income
taxes and the Partnership has no other tax positions which must be
considered for disclosure. Income tax returns filed
by the
Partnership are subject to examination by the Internal Revenue
Service for a period of three years. While no income tax returns
are currently being examined by the Internal Revenue Service, tax
years since 2014 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.
Correction of Immaterial Error
In
connection with the preparation of the financial statements for the
year ended March 31, 2016, the Partnership identified an immaterial
error related to the allocation of losses between the general
partner and limited partners. The accounting error resulted in
March 31, 2015 ending equity for the general partner being
understated and ending equity for the limited partners being
overstated by $41,543. The Partnership reviewed the accounting
error and determined the impact of the error to be immaterial to
the prior year presentation. The accompanying 2016 financial
statements reflect the correction of the aforementioned immaterial
error.
Impact of Recent Accounting Pronouncements
In January 2014, the Financial Accounting Standards Board
(“FASB”) issued an amendment to the accounting and
disclosure requirements for investments in qualified affordable
housing projects. The amendments provide guidance on accounting for
investments by a reporting entity in flow-through limited liability
entities that manage or invest in affordable housing projects that
qualify for the low-income housing tax credit. The amendments
permit reporting entities to make an accounting policy election to
account for their investments in qualified affordable housing
projects using the proportional amortization method if certain
conditions are met. Under the proportional amortization method, an
entity amortizes the initial cost of the investment in proportion
to the tax credits and other tax benefits received, and recognizes
the net investment performance in the income statement as a
component of income tax expense (benefit). The amendments are
effective for interim and annual periods beginning after December
15, 2014 and should be applied retrospectively to all periods
presented. Early adoption is permitted. The adoption of this update
did not materially affect the Partnership's financial
statements.
36
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017 and 2016
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”. In addition, in October 2016, the FASB issued ASU
No. 2016-17, “Consolidation (Topic 810): Interests Held
Through Related Parties That Are Under Common Control”, to
provide further clarification guidance to ASU No. 2015-02. 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
and ASU 2016-17 simplifies and improves GAAP by: eliminating the
presumption that a general partner should consolidate a limited
partnership, eliminating the indefinite deferral of FASB Statement
No. 167, thereby reducing the number of Variable Interest Entity
(VIE) consolidation models from four to two (including the limited
partnership consolidation model) and clarifying when fees paid to a
decision maker should be a factor to include in the consolidation
of VIEs. ASU 2015-02 is effective for periods beginning after
December 15, 2015. ASU 2016-17 is effective for periods beginning
after December 15, 2016. The adoption of these updates did not
materially affect the Partnership's financial
statements.
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
As of
March 31, 2018 and 2017, the Partnership owned interests in 3 and 7
Local Limited Partnerships, respectively, each of which owns or
owned one Housing Complex, consisting of an aggregate of 108 and
252 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 generally entitled to 99%, 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, 2018 and 2017 are
approximately $808,000 and $1,474,000, respectively, less than the Partnership's
equity at the preceding December 31 as shown in the Local Limited
Partnerships’ combined condensed 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, impairment losses recorded 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 Partnership’s financial
statements.
37
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017 and 2016
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS,
continued
As of
March 31, 2018 and 2017 the investment accounts in all Local
Limited Partnerships have reached a zero balance. Consequently, the
Partnership’s estimate of its share of losses for the years
ended March 31, 2018, 2017, and
2016 amounting to approximately $62,000, $329,000, and
$326,000, respectively, have not been recognized. As of March 31,
2018, the aggregate share of net losses from the remaining Local
Limited Partnerships not recognized by the Partnership amounted to
approximately $371,000.
The
financial information from the individual financial statements of
the Local Limited Partnerships includes rental and interest
subsidies. Rental subsidies are included in total revenues and
interest subsidies are generally netted in interest expense.
Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships
as of December 31 and for the years then ended is as
follows:
COMBINED CONDENSED BALANCE SHEETS
|
2017
|
2016
|
ASSETS
|
|
|
Buildings and improvements (net of accumulated depreciation as of
December 31, 2017 and 2016 of $4,016,000 and $8,617,000,
respectively)
|
$5,324,000
|
$10,481,000
|
Land
|
271,000
|
1,452,000
|
Other assets
|
716,000
|
1,838,000
|
Total assets
|
$6,311,000
|
$13,771,000
|
LIABILITIES
|
|
|
Mortgage payable
|
$4,156,000
|
$9,900,000
|
Due to affiliates
|
228,000
|
280,000
|
Other liabilities
|
188,000
|
268,000
|
|
|
|
Total liabilities
|
4,572,000
|
10,448,000
|
|
|
|
PARTNERS' EQUITY
|
|
|
WNC Housing Tax Credit Fund VI, L.P.,
Series 9
|
808,000
|
1,474,000
|
Other partners
|
931,000
|
1,849,000
|
Total partners’
equity
|
1,739,000
|
3,323,000
|
Total liabilities and partners’
equity
|
$6,311,000
|
$13,771,000
|
38
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017 and 2016
NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS,
continued
COMBINED CONDENSED STATEMENTS OF OPERATIONS
|
2017
|
2016
|
2015
|
|
|
|
|
Revenues
|
$1,192,000
|
$2,226,000
|
$2,654,000
|
|
|
|
|
Expenses:
|
|
|
|
Operating expenses
|
780,000
|
1,598,000
|
1,857,000
|
Interest expense
|
192,000
|
369,000
|
421,000
|
Depreciation and amortization
|
258,000
|
588,000
|
702,000
|
|
|
|
|
Total expenses
|
1,230,000
|
2,555,000
|
2,980,000
|
|
|
|
|
Net loss
|
$(38,000)
|
$(329,000)
|
$(326,000)
|
|
|
|
|
Net loss allocable to the Partnership
|
$(62,000)
|
$(329,000)
|
$(326,000)
|
|
|
|
|
Net loss recorded by the Partnership
|
$-
|
$-
|
$-
|
Certain
Local Limited Partnerships have incurred significant operating
losses and/or have working capital deficiencies. In the event these
Local Limited Partnerships continue to incur significant operating
losses, additional capital contributions by the Partnership and/or
the Local General Partner may be required to sustain the operations
of such Local Limited Partnerships. If additional capital
contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited
Partnerships could be impaired, and the loss and recapture of the
related Low Income Housing Tax Credits could occur.
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 fees:
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. At the end of all periods presented, the
Partnership incurred total acquisition fees of $1,072,750, which
have been included in investments in Local Limited Partnerships. As
of all periods presented, the fees had been fully amortized or
impaired. 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.
39
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017 and 2016
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
Reimbursement of costs incurred by of the
General Partner or by an affiliate of Associates in connection with
the acquisition of Local Limited Partnerships. These
reimbursements have not exceeded 2% of the gross proceeds. At the
end of all periods presented, the Partnership incurred acquisition
costs of $306,500, which have been included in investments in Local
Limited Partnerships. As of all periods presented, the costs had
been fully amortized or impaired. 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 not to exceed 0.5% of the invested
assets of the Partnership, as defined. “Invested
Assets” means the sum of the Partnership’s investment
in Local Limited Partnership interests and the Partnership’s
allocable share of mortgage loans on and other debts related to the
Housing Complexes owned by such Local Limited Partnerships. Asset
management fees of $41,524, $98,350, and $108,112 were incurred
during the years ended March 31, 2018, 2017, and 2016,
respectively, and $112,200, $108,000, and $21,970 was paid during
the years ended March 31, 2018, 2017, and 2016,
respectively.
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.
The
Partnership reimbursed the General Partner or its affiliates for
operating expenses incurred by the Partnership and paid for by the
General Partner or its affiliates on behalf of the Partnership.
Operating expense reimbursements paid were $57,523, $59,776, and
$79,908, during the years ended March 31, 2018, 2017, and 2016,
respectively.
WNC
Holding, LLC (“Holding”), a wholly owned subsidiary of
Associates, acquires investments in Local Limited Partnerships
using funds from a secured warehouse line of credit. Such
investments are warehoused by Holding until transferred to
syndicated partnerships as investors are identified. The transfer
of the warehoused investments is typically achieved through the
admittance of the syndicated partnership as the Limited Partner of
the Local Limited Partnership and the removal of Holding as the
Limited Partner. Consideration paid to Holding for the transfer of
its interest in the Local Limited Partnership generally consists of
cash reimbursement of capital contribution installment(s) paid to
the Local Limited Partnerships by Holding, assumption of the
remaining capital contributions payable due to the Local Limited
Partnership and financing costs and interest charged by Holding.
For all periods presented, the Partnership incurred financing costs
of $17,386 and interest of $110,011 which are included in
investments in Local Limited Partnerships. As of all periods
presented, the financing costs were fully amortized or
impaired.
40
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017, and 2016
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
The
accrued fees and expenses due to the General Partner and affiliates
consist of the following at:
|
March
31,
|
|
|
2018
|
2017
|
|
|
|
Asset
management fee payable
|
$1,559,431
|
$1,630,107
|
Expenses
paid by the General Partner or an affiliate on behalf of the
Partnership
|
45,286
|
48,807
|
|
|
|
Total
|
$1,604,717
|
$1,678,914
|
The
General Partner and/or its affiliates do not anticipate that these
accrued fees will be paid until such time as capital reserves are
in excess of the future foreseeable working capital requirements of
the Partnership.
