WNC HOUSING TAX CREDIT FUND VI, L.P.,
SERIES 6
Supplement Dated July 9, 1998
To Prospectus Dated June 23, 1997
This Supplement is part of, and should be read in conjunction with, the
Prospectus of WNC Housing Tax Credit Fund VI, L.P., Series 6 ("Series 6") dated
June 23, 1997 (the "Prospectus"). This Supplement supersedes all previous
supplements. Capitalized terms used but not defined in this Supplement have the
meanings given to them in the Prospectus.
TABLE OF CONTENTS
Page
Termination of Series 5 Offering............................................2
Status of Series 6 Offering.................................................2
Investment Objectives and Policies .........................................2
Federal Income Tax Considerations...........................................3
Profits, Losses and Tax Credits.............................................3
Management .................................................................4
Experts.....................................................................4
Prior Performance Summary...................................................4
Financial Statements.....................................................FS-1
Prior Performance Tables..................................................A-1
First Amendment to Partnership Agreement..................................B-1
As indicated in the chart which follows, the information presented
herein either adds to or supersedes similar information included in the
Prospectus, or constitutes information which has no corresponding information in
the Prospectus.
Supplement Presentation Relationship to Prospectus Presentation
Termination of Series 5 Offering New Information
Status of Series 6 Offering New Information
Investment Objectives and Policies Supersedes a portion of "Investment
Objectives and Policies"
Federal Income Tax Considerations Adds to or supersedes a portion of
"Federal Income Tax Considerations"
Profits, Losses and Tax Credits Supersedes a portion of "Profits and
Losses for Tax Purposes, Tax Credits
and Cash Distributions"
Management Adds to "Management"
Experts Adds to "Experts"
Prior Performance Summary Adds to "Prior Performance Summary"
Financial Statements Adds to "Financial Statements"
Prior Performance Tables Adds to "Prior Performance Tables"
First Amendment to Partnership Agreement Adds to "Partnership Agreement"
NOT TO BE USED IN ARIZONA, MAINE, MASSACHUSETTS, MINNESOTA, MISSOURI, NEBRASKA,
PENNSYLVANIA, TENNESSEE OR TEXAS
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TERMINATION OF SERIES 5 OFFERING
As of the date hereof the Fund has terminated the offering of Units
in Series 5.
STATUS OF SERIES 6 OFFERING
The Fund is now offering a minimum of 1,400 Units in Series 6 on the
terms set forth herein and in the Prospectus. A maximum of 25,000 Units may be
sold. Series 6 and Series 5 have been organized as separate limited partnerships
under California law and investors in Series 6 will have no rights or interests
in the properties acquired by Series 5.
INVESTMENT OBJECTIVES AND POLICIES
The principal investment objective of Series 6 is to provide Low Income
Housing Credits to its investors in an amount of from $1,000 to $1,200 per Unit.
See "Investment Objectives and Policies - Principal Investment Objectives" in
the Prospectus. There can be no assurance that this objective will be satisfied.
See "Summary of the Offering - Risk Factors" and "Risk Factors" in the
Prospectus. In this regard, the Partnership Agreement utilizes a defined term to
determine whether the Fund Manager can receive distributions from the sale of
Apartment Complexes. The defined term is "Return on Investment." As set forth in
the Prospectus, investors should note that the use of the term "Return on
Investment" is not intended to suggest that this return will be provided to
investors. It means only that if proceeds from the sale of Apartment Complexes
are available after payment of all current and accrued fees and expenses, they
will be distributed to investors before distributions to the Fund Manager. For
purposes of Series 6 the term "Return on Investment" will mean 11% of
"unreturned capital" (i.e., the capital contribution originally paid for a Unit,
less distributions of Sale or Refinancing Proceeds) each year through 2008 and
6% of unreturned capital thereafter. See "Summary of the Offering - Profits and
Losses for Tax Purposes, Tax Credits and Cash Distributions," "Summary of the
Offering - Management Compensation," "Profits and Losses for Tax Purposes, Tax
Credits and Cash Distributions" and "Management Compensation" in the Prospectus.
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FEDERAL INCOME TAX CONSIDERATIONS
Tax Legislation
On August 5, 1997, President Clinton signed into law the Taxpayer
Relief Act of 1997 (the "1997 Act"). The 1997 Act includes many provisions, only
a few of which are directly applicable to an investment in Series 6. The
provisions of the 1997 Act that are material to an investment in Series 6 are
summarized below.
Tax Rates. The 1997 Act includes provisions that reduce the tax imposed
on most net capital gains. See "Federal Income Tax Considerations - Other
Important Tax Considerations - Tax Rates" in the Prospectus. These provisions
utilize a two-tier approach to taxation of net capital gains.
In the first tier, the maximum tax rate on net capital gains for
individuals is reduced from 28% to 20%; the rate for individuals who would pay a
15% tax on net capital gains is reduced to 10%. Effective July 29, 1997, these
new rates apply to assets held for more than 18 months. Assets held for more
than 12 but less than 18 months may qualify for the maximum tax rate of 28%.
In the second tier, which is effective for any taxable year beginning after
December 31, 2000, the 20% rate is reduced to 18% for assets held more than five
years; the 10% rate is reduced to 8% for assets held more than five years
whenever acquired.
These preferential rates do not apply to collectibles (e.g., fine art
and jewelry), certain qualified small business stock, and certain gains on the
sale of depreciable real property. In the case of a sale of depreciable real
property, the taxation scheme is as follows: (i) the excess of accelerated
depreciation over straight-line depreciation is taxed at ordinary income rates
(there will be no such excess in the case of the sale of an Apartment Complex),
(ii) the balance of the depreciation is taxed at a top rate of 25%, and (iii)
the balance of the gain is subject to the net capital gains rates described in
the preceding paragraphs.
The rates described above generally apply for purposes of both the
regular tax and the alternative minimum tax.
Alternative Minimum Tax. The corporate alternative minimum tax (see
"Federal Income Tax Considerations - Other Important Tax Considerations -
Alternative Minimum Tax" in the Prospectus) is repealed for small business
corporations for taxable years ending after December 31, 1997. A corporation is
a small business corporation in 1998 if its average gross receipts for the prior
three years was less than $5,000,000. A corporation that meets the $5,000,000
test initially will be treated as a small business corporation in future years
if its average gross receipts does not exceed $7,500,000.
Another amendment made by the 1997 Act will reduce the impact of the
alternative minimum tax. For assets placed in service after December 31, 1998,
depreciation lives for regular tax purposes will also be used for alternative
minimum tax purposes. See "Federal Income Tax Considerations - Other Important
Tax Considerations Alternative Minimum Tax" in the Prospectus.
General Business Tax Credit Limitations. As set forth in the
Prospectus, the ability of taxpayers to use Tax Credits is subject to an annual
limitation on the allowance of aggregate general business tax credits (which
includes Tax Credits). See "Federal Income Tax Considerations - General Business
Tax Credit Limitations" in the Prospectus. Effective for business tax credits
arising in taxable years beginning after December 31, 1997, business tax credits
limited by this rule are first carried back one year and then forward 20 years.
Under prior law, such credits were first carried back three years and then
forward 15 years.
Tax Shelter Registration Number
The taxpayer identification number and tax shelter registration number
of Series 6 are 33-0761578 and 97241000054, respectively. See "Federal Income
Tax Considerations - Tax Shelter Registration" in the Prospectus.
PROFITS, LOSSES AND TAX CREDITS
Pursuant to the power granted to it in Section 12.1.2 of the
Partnership Agreement, the General Partner has amended the Partnership Agreement
to provide that all items of Profits for Tax Purposes, Losses for Tax Purposes
and Tax Credits which, under the Partnership Agreement would have been allocated
99% to the Unitholders and 1% to the General Partner, will instead be allocated
99.9% to the Unitholders and 0.1% to the General Partner. See "First Amendment
to Partnership Agreement" included herein as Exhibit B.
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MANAGEMENT
WNC Management, Inc.
WNC Management, Inc., a California corporation which is wholly-owned by WNC
& Associates, Inc., was organized in 1997 to manage certain of the properties
invested in by partnerships sponsored by WNC & Associates, Inc. (including,
possibly, Series 5 and Series 6). The officers and directors of WNC Management,
Inc. are as follows: Thomas J. Riha (Chief Executive Officer/Director), David N.
Shafer (Secretary/Director), Theodore M. Paul (Chief Financial
Officer/Director), and Wilfred N. Cooper, Jr. (Director).
EXPERTS
The balance sheet of WNC Housing Tax Credit Fund VI, L.P., Series 6 as
of April 10, 1998 and the consolidated balance sheet of WNC & Associates, Inc.
as of August 31, 1997 which are included in this Supplement and in the
Registration Statement have been audited by Corbin & Wertz, independent
certified public accountants, as set forth in their reports thereon appearing
elsewhere herein and in the Registration Statement and are included in reliance
upon such reports given upon the authority of said firm as experts in accounting
and auditing.
PRIOR PERFORMANCE SUMMARY
The Sponsor directly and through its Affiliates has had significant
prior experience in the syndication and management of real estate programs. From
its formation through December 31, 1997, the Sponsor and its Affiliates have
raised equity from more than 12,200 investors to acquire interests in more than
520 properties located in 37 states and one territory, and representing more
than $860,000,000 in aggregate acquisition costs. The information which follows
contains discussions as of December 31, 1997 of all of the prior real estate
investment programs sponsored the Sponsor and its Affiliates.
In addition to the Syndicated Partnerships for which the Sponsor has
performed syndication and related services for third parties as discussed under
"Management" in the Prospectus, as of December 31, 1997 the Sponsor and its
Affiliates had sponsored a total of 15 public and 49 non-public real estate
programs (excluding Series 6). As of December 31, 1997, these 64 programs had
raised an aggregate of approximately $322,000,000 from more than 12,200
investors, and had invested in a total of 470 apartment properties at an
aggregate acquisition cost of approximately $795,000,000 in the following
jurisdictions:
Alabama (16) Montana (1)
Arizona (9) Nebraska (8)
Arkansas (14) New Mexico (16)
California (103) North Carolina (30)
Florida (6) Ohio (4)
Georgia (6) Oklahoma (11)
Idaho (2) Oregon (5)
Illinois (16) Pennsylvania (1)
Indiana (4) South Carolina (14)
Iowa (9) South Dakota (1)
Kansas (3) Tennessee (28)
Kentucky (2) Texas (87)
Louisiana (15) U.S. Virgin Islands (1)
Maryland (2) Virginia (5)
Michigan (3) West Virginia (1)
Minnesota (1) Wisconsin (18)
Mississippi (11) Wyoming (1)
Missouri (16)
Of these 64 programs, 13 public and 35 private real estate programs
commenced their offerings during the period beginning January 1, 1987 (the
"Prior Programs"). See "Public Programs Sponsored" and "Private Programs
Sponsored" below. The Prior Programs were organized to invest in apartment
complexes (by acquiring limited partnership interests in other limited
4
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partnerships which owned the apartment complexes) benefitting from Low Income
Housing Credits and, in most instances, one or more other forms of Government
Assistance. See "Government Assistance Programs." As will be the case with
respect to the Apartment Complexes in which the Partnership will invest,
management and operational control of the properties in which the Prior Programs
have invested is exercised by the general partners of the local limited
partnerships.
Public Programs Sponsored
The 13 public Prior Programs are WNC Housing Tax Credit Fund, L.P.
("HTCF"); WNC California Housing Tax Credits, L.P. ("CHTC"); WNC Housing Tax
Credit Fund II, L.P. ("HTCFII"); WNC California Housing Tax Credits II, L.P.
("CHTCII"); WNC Housing Tax Credit Fund III, L.P. ("HTCFIII"); WNC California
Housing Tax Credits III, L.P. ("CHTCIII"); WNC Housing Tax Credit Fund IV, L.P.,
Series 1 ("HTCFIV-1"); WNC Housing Tax Credit Fund IV, L.P., Series 2
("HTCFIV-2"); WNC California Housing Tax Credits IV, L.P., Series 4
("CHTCIV-4"); WNC California Housing Tax Credits IV, L.P., Series 5
("CHTCIV-5"); WNC Housing Tax Credit Fund V, L.P., Series 3 ("HTCFV-3"); WNC
Housing Tax Credit Fund V, L.P., Series 4 ("HTCFV-4"); and WNC Housing Tax
Credit Fund VI, L.P., Series 5 ("HTCFVI-5"). Except for HTCFVI-5, each of the
public Prior Programs had completed its offering as of December 31, 1997.
Through December 31, 1997, the 13 public Prior Programs had raised an
aggregate of approximately $161,856,000 in capital contributions from an
aggregate of approximately 9,800 investors and invested in a total of 219
apartment properties located in the following jurisdictions:
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Alabama (14) Mississippi (7)
Arizona (4) Missouri (6)
Arkansas (5) Nebraska (7)
California (48) New Mexico (8)
Florida (1) North Carolina (15)
Georgia (2) Ohio (4)
Idaho (1) Oklahoma (3)
Illinois (8) Oregon (3)
Indiana (4) South Carolina (1)
Iowa (7) South Dakota (1)
Kansas (2) Tennessee (6)
Kentucky (1) Texas (41)
Louisiana (3) Virginia (4)
Maryland (1) Wisconsin (11)
Michigan (1)
The aggregate mortgage debt encumbering the properties was
approximately $260,300,000 and the aggregate acquisition cost of the properties
was approximately $375,516,000. At the times of the Prior Programs' investments
therein 77 of the properties were existing apartment complexes and 142 were
under development or construction by the local partnerships which own them.
All of the public Prior Programs have as their principal investment
objective providing Federal Low Income Housing Credits to their investors, and
CHTC, CHTCII, CHTCIII, CHTCIV-4 and CHTCIV-5 have the additional objective of
providing California Low Income Housing Credits.
Certain information with regard to the public Prior Programs is set
forth in the tables which follow:
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<TABLE>
Federal Credit Programs
Federal
Offering Partnership Credits Received Per $10,000 Investment Credit Years
Commencement Name Total 1997 1996 1995 1994 1993 1992 1991 1990 1989 Remaining(1)
- ------------ ---- ----- ---- ---- ---- ---- ---- ---- ---- ---- ---- ------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1989 HTCF $11,580 $1,410 $1,410 $1,410 $1,410 $1,410 $1,410 $1,400 $1,640 $80 4
1990 HTCFII 10,460 1,450 1,450 1,450 1,460 1,380 1,210 1,300 760 -- 6
1992 HTCFIII 6,570 1,570 1,570 1,520 1,190 680 40 -- -- -- 8
1993 HTCFIV-1 4,120 1,430 1,360 1,010 320 -- -- -- -- -- 9
1994 HTCFIV-2 3,090 1,130 1,050 700 210 -- -- -- -- -- 9
1995 HTCFV-3 1,490 840 620 30 -- -- -- -- -- -- 10
1996 HTCFV-4 330 190 140 -- -- -- -- -- -- -- 11(2)
1997 HTCFVI-5 -- -- -- -- -- -- -- -- -- -- 12
Federal and California Credit Programs
Federal
Offering Partnership Credits Received Per $10,000 Investment Credit Years
Commencement Name Total 1997 1996 1995 1994 1993 1992 1991 1990 1989 Remaining(1)
- ------------ ---- ----- ---- ---- ---- ---- ---- ---- ---- ---- ----- ------------
1989 CHTC $14,650 $ 990 $ 990 $ 990 $1,180 $1,720 $2,360 $2,590 $2,270 $1,560 4
1991 CHTCII 11,210 1,440 1,530 2,060 1,940 1,780 1,810 650 -- -- 3(2)
1993 CHTCIII 6,420 1,790 1,970 1,800 800 60 -- -- -- -- 9
1994 CHTCIV-4 3,810 1,760 1,340 710 -- -- -- -- -- -- 9
1995 CHTCIV-5 980 980 -- -- -- -- -- -- -- -- 10
- -----------------
(1) As of December 31, 1997.