The
Partnership currently has insufficient working capital to fund its
operations. Associates has agreed to continue providing advances
sufficient enough to fund the operations and working capital
requirements of the Partnership through June 30, 2019.
NOTE 4 – QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)
The
following is a summary of the quarterly operations for the years
ended March 31 (rounded):
|
June
30
|
September
30
|
December
31
|
March
31
|
2018
|
|
|
|
|
|
|
|
|
|
Income$
|
$6,000
|
$7,000
|
$-
|
-
|
|
|
|
|
|
Operating
expenses
|
(24,000)
|
(21,000)
|
(31,000)
|
(12,000)
|
|
|
|
|
|
Loss from
operations
|
(18,000)
|
(14,000)
|
(31,000)
|
(12,000)
|
|
|
|
|
|
Gain on sale of
Local Limited
|
|
|
|
|
Partnerships
|
100,000
|
-
|
-
|
38,000
|
|
|
|
|
|
Net income
(loss)
|
82,000
|
(14,000)
|
(31,000)
|
26,000
|
|
|
|
|
|
Net income (loss)
available to Limited Partners
|
82,000
|
(14,000)
|
(31,000)
|
26,000
|
|
|
|
|
|
Net income (loss)
per Partnership Unit
|
5
|
(1)
|
(2)
|
2
|
|
|
|
|
|
41
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017, and 2016
NOTE 4 – QUARTERLY RESULTS OF OPERATIONS (UNAUDITED),
continued
|
June
30
|
September
30
|
December
31
|
March
31
|
2017
|
|
|
|
|
|
|
|
|
|
Income
|
$2,000
|
$24,000
|
$-
|
$3,000
|
|
|
|
|
|
Operating
expenses
|
(31,000)
|
(49,000)
|
(30,000)
|
(26,000)
|
|
|
|
|
|
Loss from
operations
|
(29,000)
|
(25,000)
|
(30,000)
|
(23,000)
|
|
|
|
|
|
Gain on sale of
Local Limited Partnerships
|
-
|
-
|
87,000
|
21,000
|
|
|
|
|
|
Net income
(loss)
|
(29,000)
|
(25,000)
|
57,000
|
(2,000)
|
|
|
|
|
|
Net income (loss)
available to Limited Partners
|
(29,000)
|
(25,000)
|
56,000
|
(2,000)
|
|
|
|
|
|
Net income (loss)
per Partnership Unit
|
(2)
|
(2)
|
4
|
-
|
|
|
|
|
|
|
June
30
|
September
30
|
December
31
|
March
31
|
2016
|
|
|
|
|
|
|
|
|
|
Income
|
$4,000
|
$20,000
|
$-
|
$3,000
|
|
|
|
|
|
Operating
expenses
|
(37,000)
|
(56,000)
|
(29,000)
|
(34,000)
|
|
|
|
|
|
Loss from
operations
|
(33,000)
|
(36,000)
|
(29,000)
|
(31,000)
|
|
|
|
|
|
Gain on sale of
Local Limited Partnerships
|
192,000
|
(3,000)
|
-
|
-
|
|
|
|
|
|
Net income
(loss)
|
159,000
|
(39,000)
|
(29,000)
|
(31,000)
|
|
|
|
|
|
Net income (loss)
available to Limited Partners
|
159,000
|
(39,000)
|
(29,000)
|
(31,000)
|
|
|
|
|
|
Net income (loss)
per Partnership Unit
|
10
|
(3)
|
(2)
|
(2)
|
42
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS – CONTINUED
For the Years Ended March 31, 2018, 2017, and 2016
NOTE 5 – PAYABLES TO LOCAL LIMTED PARTNERSHIPS
Payables
to Local Limited Partnerships represent amounts which are due at
various times based on conditions specified in the Local Limited
Partnership agreements. These contributions are payable in
installments and are generally due upon the Local Limited
Partnerships achieving certain operating and development benchmarks
(generally within two years of the Partnership’s initial
investment). As of March 31, 2018 and 2017, $0 and $40,282 remains
payable to the Local Limited Partnerships,
respectively.
NOTE 6 – LEGAL PROCEEDINGS
In
March 2018, Sioux Falls Environmental Access, Inc., the general
partner of both 505 West Main L.P. (“West Main”) and
North Davison Partners 99 L.P. (“North Davison”) filed
complaints (the “Complaints”) alleging, among other
things, breach of contract against WNC Housing Tax Credit Fund VI,
L.P. Series 9 (the “Partnership”) and WNC Housing, L.P.