(2) These Prior Programs will generate a small amount of Tax Credits for four
years beyond the stated number of years due to increases in qualified
basis.
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Private Programs Sponsored
As of December 31, 1997, the 35 private Prior Programs involved an
aggregate of approximately $145,169,000 in commitments for capital contributions
payable in installments from an aggregate of approximately 1,520 investors.
These private Prior Programs invested in a total of 208 apartment properties
located in the following jurisdictions:
Alabama (2) Missouri (8)
Arizona (4) Montana (1)
Arkansas (9) Nebraska (1)
California (44) New Mexico (7)
Florida (5) North Carolina (13)
Georgia (3) Oklahoma (5)
Illinois (7) Oregon (2)
Iowa (2) Pennsylvania (1)
Kentucky (1) South Carolina (7)
Louisiana (9) Tennessee (21)
Maryland (1) Texas (40)
Michigan (1) Virginia (1)
Minnesota (1) Wisconsin (7)
Mississippi (4) Wyoming (1)
The aggregate mortgage debt encumbering the properties was approximately
$247,749,000 and the aggregate acquisition cost of the properties was
approximately $355,235,000.
All of the 35 private Prior Programs have as their principal investment
objective providing Federal Low Income Housing Credits to their investors, and
13 of the 35 programs have the additional objective of providing California Low
Income Housing Credits.
Certain additional information with regard to the 35 private Prior Programs
formed to provide Low Income Housing Credits is set forth in the tables which
follow:
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Federal Credit Programs
Offering Federal
Commence- Partnership Credits Received Per $10,000 Investments(1) Credit Years
ment Name Totals 1997 1996 1995 1994 1993 1992 1991 1990(3) 1989 1988 1987 Remaining(2)
- -------- ---- ------ ---- ---- ---- ---- ---- ---- ---- ------- ---- ---- ---- ------------
1987 Pepper Tree (4) 15,000 $1,350 $1,470 $1,470 $1,470 $1,470 $1,470 $1,470 $2,370 $1,530 $ 900 $ 30 1
1987 East Bay 14,320 380 1,360 1,350 1,360 1,360 1,360 1,360 1,670 1,700 1,400 1,020 0
1987 Sequoia Manor 14,830 1,390 1,370 1,370 1,370 1,370 1,350 1,380 2,220 1,460 1,340 210 1
1987 Bayou 13,890 1,000 1,290 1,290 1,290 1,290 1,290 1,290 2,110 1,400 1,330 310 0
1987 Laurel Hill 13,950 1,180 1,320 1,320 1,320 1,320 1,320 1,300 2,090 1,320 1,230 230 1(5)
1988 Ridgetop 13,700 1,390 1,390 1,390 1,390 1,390 1,390 1,390 2,250 1,500 220 -- 1(6)
1989 Alta Mesa 11,730 1,320 1,320 1,320 1,320 1,320 1,320 1,320 1,950 540 -- -- 3
1990 WNC-90 10,050 1,400 1,400 1,400 1,400 1,400 1,400 1,400 250 -- -- -- 3
1991 Shelter Resource
XIX 9,360 1,440 1,440 1,440 1,440 1,440 1,440 720 -- -- -- -- 4
1991 WNC Tax Credits
XX 9,700 1,460 1,460 1,460 1,460 1,460 1,460 940 -- -- -- -- 4
1991 WNC Tax Credits
XXI 7,880 1,360 1,360 1,360 1,360 1,360 1,030 50 -- -- -- -- 5
1992 WNC Tax Credits
XXII 8,140 1,410 1,410 1,410 1,410 1,410 1,090 -- -- -- -- -- 5
1992 WNC Tax Credits
XXIII 7,840 1,400 1,400 1,400 1,400 1,370 870 -- -- -- -- -- 5
1992 WNC Tax Credits
XXV 6,440 1,380 1,380 1,380 1,280 870 150 -- -- -- -- -- 7
1993 WNC Tax Credits
XXVI 6,150 1,330 1,330 1,330 1,320 840 -- -- -- -- -- -- 6
1993 WNC Tax Credits
XXVIII 4,650 1,300 1,300 1,300 640 110 -- -- -- -- -- -- 7
1993 WNC Tax Credits
XXIX 4,530 1,310 1,290 1,110 790 30 -- -- -- -- -- -- 8
1994 WNC Tax Credits
XXX 3,560 1,230 1,220 1,000 110 -- -- -- -- -- -- -- 8
1994 ITC I 4,390 1,530 1,670 780 410 -- -- -- -- -- -- -- 9
1995 ITC II 1,950 1,290 590 70 -- -- -- -- -- -- -- -- 10
1996 ITCIII 380 380 -- -- -- -- -- -- -- -- -- -- 12
1997 ITCV 20 20 -- -- -- -- -- -- -- -- -- -- 12
Federal and California Credit Programs
Offering Federal
Commence- Partnership Credits Received Per $10,000 Investment (1) Credit Years
ment Name Totals 1997 1996 1995 1994 1993 1992 1991 1990(3) 1989 1988 1987 Remaining(2)
- -------- ---- ------ ---- ---- ---- ---- ---- ---- ---- ------- ---- ---- ---- ------------
1987 Beech Villa $18,610 $ 860 $1,360 $1,360 $1,350 $1,350 $1,350 $1,350 $2,670 $3,210 $3,210 $540 0
1988 Elmwood Villa 18,020 990 990 990 990 990 1,330 2,610 4,010 3,460 1,660 -- 2
1988 Poplar Villa 17,620 970 970 970 970 970 970 2,280 3,420 3,410 2,690 -- 0
1988 Olive Tree 17,460 970 970 970 970 970 970 1,620 3,990 3,310 2,720 -- 1
1988 Pine Rock 16,470 940 940 940 940 880 1,220 3,280 3,810 3,240 280 -- 2
1988 Mesa Verde 16,060 1,030 1,020 1,030 1,030 1,030 1,870 1,690 3,610 2,760 990 -- 2
1988 Sunfield 15,650 1,340 1,340 1,340 1,340 1,340 1,340 1,650 3,090 2,080 790 -- 2
1988 Foxglove 13,240 1,360 1,360 1,360 1,360 1,550 2,020 2,020 1,920 290 -- -- 3
1989 Elliot Place 15,360 1,200 1,200 1,200 1,200 1,200 1,670 2,460 3,200 2,030 -- -- 3
1990 Wheatridge 12,000 1,120 1,120 1,120 1,120 1,480 2,240 2,230 1,570 -- -- -- 4
1992 WNC Tax Credits
XXIV 9,850 1,260 1,260 1,740 2,180 2,180 1,230 -- -- -- -- -- 5
1993 WNC Tax Credits
XXVII 7,360 1,290 1,560 1,750 1,740 1,020 -- -- -- -- -- -- 7
1997 CTC 210 210 -- -- -- -- -- -- -- -- -- -- 12
<FN>
(1) Represents the return received by investors utilizing deferred payment
purchase plans. In many instances the respective returns to cash investors
were higher than those listed above inasmuch as the use of
deferred payment purchase notes entailed the payment of interest.
(2) As of December 31, 1997.
(3) In 1990 certain partnerships were permitted to, and did, elect to utilize
150% of the Federal Low Income Housing Credit otherwise allowable for 1990.
(4) Pepper Tree originally offered Federal Tax Credits only. After the
investors were admitted to the Prior Program, the Local General Partners
obtained California Low Income Housing Credits as well, which are not
reflected in this chart.
(5) These Prior Programs will generate a small amount of Tax Credits for five
years beyond the stated number of years due to increases in qualified
basis.
(6) These Prior Programs will generate a small amount of Tax Credits for
four years beyond the stated number of years due to increases in qualified
basis.