(“WNC”) in the United States District Court of South
Dakota (the “Court”). Attempts to negotiate a
settlement were unsuccessful. The Partnership and WNC have answered
the Complaints and WNC filed third party complaints (the
“Third party Complaints”) against Crane & Fowler
Investments, LLC (“Crane”). The Third Party Complaints
allege, among other things, Crane’s breach of contract.
Currently, the matters are moving toward the discovery
phase.
43
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
NONE
Item 9A. Controls and Procedures
(a)
Evaluation of disclosure controls and procedures
As of
the end of the periods covered by this report, the
Partnership’s General Partner, under the supervision and with
the participation of the Chief Executive Officer and Chief
Financial Officer of Associates, carried out an evaluation of the
effectiveness of the Partnership’s “disclosure controls
and procedures” as defined in Securities Exchange Act of 1934
Rules 13a-15 and 15d-15. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that,
as of the end of the period 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, 2018. The internal control process of
Associates, as it is applicable to the Partnership, was designed to
provide reasonable assurance to Associates regarding the
preparation and fair presentation of published financial
statements, and includes those policies and procedures
that:
(1)
Pertain to the
maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of
the Partnership;
(2)
Provide reasonable
assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles in the United States, and that the
Partnership’s receipts and expenditures are being made only
in accordance with authorization of the management of Associates;
and
(3)
Provide reasonable
assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Partnership’s assets
that could have a material effect on the financial
statements.
44
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.
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, 2018.
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, 2018, that materially affected, or are reasonably likely to
materially affect, the Partnership’s internal control over
financial reporting.
Item
9B. Other Information
NONE
45
PART
III.
Item 10. Directors, Executive Officers and Corporate
Governance
(a)
Identification of Directors, (b) Identification of Executive
Officers, (c) Identification of Certain Significant Employees, (d)
Family Relationships, and (e) Business Experience
The
Partnership has no directors, executive officers or employees of
its own. The business of the Partnership is conducted primarily
through Associates. Associates is a California corporation which
was organized in 1971. The following biographical information is
presented for the officers and employees of Associates with
principal responsibility for the Partnership’s
affairs.
WNC
& Associates, Inc. is a California corporation which was
organized in 1971. Its officers and significant employees
are:
Wilfred
N. Cooper, Sr.
|
Chairman
|
Wilfred
N. Cooper, Jr.
|
President,
Chief Executive Officer
|
Michael
J. Gaber
|
Executive
Vice President and Chief Operating Officer
|
David
N. Shafer, Esq.
|
Executive
Vice President
|
Melanie
R. Wenk, CPA
|
Senior
Vice President – Accounting and Finance and Chief Financial
Officer
|
Darrick
Metz
|
Senior
Vice President – Originations
|
Christine
A. Cormier
|
Senior
Vice President – Investor Relations
|
Anand
Kannan
|
President
– Community Preservation Partners
|
Gregory
S. Hand
|
Senior
Vice President – Underwriting
|
Anil
Advani
|
Senior
Vice President – Syndications
|
|
|
In
addition to Wilfred N. Cooper, Sr., the directors of WNC &
Associates, Inc. are Wilfred N. Cooper, Jr., Kay L. Cooper and
Jennifer E. Cooper.
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.
46
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.
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.
47
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.
(f)
Involvement in Certain Legal Proceedings
None.
(g)
Promoters and Control Persons
Inapplicable.
(h)
Audit Committee Financial
Expert, and (i) Identification of the Audit
Committee
Neither
the Partnership nor the General Partner 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.
48
Item 11. Executive Compensation
The
General Partner and its affiliates are not permitted under Section
5.6 of the Partnership Agreement 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 and paid during the periods covered
by this report or that could be paid in future periods 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
affiliate may receive an annual asset management fee not to exceed
0.5% of the Partnership’s invested assets in the Local
Limited Partnerships, including the Partnership’s allocable
share of the mortgages. The asset management fee is payable with
respect to the previous calendar quarter on the first day of each
calendar quarter during the year. 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. Asset management fees of $41,524, $98,350, and
$108,112 were incurred during the years ended March 31, 2018, 2017,
and 2015, respectively, and $112,200, $108,000, and $21,970 was
paid during the years ended March 31, 2018, 2017, and 2016,
respectively.
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 property management services actually rendered by the General
Partner or its 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
the General Partner or any of its affiliates of Operating Cash
Expenses is subject to specific restrictions in Section 5.3.3 of
the Partnership Agreement. 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.”
49
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.