</FN>
</TABLE>
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Additional Information
In a prior private program sponsored in 1981, WNC & Associates, Inc.
became successor managing general partner in 1989 after the original managing
general partner had misappropriated partnership accounts. Thereafter, using the
proceeds from an RD loan, the property was substantially rehabilitated and
continues to be owned and operated by the prior program. In a private program
sponsored in 1996, a Local General Partner was removed by the Sponsor in 1997
after construction defects were discovered and the Local General Partner
declared bankruptcy. The prior program purchased the bridge loan at its face
value upon maturity thereof and construction has since been completed using
other funds loaned by the Sponsor and the prior program. The Sponsor anticipates
that the property will be listed for sale after receipt of a commitment for
permanent financing. In a public program sponsored in 1993, a Local General
Partner was removed by the Sponsor in 1997 after the Local General Partner
violated provisions of the Local Limited Partnership Agreement. The remaining
Local General Partner, which is an agency of the county in which the property is
located, will be replaced by the Sponsor or an experienced non-profit agency. In
1997 five properties owned by four prior private programs and developed by the
same Local General Partner were the subject of notices of adjustment wherein the
IRS claims that development fees to the Local General Partner were not property
includable in the depreciable basis of the respective properties. Each of the
Local Limited Partnerships and the prior private programs has filed a petition
for readjustment before the United States Tax Court. Also in 1997, the Local
General Partner of three Local Limited Partnerships which were invested in by a
prior private program sponsored in 1984 transferred the properties of the Local
Limited Partnerships to the same transferee without seeking the approval of the
prior program. The transfers were made in consideration of relief of
indebtedness owed by the Local General Partner. Each of the Local Limited
Partnerships has brought an action to have the transfer set aside and to remove
the Local General Partner. As the properties are located in three states, three
suits have been commenced.
Additional information with regard to certain of the Prior Programs is
set forth in Tables I, II, III and V which comprise Exhibit A to this
Supplement. Reference also is made to Table VI which describes in greater detail
the properties in which these Prior Programs have invested. Table IV has been
omitted since none of the prior programs has completed operations.
There will be made available to any prospective investor upon request
and without charge, a copy of Table VI and upon request, for a reasonable fee,
copies of the most recent report on Form 10-K filed by any of the public Prior
Programs with the Securities and Exchange Commission.
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FINANCIAL STATEMENTS
INDEX
Page
WNC Housing Tax Credit Fund VI, L.P., Series 6
Independent Auditors' Report ........................................... FS-2
Balance Sheet, April 10, 1998 .......................................... FS-3
Notes to Balance Sheet...................................................FS-4
WNC & Associates, Inc.
Independent Auditors' Report.............................................FS-6
Consolidated Balance Sheets, March 31, 1998
(Unaudited) and August 31, 1997.......................................FS-7
Notes to Consolidated Balance Sheet......................................FS-8
wncnat6-e1/fs1.wpd FS-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC Housing Tax Credit Fund VI, L.P., Series 6
We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
VI, L.P., Series 6 (a California limited partnership) (a development-stage
enterprise) (the "Partnership") as of April 10, 1998. The balance sheet is the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on the balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the accompanying balance sheet referred to above presents
fairly, in all material respects, the financial position of WNC Housing Tax
Credit Fund VI, L.P., Series 6 (a California limited partnership) (a
development-stage enterprise) as of April 10, 1998 in conformity with generally
accepted accounting principles.
CORBIN & WERTZ
Irvine, California
April 16, 1998
FS-2
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
(A Development-Stage Enterprise)
BALANCE SHEET
April 10, 1998
ASSETS
Cash $ 1,000
Due from general partner (Note 3) 100
----------------
$ 1,100
================
LIABILITIES AND PARTNERS' CAPITAL
Commitments and contingencies (Note 2)
Partners' capital (Note 1):
General partner $ 100
Original limited partner 1,000
----------------
Total partners' capital 1,100
----------------
$ 1,100
================
See accompanying notes to balanc
FS-3
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P.
(A California Limited Partnership)
(A Development-Stage Enterprise)
NOTES TO BALANCE SHEET
April 10, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC Housing Tax Credit Fund VI, L.P., Series 6 (the pursuant to the laws of
California on March 6, 1997 and has not commenced operations. The Partnership
was formed to invest primarily in other limited partnerships which will own and
operate multi-family housing complexes that will qualify for low income housing
credits.
The general partner is WNC & Associates, Inc. (tWilfred N. Cooper, Sr.,
through the Cooper Revocable Trust, owns 70% of the outstanding stock of WNC &
Associates, Inc. John B. Lester, Jr. is the original limited partner of the
Partnership and owns, through the Lester Family Trust, 30% of the outstanding
stock of WNC & Associates, Inc. (see Note 2 below).
Allocations Under the Terms of the Partnership Agreement
The General Partner has a 1% interest in operating profits and losses, taxable
income and losses and cash available for distribution from the Partnership. The
limited partners will be allocated the remaining 99% of these items in
proportion to their respective investments.
After the limited partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership's Agreement of Limited Partnership) and the General Partner
has received a subordinated disposition fee (as described in Note 2 below), 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.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
The Partnership is offering up to 25,000 limited partnership units at $1,000 per
unit (the "Units"). The accompanying balance sheet does not include certain
Partnership legal, accounting, and other organization and offering costs paid
and to be paid by the General Partner and/or affiliates of the General Partner.
If the minimum offering amount of $1,400,000 is raised, the Partnership will be
required to reimburse the General Partner and/or its affiliates for such fees
out of the proceeds of the offering, up to certain maximum levels set forth
below. In the event the Partnership is unable to raise the minimum offering
amount, the General Partner will absorb all organization and offering costs.
FS-4
<PAGE>
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
(A California Limited Partnership)
(A Development-Stage Enterprise)
NOTES TO BALANCE SHEET - CONTINUED
April 10, 1998
NOTE 2 - COMMITMENTS AND CONTINGENCIES, continued
The reader of this financial statement should refer to the WNC Housing Tax
Credit Fund VI, L.P., Series 5 and Series 6 prospectus dated June 23, 1997, as
supplemented, for a more thorough description of the Partnership, and the terms
and provisions thereunder.
The Units are being offered by WNC Capital Corporation, a wholly-owned
subsidiary of the General Partner.
If the minimum offering amount of $1,400,000 is raised, the Partnership will be
obligated to the General Partner or affiliates for certain acquisition,
management and other fees as set forth below:
Acquisition fees up to 7.0%, as defined, of the gross proceeds from the
sale of Units.
Reimbursement for organizational, offering, dealer-manager, selling and
acquisition expenses advanced by the General Partner or affiliates on
behalf of the Partnership. These reimbursements plus all other
organizational and offering expenses inclusive of sales commissions and
dealer-manager fees will not exceed 14.5% of the gross proceeds.
An annual management fee equal to 0.2% of the invested assets (defined
by the Partnership's capital contributions plus its allocable
percentage of the permanent financing) of the limited partnerships.
A subordinated disposition fee in an amount equal to 1% of the sales
price of real estate sold. Payment of this fee is subordinated to the
limited partners receiving distributions equal to their capital
contributions and their return on investment (as defined in the
Partnership's Agreement of Limited Partnership) and is payable only if
services are rendered in the sales effort.
NOTE 3 - DUE FROM GENERAL PARTNER
The general partner's capital contribution was collected prior to the issuance
of this financial statement. Accordingly, such has been reflected as a
receivable on the accompanying balance sheet as of April 10, 1998.
NOTE 4 - INCOME TAXES
The Partnership will not incur a provision for income taxes since all income
taxes and losses will be allocated to the Partners for inclusion in their
respective returns.
FS-5
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
WNC & Associates, Inc.
We have audited the consolidated balance sheet of WNC & Associates, Inc. and
subsidiaries (the "Company") as of August 31, 1997. This consolidated balance
sheet is the responsibility of the Company's management. Our responsibility is
to express an opinion on this consolidated balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated balance sheet. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall consolidated balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the financial position of WNC & Associates,
Inc. and subsidiaries as of August 31, 1997 in conformity with generally
accepted accounting principles.