The
unpaid operating expenses reimbursable to the General Partner or
its affiliates were $45,286, $48,807, and $59,500 for the years
ended March 31, 2018, 2017, and 2016, respectively. The Partnership
reimbursed the General Partner or its affiliates for operating
expenses of $57,523, $59,776, and $79,908 during the years ended
March 31, 2018, 2017, and 2016, respectively.
(c)
Interest in Partnership
The
General Partner receives 0.1% of the Partnership’s allocated
Low Income Housing Tax Credits, which were $0 for the years ended
December 31, 2017, 2016, and 2015. The General Partner is also
entitled to receive 0.1% 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, 2018, 2017, and 2016. 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, 2018, 2017, and 2016.
(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.
50
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
(a)
Securities Authorized for Issuance Under Equity Compensation
Plans
The
Partnership has no compensation plans under which interests in the
Partnership are authorized for issuance.
(b)
Security Ownership of Certain Beneficial Owners
No
person is known to own beneficially in excess of 5% of the
outstanding Partnership Units.
(c)
Security Ownership of Management
Neither
the General Partner, Associates, its affiliates, nor any of the
officers or directors of the General Partner, Associates or its
affiliates own directly or beneficially any Partnership
Units.
(d)
Changes in Control
The
management and control of Associates and its affiliates may be
changed at any time in accordance with their respective
organizational documents, without the consent or approval of the
Limited Partners. In addition, the Partnership Agreement provides
for the admission of one or more additional and successor General
Partners in certain circumstances.
First,
with the consent of the General Partner and a majority-in-interest
of the Limited Partners, the General Partner may designate one or
more persons to be successor or additional General Partners. In
addition, the General Partner may, without the consent of the
Limited Partners, (i) substitute in its stead as General Partner
any entity which has, by merger, consolidation or otherwise,
acquired substantially all of its assets, stock or other evidence
of equity interest and continued its business, or (ii) cause to be
admitted to the Partnership an additional General Partner or
Partners if it deems such admission to be necessary or desirable so
that the Partnership will be classified a partnership for Federal
income tax purposes. Finally, a majority-in-interest of the Limited
Partners may at any time remove the General Partner of the
Partnership and elect a successor General Partner.
Item 13. Certain Relationships and Related Transactions, and
Director Independence
(a)
The General Partner
manages all of the Partnership’s affairs. The transactions
with the General Partner are primarily in the form of fees paid by
the Partnership for services rendered to the Partnership,
reimbursement of expenses, and the General Partner’s
interests in the Partnership, as discussed in Item 11 and in the
notes to the Partnership’s financial statements.
(b)
The Partnership has
no directors.
Item 14. Principal Accountant Fees and Services
The
following is a summary of fees paid to the Partnership’s
principal independent registered public accounting firm for the
years ended March 31:
|
2018
|
2017
|
Audit
Fees
|
$25,345
|
$24,150
|
Audit-related
Fees
|
|
|
Tax
Fees
|
4,000
|
4,000
|
All Other
Fees
|
|
|
TOTAL
|
$29,345
|
$28,150
|
|
|
|
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.
PART
IV.
51
Item 15. Exhibits and Financial Statement Schedules
(a)(1)
List of financial statements included in Part II
hereof
Report
of Independent Registered Public Accounting Firm
Balance
Sheets, March 31, 2018 and 2017
Statements of
Operations for the years ended March 31, 2018, 2017, and
2016
Statements of
Partners’ Equity (Deficit) for the years ended March 31,
2018, 2017, and 2016
Statements of Cash
Flows for the years ended March 31, 2018, 2017, and
2016
Notes
to Financial Statements
(a)(2)
List of financial statement schedules
included in Part IV hereof:
Schedule III, Real
Estate Owned by Local Limited Partnerships
(a)(3)
Exhibits.
Certification of
the Chief Executive Officer pursuant to Rule 13a-14 and 15d-14
(filed herewith)
Certification of
the Chief Financial Officer pursuant to Rule 13a-14 and 15d-14
(filed herewith)
Section 1350
Certification of the Chief Executive Officer. (filed
herewith)
Section 1350
Certification of the Chief Financial Officer. (filed
herewith)
101.
Interactive data
files pursuant to Rule 405 of Regulation S-T: (i) the Balance
Sheets at March 31, 2018 and 2017, (ii) the Statements of
Operations for the years ended March 31, 2018, 2017, and 2016,
(iii) the Statements of Partners’ Equity (Deficit) for the
years ended March 31, 2018, 2017, and 2016, (iv) the Statements of
Cash Flows for the years ended March 31, 2018, 2017, and 2016 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.