CORBIN & WERTZ
Irvine, California
November 5, 1997
FS-6
<PAGE>
WNC & ASSOCIATES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1998 (Unaudited) and August 31, 1997 (Audited)
ASSETS March 31, 1998 August 31, 1997
(Unaudited) (Audited)
Cash $128,815 $259,554
Fees receivable, net (Note 2) 548,917 179,646
Loans to property developers (Notes 3 and 6) 1,346,286 674,846
Offering costs advanced 154,437 518,079
Due from partnerships 1,642,871 1,958,933
Advances to partnerships 293,375 117,571
Deferred income taxes 45,127 180,527
Property and equipment, net (Note 4) 396,061 365,532
Other assets (Note 5) 327,954 318,785
------- -------
$4,883,843 $4,573,473
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Notes payable to bank (Note 6) $1,181,662 $600,000
Accounts payable and accrued expenses 111,427 416,684
Income taxes payable 52,590 335,427
Interest payable (Note 6) 0 16,200
Due to partnership 0 30,000
Accumulated losses of partnerships in excess of
investments 427,655 367,701
Capitalized lease obligations (Note 8) 68,465 98,469
------ ------
Total liabilities 1,841,799 1,864,481
Commitments and contingencies (Note 8)
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized, none issued
Common stock, no par value, 1,000,000 shares
authorized, 104,750 issued and outstanding in
1998 and 1997 177,677 177,677
Retained earnings 2,864,367 2,531,315
--------- ---------
Total stockholders' equity 3,042,044 2,708,992
--------- ---------
$4,883,843 $4,573,473
========== ==========
See accompanying notes to consolidated balance sheets
FS-7
wncnat6-e1wnc398fs.doc
<PAGE>
WNC & ASSOCIATES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEETS
March 31, 1998 (Unaudited) and August 31, 1997 (Audited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC & Associates, Inc. (a California corporation) (the "Company"), acts as a
corporate general partner and syndicator of both public and private placement
real estate partnerships (the "Partnerships"), which invest in apartment
complexes throughout the United States, the majority of which are government
assisted apartment complexes that qualify for low income housing tax credits.
The Company is the general partner of various Partnerships which own government
assisted housing apartment complexes (either directly or indirectly through
other partnership interests). The majority of the Partnerships' apartment
complexes are subsidized through various United States governmental low-income
housing programs. The Company's interest in the profits and losses of each
Partnership, as general partner, varies between one-quarter and five percent.
Principles of Consolidation
The accompanying consolidated balance sheet includes the accounts of the Company
and its wholly owned subsidiaries, WNC Capital Corporation and WNC Management,
Inc. All significant intercompany accounts and transactions have been eliminated
in consolidation.
WNC Capital Corporation was incorporated on February 23, 1994 and is registered
with the Securities and Exchange Commission as a broker/dealer in securities.
WNC Capital Corporation does not carry customers' accounts or hold securities
for the accounts of its customers. WNC Capital Corporation provides wholesaling
services to affiliates of the Company. WNC Management, Inc. was incorporated in
California on April 28, 1997 and is in the business of providing property
management services to government assisted apartment complexes. WNC Management,
Inc. provides management services to affiliates of the Company.
Interim Financial Statements
The financial information presented as of March 31, 1998 is prepared in
conformity with generally accepted accounting principles and such principles are
applied on a basis consistent with those reflected in the Annual Report for the
year ended August 31, 1997. The financial information presented herein as of
March 31, 1998 has been prepared by management without audit by independent
certified public accountants who do not express an opinion thereon. The balance
sheet presented as of March 31, 1998 has been derived from, but does not include
all the disclosures contained in the audited balance sheet as of August 31,
1997. The information furnished as of March 31, 1998 includes all adjustments
(consisting of only normal recurring accruals), which are, in the opinion of
management, necessary for a fair presentation of financial position as of the
interim date.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities, as well as
FS-8
<PAGE>
WNC & ASSOCIATES, INC. and SUBSIDIARIES
NOTES TO CONSOLIDATED BALANCE SHEETS - CONTINUED
March 31, 1998 (Unaudited) and August 31, 1997 (Audited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
disclosure of contingent assets and liabilities at the date of these
consolidated balance sheets. Actual results could materially differ from those
estimates.
Fair Value of Financial Instruments
The consolidated balance sheets contain financial instruments whereby the fair
market value of the financial instruments could be different than those recorded
on a historical basis in the accompanying consolidated balance sheets. The
Company's financial instruments consist of cash, fees receivable, loans to
property developers, offering costs advanced, due from and advances to
Partnerships, note payable to bank, accounts payable and due to Partnership.
Management believes that the carrying amounts of the Company's financial
instruments generally approximate their fair market values at March 31, 1998
(unaudited) and August 31, 1997 (audited). In the case of certain financial
instruments which are non-interest bearing, it was not practical to determine
fair market values due to the lack of a market for such financial instruments.
Concentration of Credit Risk
The Company, at times, maintains cash balances at certain financial institutions
in excess of the federally insured amounts.
Risks and Uncertainties
Net Capital Requirements
WNC Capital Corporation, as a broker/dealer, is required under provisions of
Rule 15c-1 of the Securities and Exchange Act of 1934 to maintain a ratio of
aggregate indebtedness to net capital, as defined, not to exceed 15 to 1. The
basic concept of the rule is liquidity, its objective being to require a broker
or dealer to have, at all times, sufficient liquid assets to cover its current
indebtedness. WNC Capital Corporation is also required to maintain a minimum net
capital of the greater of $5,000 or 6.67% of aggregate indebtedness, as defined.
At March 31, 1998 and August 31, 1997, WNC Capital Corporation had net capital
of $131,236 (unaudited) and $52,770 (audited), respectively, which are in excess
of the required minimum capital and which represent a ratio of aggregate
indebtedness to net capital of .97 to 1 (unaudited) and 3.60 to 1 (audited),
respectively.
Registration
WNC Capital Corporation must register with state departments which govern
compliance with securities laws in the states in which it does business. Various
regulatory requirements exist in each state with which WNC Capital Corporation
must comply. Because of the various compliance laws, there is a risk that one or
more regulatory authorities could determine that WNC Capital Corporation has not
complied with securities laws necessary for it to
FS-9
<PAGE>
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
conduct business in a given state. Regulatory actions, if ever taken, could have
a material adverse effect on WNC Capital Corporation's financial condition.
Fees Receivable
Fees receivable consist of syndication fees due from various Partnerships in
which the Company acts as general partner. Certain syndication fees are received
by the Company from the Partnerships as the limited partners make their capital
contributions to the Partnerships.
Loans to Property Developers
Loans to property developers are comprised of amounts loaned to or deposits made
to the general partners of limited partnerships in which the Partnerships have
or will have an equity interest. All such loans receivable are secured by the
respective general partner's interest in the limited partnerships. In the event
a property is not acquired, deposits may not be refunded to the Company.
Accordingly, such amounts are written off in the period determined by management
that a property will not be acquired and the deposit will not be refunded.
Offering Costs Advanced
Offering costs advanced represent funds that the Company advances to the
Partnerships for certain costs and expenses to produce the offering materials
and to qualify the Partnership interests for sale under the various state or
federal securities laws. Such advances are repaid to the Company out of the
Partnerships' initial capital proceeds and may be subject to limitations as
defined in the individual partnership agreements.
Due From Partnerships
Due from Partnerships consists of amounts advanced to Partnerships which invest
in apartment complexes. Such amounts are invested by the Partnerships in
apartment complexes as capital contributions pursuant to partnership agreements.
Such amounts are non-interest bearing and are due upon the Partnerships
collection of proceeds from sales of Partnership units. As March 31, 1998 and
August 31, 1997, the Company had amounts due from four and two Partnerships
which represent 82% (unaudited) and 72% (audited), respectively, of the total
due from Partnerships.
During the year ended August 31, 1997, the Company loaned $1,035,509 (audited)
to a Partnership which invested the funds into a property in Mississippi which
was under construction. During fiscal 1997, it was determined by the Company
that the property under construction had certain structural defects which
resulted in material cost overruns. Management determined the estimated possible
impairment of this loan to be $500,000 (audited). Accordingly, such was reserved
for during the year ended August 31, 1997 (see Note 8).
Organization Costs
Organization costs consist principally of legal and regulatory fees incurred to
incorporate WNC Capital Corporation and obtain the necessary approvals to
commence operations. These costs, totaling $14,797 at March
FS-10
<PAGE>
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
31, 1998 (unaudited) and August 31, 1997 (audited), are being amortized over a
five year period on a straight-line basis and are included in other assets in
the accompanying consolidated balance sheets.
Accumulated amortization at March 31, 1998 and August 31, 1997 was $12,096
(unaudited) and $10,369 (audited), respectively.
Property and Equipment
Property and equipment and improvements which extend the economic life of assets
are recorded at cost and are depreciated using the straight-line method over the
estimated useful life of the related asset, generally from three to five years.
Leasehold improvements and capitalized leases are amortized over the shorter of
the life of the lease or estimated useful life of the related asset.
Investments in Partnerships
The Company records its investment in the Partnerships using the equity method,
which recognizes the Company's proportionate share of income or loss as an
increase or decrease in the investment in the Partnership. As the Company acts
as the general partner, losses in excess of the Company's investment are
recorded as accumulated losses of Partnerships in excess of investments.
Revenue Recognition
Syndication fees, which represent fees for selecting, evaluating, structuring,
negotiating and closing Partnership investments in apartment complexes, are
recognized at the time the Partnership's initial capital offerings are completed
and the Company's contractual obligations have been fulfilled. Syndication fees
receivable that are scheduled to be collected more than one year from the
Company's year end are discounted to reflect their present value.
Management fees, which represent an annual free for providing administrative and
management services for Partnerships and their investments, are recognized as
earned and the extent that such fees are deemed to be collectible, generally on
a cash basis.
Commission revenue earned and related expenses associated with the operations of
WNC Capital Corporation are recorded when the related services are performed.
Income Taxes
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting For Income
Taxes." Under the asset and liability method of SFAS 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under SFAS 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized as income in the period that includes the
enactment date.
FS-11
<PAGE>
NOTE 2 - FEES RECEIVABLE
Aggregate annual future minimum collections as of March 31, 1998 and August 31,
1997 total $548,917 (unaudited) and $179,646 (audited), respectively. Both
amounts are all collectible in 1998.
At March 31, 1998, (unaudited), fees receivable from one limited partnership
represented 92% of total fees receivable. At August 31, 1997 (audited), fees
receivable from three Partnerships represented 45%, 32% and 19%, respectively,
of total fees receivable.
NOTE 3 - LOANS TO PROPERTY DEVELOPERS
Loans to property developers consist of the following:
March 31, 1998 August 31, 1997
(Unaudited) (Audited)
Notes receivable due November 1997, with
interest at the Company's borrowing rate $0 $150,300
Notes receivable past due, generally with
interest at the Company's borrowing rate secured by
the borrowers interest in the properties to be
constructed for which amounts are borrowed 0 524,546
Notes receivable due September 1998,
generally with interest at the Company's
borrowing rate secured by the borrowers'
interest in the properties to be
constructed for which amounts are borrowed.
Interest will be waived if the
acquisition is consummated by the loans' due
dates. 245,000 0
Note receivable with interest at 1% per annum.
Payments of interest and principal are to be
made from available cash flow. Loan matures
in the year 2037 and is secured the underlying
apartment complex. This loan will be
subordinated in June when the property obtains
additional financing from an
unrelated financial institution. 1,101,286 0
--------- -------------
$1,346,286 $674,846
========= =============
The Company's borrowing rate at March 31, 1998 (unaudited) and August 31, 1997
(audited) was 8.75%.
The Company has loans to two property developers at March 31, 1998 (unaudited)
which represent 82% and 11% respectively, of total loans to property developers.
The Company has loans to two property developers at August 31, 1997 (audited)
which represent 49% and 42%, respectively, of total loans to property
developers.
FS-12
<PAGE>
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
March 31, 1998 August 31, 1997
(Unaudited) (Audited)
Furniture, fixtures and computer software $481,466 $401,937
Leasehold improvements 61,801 61,801
Equipment subject to capital leases (see Note 8) 205,019 205,019
--------- -------
748,286 668,757
Less accumulated depreciation and amortization (352,225) (303,225)
--------- ---------
$396,061 $365,532
========= =========
NOTE 5 - OTHER ASSETS
Other assets consist of the following:
March 31, 1998 August 31, 1997
(Unaudited) (Audited)
Real estate joint venture costs $182,230 $182,230
Due from officers and stockholders (Note 8) 86,000 92,000
Deposits, advances and other 57,023 40,127
Organization costs 2,701 4,428
----- -----
$327,954 $318,785
======= =======
NOTE 6 - NOTES PAYABLE
On April 15, 1997, the Company renewed and changed the terms of its previous
line-of-credit with a bank. The renewal created two lines-of-credit. One
line-of-credit allows for borrowings of up to $1,500,000 at the bank's index
rate plus 0.25% and is unsecured. There were $1,181,662 (unaudited) and $600,000
(audited) of borrowings under this arrangement as of March 31, 1998 and August
31, 1997, respectively. The other line-of-credit allows for borrowings of up to
$2,500,000 at the bank's index rate plus 0.25% and is secured by assignment of
the Company's interest in Partnership properties to be acquired for which
amounts are borrowed. This $2,500,000 line-of-credit is personally guaranteed by
the majority stockholder of the Company. There were no amounts outstanding under
this arrangement as of March 31, 1998 (unaudited) and August 31, 1997 (audited).
The bank's index rate was 8.75% at March 31, 1998 (unaudited) and August 31,
1997 (audited), respectively.
FS-13
<PAGE>
NOTE 7 - INCOME TAXES
The deferred tax liability of $45,127 (unaudited) and $180,527 (audited) as of
March 31, 1998 and August 31, 1997, respectively, represents primarily the
difference between the treatment of the reserve for an advance due from a
partnership (see Note 1) for financial statement purposes and for tax return
purposes.
NOTE 8- COMMITMENTS AND CONTINGENCIES
Leases
The Company leases office space, automobiles and furniture under operating
leases and certain equipment under capital leases. Aggregate monthly capital
lease payments amount to $3,631 (audited) as of August 31, 1997. The leases are
non--cancelable and require future minimum lease payments as of August 31, 1997
(audited) as follows:
Capitalized Operating
Leases Leases
Fiscal year:
1998 $52,089 $141,730
1999 30,504 131,716
2000 14,059 38,811
2001 12,564 15,132
2002 5,235 8,827
----- -----
Total minimum lease payments $114,451 $336,216
Less amounts representing interest at rates
ranging from 9.5% to 12.5% (15,982)
--------
Present value of future minimum capitalized
lease obligations $98,469
========
Litigation
The Company serves as a limited and general partner to a certain limited
partnership. The Company loaned to the limited partnership $1,601,000
(unaudited) and $1,035,509 (audited), at March 31, 1998 and August 31, 1997,
respectively, for development of the property. The developed property incurred
significant cost overruns due to defects in construction. As a result of such
defects, the Company removed and replaced the local general partner. In this
capacity, construction was completed by the Company. The limited partnership has
filed suit against the architects and contractors. There have been various
claims filed against the limited partnership and certain liens placed on the
property. The ultimate outcome of the aforementioned actions are unknown at this
time. The Company has reserved $500,000 of its due from partnerships in
connection with various claims filed. Management of the Company does not believe
that the additional effect on the consolidated balance sheet upon the ultimate
disposition of the aforementioned actions will be material.
Equity Participation Agreement
The Company has an equity participation agreement with a key officer of the
Company and his spouse. This agreement provided for an investment of $80,000 by
the Company to acquire a 50% interest in certain real property owned by the key
officer and his spouse, which was later converted into rental property. Pursuant
to terms of this agreement, all income and loss arising from the operations of
the rental property, including the
FS-14
<PAGE>
NOTE 8- COMMITMENTS AND CONTINGENCIES, continued
allocation of income and losses upon a sale or refinance shall be allocated
50% to the Company and 50% to the key officer and his spouse.