52
WNC Housing Tax Credit Fund VI, L.P., Series 13
Schedule III
|
|
||||||
Real Estate Owned by Local Limited Partnerships
|
|
||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
As of March
31, 2018
|
Initial Cost
to Partnership
|
|
As of December
31, 2017
|
||||||
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
|
505 West Main
Limited Partnership
|
Vermillion,
South Dakota
|
$709,000
|
$709,000
|
$75,000
|
$3,876,000
|
$293,000
|
$1,350,000
|
$75,000
|
$4,169,000
|
$1,767,000
|
$2,477,000
|
|
|
|
|
|
|
|
|
|
|
|
|
North Davison
Partners 99 L.P.
|
Mitchell, South
Dakota
|
470,000
|
470,000
|
30,000
|
1,164,000
|
31,000
|
505,000
|
40,000
|
1,185,000
|
479,000
|
746,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Oakview Terrace Townhomes
L.P.
|
North Branch,
Minnesota
|
605,000
|
605,000
|
18,000
|
1,359,000
|
81,000
|
523,000
|
18,000
|
1,440,000
|
506,000
|
952,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Saw Mill Creek
II Limited Dividend Housing Association Limited
Partnership(1)
|
Vicksburg, Michigan
|
383,000
|
343,000
|
50,000
|
1,536,000
|
17,000
|
930,000
|
50,000
|
1,553,000
|
694,000
|
909,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$2,666,000
|
$2,626,000
|
$261,000
|
$8,996,000
|
$354,000
|
$4,156,000
|
$271,000
|
$9,340,000
|
$4,016,000
|
$5,595,000
|
(1)
The Local Limited
Partnership was disposed of subsequent to December 31, 2017, but
prior to March 31, 2018
53
WNC Housing Tax Credit Fund VI, L.P., Series 9
|
|
|
|
|
|
||||||||
Schedule III
|
|
|
|
|
|
|
|
|
|||||
Real Estate Owned by Local Limited Partnerships
|
|
|
|
|
|
|
|||||||
March 31, 2018
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2017
|
||||
Local Limited
Partnership Name
|
Rental Income
|
Net Income (Loss)
|
Year Investment Acquired
|
Status
|
Estimated Useful Life (Years)
|
|
|
|
|
|
|
505 West Main
Limited Partnership
|
$581,000
|
$40,000
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
North Davison
Partners 99 L.P.
|
187,000
|
10,000
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
Oakview Terrace
Townhomes L.P.
|
204,000
|
(62,000)
|
2002
|
Completed
|
30
|
|
|
|
|
|
|
Saw Mill Creek II
Limited Dividend Housing Association Limited Partnership
(1)
|
153,000
|
(26,000)
|
2002
|
Completed
|
27.5
|
|
|
|
|
|
|
|
$1,125,000
|
$(38,000)
|
|
|
|
(1)
The Local Limited
Partnership was disposed of subsequent to December 31, 2017, but
prior to March 31, 2018
54
WNC Housing Tax Credit Fund VI, L.P., Series 9
Schedule III
Real Estate Owned by Local Limited Partnerships
|
|||||||||||
March 31, 2017
|
|
|
As of March
31, 2017
|
|
Initial Cost
to Partnership
|
|
As of December
31, 2016
|
|||||
Local Limited Partnership
Name
|
Location
|
Total
Investment in Local Limited Partnership
|
Amount of
Investment Paid to Date
|
Land
|
Building &
Improvements
|
Cost
Capitalized Subsequent to Acquisition
|
Mortgage
Balances of Local Limited Partnerships
|
Land
|
Building,
Construction in Progress & Equipment
|
Accumulated
Depreciation
|
Net Book
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
505 West Main
Limited Partnership
|
Vermillion, South
Dakota
|
$709,000
|
$709,000
|
$75,000
|
$3,876,000
|
$264,000
|
$1,402,000
|
$75,000
|
$4,161,000
|
$1,648,000
|
$2,588,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Byhalia Estates,
L.P. (1)
|
Byhalia,
Mississippi
|
-
|
-
|
24,000
|
943,000
|
-
|
620,000
|
24,000
|
943,000
|
504,000
|
463,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Harbor Pointe,
L.P.
|
Tifton,
Georgia
|
1,869,000
|
1,869,000
|
827,000
|
3,482,000
|
5,000
|
1,965,000
|
827,000
|
3,487,000
|
1,797,000
|
2,517,000
|
|
|
|
|
|
|
|
|
|
|
|
|
North Davison
Partners 99 L.P.
|
Mitchell, South
Dakota
|
470,000
|
470,000
|
30,000
|
1,164,000
|
17,000
|
537,000
|
40,000
|
1,171,000
|
444,000
|
767,000
|
Oakview Terrace
Townhomes L.P.