Due From Officers and Stockholders
In April 1993, an officer and the Company's majority stockholder borrowed
$55,000. This note bears interest at 7.5% per annum. The maturity date of the
note was extended along with accrued interest to March 31, 1999. The note,
together with accrued interest, is included in other assets in the accompanying
consolidated balance sheet.
During 1994, an officer and stockholder of the Company borrowed $25,000. This
note bears interest at 7.5% per annum. The maturity date of the note was
extended along with accrued interest to March 31, 1999. The note, together with
accrued interest, is included in other assets in the accompanying consolidated
balance sheet.
FS-15
<PAGE>
EXHIBIT A
PRIOR PERFORMANCE TABLES
The tables set forth below present financial information with respect
to programs which were sponsored by the Sponsor. Each of these programs is
considered to have investment objectives similar to those of the Fund in that
they each own interests in local limited partnerships which own properties
generating low income housing credits or, in the case of Shelter Resource Fund,
benefitting from some other form of Government Assistance. However, the
principal investment objective of Shelter Resource Fund was to provide income
tax losses which its investors could use to offset income from other sources.
None of these tables is covered by the reports of independent public accountants
set forth in this document.
For additional information as to the investment objectives and policies
of such prior programs see "Prior Performance Summary." Additional information
concerning prior performance is included in Part II of the Registration
Statement of the Fund and for the public programs in the Form 10-K annual
reports. Copies of these 10-K Forms are available to any investor upon request
to the Sponsor. Any such request should be directed to 3158 Redhill Avenue,
Suite 120, Costa Mesa, California 92626.
The purpose of the tables is to provide information on the prior
performance of these partnerships so as to permit a prospective purchaser of the
Units to evaluate the experience of the Sponsor in sponsoring such limited
partnerships. The tables consist of:
Table I Experience in Raising and Investing Funds
Table II Compensation to Sponsor
Table III Operating Results of Prior Programs
Table V Sales or Disposals of Properties
Table IV has been omitted since none of the prior programs which were
sponsored by the Sponsor have completed operations.
Definitions
The following terms used in the prior performance tables have the following
meanings:
A-1
<PAGE>
"Acquisition Cost" includes all costs related to the acquisition of partnership
interests, including equity contributions, acquisition and selection fees
payable to the general partners and other fees and expenses incident to the
acquisition of partnership interests.
"Capital Contributions" represents the contributions by investors in the
prior partnerships.
"GAAP" means generally accepted accounting principles.
"Months to Invest 90% of Amount Available for Investment" means the length of
time, in months, from the offering date to the date of the closing of properties
which, in the aggregate, represented the investment commitment of 90% of the
amount available for investment.
"Percent leverage" means mortgage financing divided by total acquisition costs.
IT SHOULD NOT BE ASSUMED THAT INVESTORS IN THIS OFFERING WILL
EXPERIENCE RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN THE
PARTNERSHIPS DESCRIBED IN THE FOLLOWING TABLES. INVESTORS WILL NOT HAVE ANY
INTEREST IN ANY OF THE PARTNERSHIPS DESCRIBED IN THE TABLES OR IN ANY OF THE
PROPERTIES OWNED BY THE LOCAL LIMITED PARTNERSHIPS IN WHICH THOSE PARTNERSHIPS
HAVE INVESTED AS A RESULT OF THE ACQUISITION OF UNITS.
A-2
<PAGE>
TABLE I
TABLE I provides information regarding the raising and investing of funds by
partnerships sponsored by the Sponsor which raised funds during the three years
ended December 31, 1997. The table presents the aggregate dollar amount of the
offering, the percentage of dollars raised which were used to pay offering
costs, establish reserves and acquire investments, as well as information
regarding percent of leverage and the timing for both raising and investing
funds. The information concerns investor capital contributions as the sole
source of funds for investment and excludes the nominal capital contributions by
the general partners.
A-3
<PAGE>
<TABLE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(January 1, 1995 - December 31, 1997)
HTCF IV-2 % CHTC IV-4 % HTCF V-3 %
<S> <C> <C> <C>
Dollar amount offered $20,000,000 $25,000,000 $25,000,000
=========== ===========
Dollar amount raised 15,241,000 100.0 11,099,000 100.0 17,559,000 100.0
Less offering expenses:
Selling commissions &
discounts paid to non-affialiates 1,000,500 6.6 554,000 4.9 1,058,700 6.0
Oganizational expenses (a) 969,900 6.4 827,000 7.5 1,062,900 6.1
Reserves 241,600 1.7 387,000 3.5 349,000 2.0
------- --- ------- --- ----------- ---
Percent invested as of
close of offering 13,029,000 85.3 9,331,000 84.1 15,088,400 85.9
Acquisition costs:
Prepaid items and fees
related to purchase of
property 136,000 0.9 80,000 0.7 80,000 0.5
Cash down payments (b) 11,835,000 77.5 8,590,000 77.4 14,000000 79.7
Acquisition fees 1,058,000 6.9 661,000 6.0 1,008,400 5.7
Other -.- -.- - -.-
------- --- ------- --- ----- ---
Total acquisition cost 13,029,000 85.3 9,331,000 84.1 15,088,400 85.9
Percentage leverage (mortgage
financing divided by total
acquisition cost)
66% 60% 70%
Date offering began 9/94 9/94 7/95
Length of offering (months) 13 12 11
Months to invest 90% of
amount available for
investment (measured from
beginning of offering) 17 15 21
- -------------------------------
<FN>
(a) Consists of estimated legal, accounting, printing and other
organization and offering expenses paid by the partnership directly
or indirectly through the sponsor.
(b) Represents the capital contributions of the partnership paid or the
required payments to be paid to the local limited partnerships.
(c) Selling commissions were first paid to an affiliated broker-dealer
which reallowed all selling commissions to non-affiliates.
</FN>
</TABLE>
A-4
UNAUDITED
<PAGE>
<TABLE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(January 1, 1995 - December 31, 1997)
HTCFV-4 (d) % CHTC IV-5 (d) % HTCF VI-5 %
(d)(e)
<S> <C> <C> <C>
Dollar amount offered $25,000,000 $25,000,000 $25,000,000
=========== =========== ===========
Dollar amount raised 21,920,450 100.0 6,253,000 100.0 9,795,400 100.0
Less offering expenses:
Selling commissions & discounts
paid to non-affiliates (c) 1,579,000 7.2 296,000 4.7 650,500 6.6
Organizational expenses (a) 1,348,000 6.1 475,000 7.6 607,000 6.2
Reserves 1,485,450 6.8 1,462,500 23.4 6,998,900 71.5
--------- --- --------- ---- --------- ----
Percent invested as of
close of offering 17,508,000 79.9 4,019,500 64.3 1,539,000 15.7
Acquisition costs:
Prepaid items and fees
related to purchase of
property 129,000 0.6 8,000 0.1 37,000 0.4
Cash down payments (b) 15,807,000 72.1 3,689,500 59.1 837,000 8.5
Acquisition fees 1,572,000 7.2 322,000 5.1 665,000 6.8
Other --- -.- ---- -.- --- -.-
--------- --- --------- --- ------- ---
Total acquisition cost 17,508,000 79.9 4,019,500 64.3 1,539,000 15.7
Percentage leverage (mortgage
financing divided by total
acquisition cost) 54% 49%
Date offering began 7/96 11/95 6/97
Length of offering (months) 13 7 (e)
Months to invest 90% of
amount available for
investment (measured from 12 22 NA
beginning of offering)
- -------------------------------
<FN>
(a) Consists of estimated legal, accounting, printing and other
organization and offering expenses paid by the partnership directly
or indirectly through the sponsor.
(b) Represents the capital contributions of the partnership paid or the
required payments to be paid to the local limited partnerships.
(c) Selling commissions were first paid to an affiliated broker-dealer
which reallowed all selling commissions to non-affiliates.