|
North Branch,
Minnesota
|
1,104,000
|
1,104,000
|
106,000
|
2,420,000
|
4,000
|
1,383,000
|
106,000
|
2,424,000
|
1,011,000
|
1,519,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Parker Estates,
L.P. (2)
|
Sunflower,
Mississippi
|
274,000
|
274,000
|
29,000
|
1,334,000
|
1,000
|
836,000
|
29,000
|
1,346,000
|
716,000
|
659,000
|
55
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
|
|
|
|
|
|
|
|
|
|
|
|
|
Saw Mill Creek II Limited
Dividend Housing Association Limited
Partnership
|
Vicksburg,
Michigan
|
383,000
|
343,000
|
50,000
|
1,536,000
|
9,000
|
956,000
|
50,000
|
1,553,000
|
655,000
|
948,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Selman Place,
LP
|
Bainbridge,
Georgia
|
1,679,000
|
1,679,000
|
301,000
|
4,003,000
|
10,000
|
2,201,000
|
301,000
|
4,013,000
|
1,842,000
|
2,472,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$6,488,000
|
$6,448,000
|
$1,442,000
|
$18,758,000
|
$350,000
|
$9,900,000
|
$1,452,000
|
$19,098,000
|
$8,614,000
|
$11,933,000
|
(1)
The Local Limited
Partnership was disposed of subsequent to December 31, 2016, but
prior to March 31, 2017
(2)
The Local Limited
Partnership was disposed of subsequent to March 31,
2017
56
WNC Housing Tax Credit Fund VI, L.P., Series 9
Schedule III
|
|
|
|
|
|
|
||||||||||||||
Real Estate Owned by Local Limited Partnerships
|
|
|
|
|
|
|
||||||||||||||
March 31, 2017
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2016
|
|
||
Local Limited
Partnership Name
|
Rental Income
|
Net Income (Loss)
|
Year Investment Acquired
|
Status
|
Estimated Useful Life (Years)
|
|
|
|
|
|
|
505 West Main
Limited Partnership
|
$578,000
|
$23,000
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
Byhalia Estates,
L.P. (1)
|
175,000
|
(48,000)
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
Harbor Pointe,
L.P.
|
269,000
|
(51,000)
|
2001
|
Completed
|
40
|
|
|
|
|
|
|
North Davison
Partners 99 L.P.
|
183,000
|
(28,000)
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
Oakview Terrace
Townhomes L.P.
|
206,000
|
(62,000)
|
2002
|
Completed
|
30
|
|
|
|
|
|
|
Parker Estates,
L.P. (2)
|
222,000
|
(32,000)
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
Saw Mill Creek II
Limited Dividend Housing Association Limited
Partnership
|
156,000
|
(7,000)
|
2002
|
Completed
|
27.5
|
|
|
|
|
|
|
Selman Place,
LP
|
254,000
|
(124,000)
|
2001
|
Completed
|
40
|
|
$2,043,000
|
$(329,000)
|
|
|
|
(1)
The
Local Limited Partnership was sold subsequent to December 31, 2016,
but prior to March 31, 2017.
(2)
The Local Limited
Partnership was disposed of subsequent to March 31,
2017.
57
WNC Housing Tax Credit Fund VI, L.P., Series 9
Schedule III
Real Estate Owned by Local Limited Partnerships
|
|||||||||||
March 31, 2016
|
|
|
As of March
31, 2016
|
|
Initial Cost
to Partnership
|
|
As of December
31, 2015
|
|||||
Local Limited Partnership
Name
|
Location
|
Total
Investment in Local Limited Partnership
|
Amount of
Investment Paid to Date
|
Land
|
Building &
Improvements
|
Cost
Capitalized Subsequent to Acquisition
|
Mortgage
Balances of Local Limited Partnerships
|
Land
|
Building,
Construction in Progress & Equipment
|
Accumulated
Depreciation
|
Net Book
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
505 West Main Limited
Partnership
|
Vermillion, South
Dakota
|
$709,000
|
$709,000
|
$75,000
|
$3,876,000
|
$285,000
|
$1,455,000
|
$75,000
|
$4,161,000
|
$1,521,000
|
$2,715,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Byhalia Estates,
L.P.
|
Byhalia,
Mississippi
|
219,000
|
219,000
|
24,000
|
943,000
|
-
|
633,000
|
24,000
|
943,000
|
470,000
|
497,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Harbor Pointe,
L.P.
|
Tifton,
Georgia
|
1,869,000
|
1,869,000
|
827,000
|
3,482,000
|
5,000
|
1,979,000
|
827,000
|
3,487,000
|
1,679,000
|
2,635,000
|
|
|
|
|
|
|
|
|
|
|
|
|
McPherson Housing Associates
Limited Partnership
|
McPherson,
Kansas
|
1,770,000
|
1,770,000
|
200,000
|
3,731,000
|
-
|
1,640,000
|
200,000
|
3,731,000
|
1,648,000
|
2,283,000
|
|
|
|
|
|
|
|
|
|
|
|
|
North Davison Partners 99
L.P.
|
Mitchell, South
Dakota
|
470,000
|
470,000
|
30,000
|
1,164,000
|
17,000
|
556,000
|
40,000
|
1,171,000
|
407,000
|
804,000
|
Oakview Terrace Townhomes
L.P.
|
North Branch,
Minnesota
|
1,104,000
|
1,104,000
|
106,000
|
2,420,000
|
1,000
|
1,394,000
|
106,000
|
2,421,000
|
947,000
|
1,580,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Parker Estates,
L.P.
|
Sunflower,
Mississippi
|
274,000
|
274,000
|
29,000
|
1,334,000
|
-
|
854,000
|
29,000
|
1,334,000
|
668,000
|
695,000
|
58
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
|
|
|
|
|
|
|
|
|
|
|
|
|
Saw Mill Creek II Limited
Dividend Housing Association Limited
Partnership
|
Vicksburg,
Michigan
|
383,000
|
343,000
|
50,000
|
1,536,000
|
17,000
|
981,000
|
50,000
|
1,553,000
|
616,000
|
987,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Selman Place,
LP
|
Bainbridge,
Georgia
|
1,679,000
|
1,679,000
|
301,000
|
4,003,000
|
10,000
|
2,213,000
|
301,000
|
4,013,000
|
1,723,000
|
2,591,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$8,477,000
|
$8,437,000
|
$1,642,000
|
$22,489,000
|
$335,000
|
$11,705,000
|
$1,652,000
|
$22,814,000
|
$9,679,000
|
$14,787,000
|
59
WNC Housing Tax Credit Fund VI, L.P., Series 9
|
|
|
|
|
|
||||||||
Schedule III
|
|
|
|
|
|
|
|
|
|||||
Real Estate Owned by Local Limited Partnerships
|
|
|
|
|
|
|
|||||||
March 31, 2016
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2015
|
||||
Local Limited
Partnership Name
|
Rental Income
|
Net Income (Loss)
|
Year Investment Acquired
|
Status
|
Estimated Useful Life (Years)
|
|
|
|
|
|
|
505 West Main
Limited Partnership
|
$537,000
|
$23,000
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
Byhalia Estates,
L.P.
|
176,000
|
(38,000)
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
Harbor Pointe,
L.P.
|
266,000
|
(5,000)
|
2001
|
Completed
|
40
|
|
|
|
|
|
|
McPherson Housing
Associates Limited Partnership
|
481,000
|
(40,000)
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
North Davison
Partners 99 L.P.
|
191,000
|
(5,000)
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
Oakview Terrace
Townhomes L.P.
|
206,000
|
(53,000)
|
2002
|
Completed
|
30
|
|
|
|
|
|
|
Parker Estates,
L.P.
|
227,000
|
(28,000)
|
2002
|
Completed
|
40
|
|
|
|
|
|
|
Saw Mill Creek II
Limited Dividend Housing Association Limited
Partnership
|
153,000
|
(26,000)
|
2002
|
Completed
|
27.5
|
|
|
|
|
|
|
Selman Place,
LP
|
252,000
|
(154,000)
|
2001
|
Completed
|
40
|
|
|
|
|
|
|
|
$2,489,000
|
$(326,000)
|
|
|
|
60
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
WNC
HOUSING TAX CREDIT FUND VI, L.P., SERIES 9
By: WNC &
ASSOCIATES, INC.
General
Partner
By:
/s/ Wilfred N. Cooper, Jr.
Wilfred N. Cooper, Jr.,
President of WNC & Associates, Inc.
Wilfred N. Cooper, Jr.,
President of WNC & Associates, Inc.
Date:
June 26, 2018
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)
Wilfred N. Cooper, Jr.,
Chief Executive Officer, President and Director of WNC & Associates, Inc. (principal executive officer)
Date: June
26, 2018
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)
Melanie R. Wenk,
Senior Vice-President - Chief Financial Officer of WNC & Associates, Inc. (principal financial officer and principal accounting officer)
Date: June
26, 2018
By:
/s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr.,
Chairman of the Board of WNC & Associates, Inc.
Wilfred N. Cooper, Sr.,
Chairman of the Board of WNC & Associates, Inc.
Date: June
26, 2018
By:
/s/ Kay L. Cooper
Kay L. Cooper
Director of WNC & Associates, Inc.
Kay L. Cooper
Director of WNC & Associates, Inc.
Date: June 26, 2018
61