(d) Not all properties have been identified as of December 31, 1997.
(e) The offering was continuing as of December 31, 1997.
</FN>
</TABLE>
A-5
UNAUDITED
<PAGE>
<TABLE>
TABLE I
EXPERIENCE IN RAISING AND INVESTING FUNDS
(January 1, 1995 - December 31, 1997)
P R I V A T E O F F E R I N G S
One Three
Partnership Partnership
Organized in Organized in
1995 % 1997(d) %
------------ --- ------------ --
<S> <C> <C>
Dollar amount offered $15,000,000 $67,000,000
=========== ===========
Dollar amount raised 15,000,000 100.0 66,859,000 100.0
Less offering expenses:
Selling commissions & discounts
paid to non-affiliates (c) 337,500 2.2 1,517,000 2.3
Organizational expenses (a) 337,500 2.2 1,488,000 2.2
Reserves 591,000 4.0 1,707,000 2.5
------- --- --------- ---
Percent invested as of
close of offering 13,734,000 91.6 62,147,000 93.0
Acquisition costs:
Prepaid items and fees
related to purchase of
property 150,000 1.0
Cash down payments (b) 12,984,000 86.6 58,599,000 87.7
Acquisition fees 600,000 4.0 2,742,000 4.1
Other ----- -.- 806,000 1.2
---------- --- ------- ---
Total acquisition cost 13,734,000 91.6 62,147,000 93.0
Percent leverage (mortgage
financing divided by total
acquisition cost) 60% 55%
Date offering began 3/95 Various
Length of offering (months) 7 Various
Months to invest 90% of
amount available for
investment (measured from
beginning of offering) 11 Various
- ------------------------------
<FN>
(a) Consists of estimated legal, accounting, printing and other
organization and offering expenses paid by the partnership directly
or indirectly through the sponsor.
(b) Represents the capital contributions of the partnership paid or the
required payments to be paid to the local limited partnerships.
(c) Selling commissions were first paid to an affiliated broker-dealer
which reallowed all selling commissions to non-affiliates.
(d) Not all properties have been identified as of December 31, 1997.
</FN>
</TABLE>
A-6
UNAUDITED
<PAGE>
TABLE II
TABLE II presents information concerning the cumulative compensation paid to the
Sponsor for the period from January 1, 1995 to December 31, 1997 with respect to
programs presented in TABLE I and on an aggregate basis with respect to all
other programs which have been sponsored by the Sponsor.
A-7
<PAGE>
<TABLE>
TABLE II
COMPENSATION TO SPONSOR
(January 1, 1995 - December 31, 1997)
HTCF V-3 HTCF V-4 CHTC IV-5 HTCF VI-5
________ _________ _________ _________(b)
<S> <C> <C> <C> <C>
Date offering commenced 7/95 7/96 11/95 6/97
Dollar amount raised $17,559,000 $21,920,450 $6,253,000 $9,795,400
Amount paid to sponsor from
proceeds of offering: (a)
Underwriting fees 0 0 0 0
Acquisition fees 1,008,400 1,272,416 322,000 665,000
Syndication fee 0 0 0 0
Other 0 219,200 7,200 196,000
Dollar amount of cash generated
from (used in) operations before
deducting payments to sponsor 142,606 78,689 231,448 (2,873)
Amount paid to sponsor from
operations: 0 0 0 0
Property management fees 110,000 30,000 10,000 0
Partnership management fees 0 0 0 0
Reimbursements 0 0 0 0
Leasing commissions
Dollar amount of property sales and
refinancing before deducting payments
to sponsor: 0 0 0 0
Cash 0 0 0 0
Notes
Amount paid to sponsor from property
sales and refinancing:
Real estate commissions 0 0 0 0
Incentive fee 0 0 0 0
Other 0 0 0 0
- ------------------------------------
<FN>
(a) Represents amounts paid to sponsor which were not reallowed to
non-affiliates.
(b) The offering was continuing as of December 31, 1997.
</FN>
</TABLE>
A-8
UNAUDITED
<PAGE>
<TABLE>
TABLE II
COMPENSATION TO SPONSOR
(January 1, 1995 - December 31, 1997)
HTCF IV-2 CHTC IV-4 Other Public
Programs (b)
<S> <C> <C> <C>
Date offering commenced 9/94 9/94 1994 and prior
Dollar amount raised $15,241,000 $11,099,000 N/A
Amount paid to sponsor from
proceeds of offering: (a)
Underwriting fees 0 0 0
Acquisition fees 1,058,000 661,000 0
Syndication fee 0 0 0
Other 0 12,800 0
Dollar amount of cash generated
from (used in) operations before
deducting payments to sponsor 6,000 292,444 295,102
Amount paid to sponsor from
operations
Property management fees 0 0 0
Partnership management fees (c) 161,000 105,000 581,000
Reimbursements 0 0 0
Leasing commissions 0 0 0
Dollar amount of property sales and
refinancing before deducting
payments to sponsor:
Cash 0 0 51,407
Notes 0 0 0
Amount paid to sponsor from property
sales and refinancing:
Real estate commissions 0 0 0
Incentive fee 0 0 0
Other 0 0 0
- ------------------------------------
<FN>
(a) Represents amounts paid to sponsor which were not reallowed to
non-affiliates.
(b) Included 8 public programs.
(c) Partnership management fees were paid from partnership reserves in the
instances where amounts paid to sponsor from operations
exceed dollar amount of cash generated from operations.
</FN>
</TABLE>
A-9
UNAUDITED
<PAGE>
<TABLE>
TABLE II
COMPENSATION TO SPONSOR
(January 1, 1995 - December 31, 1997)
-------------------------P R I V A T E O F F E R I N G S---------------------
One Three All Other
Partnership Partnerships Private
Organized in Organized in Private
1995 1997 Partnerships(a)
<S> <C> <C>
Date offering commenced 3/95 Various 1994 & prior
Dollar amount raised $15,000,000 $66,859,433 N/A
Amount paid to sponsor from
proceeds of offering: (c)
Underwriting fees 0 0 0
Acquisition fees 600,000 2,742,000 0
Syndication fee 0 0 0
Other 0 807,000 0
Dollar amount of cash generated
from (used in) operations before
deducting payments to sponsor 211,081 (3,543) N/A
Amount paid to sponsor from operations:
Property management fees 0 0 0
Partnership management fees (b) 30,000 0 326,000
Reimbursements 0 0 0
Leasing commissions 0 0 0
Dollar amount of property sales and
refinancing before deducting
payments to sponsor:
Cash 0 0 0
Notes 0 0 0
Amount paid to sponsor from property
sales and refinancing:
Real estate commissions 0 0 0
Incentive fee 0 0 0
Other 0 0 0
- ------------------------------------
<FN>
(a) Includes 45 private programs.
(b) Partnership management fees were paid from partnership reserves in the
instances where amounts paid to sponsor from operations
exceed dollar amount of cash generated from operations.
(c) Represents amounts paid to sponsor which were not reallowed to non-
affiliates
</FN>
</TABLE>
A-10
UNAUDITED
<PAGE>
TABLE III
TABLE III presents the operating results for all partnerships sponsored by the
Sponsor which closed during the five years ended December 31, 1997. The prior
partnerships are structured as investment partnerships acquiring interests in
operating partnerships. The investment partnerships account for such investments
using the equity method of accounting which recognizes each of such
partnership's pro rata share of the operating partnership's total income or
loss. Revenues generated by the investment partnerships consist substantially of
interest on short-term investments. This interest income generally decreases
after the initial two years of operations as funds available for investment
decrease. This decrease in funds arises from the investment partnership's
payments of capital contributions due.
The prior public partnerships, one of the prior private partnerships closed in
1994 and all of the prior private partnerships closed in 1995 and 1997 report on
a GAAP basis and, accordingly, "Cash generated (or used) from operations" is per
each program's Statement of Cash Flows. The remaining prior private programs
maintain their books and records on the tax basis of accounting and not on a
GAAP basis, and "Cash generated (or used) from operations" for such programs is
per their respective books and records. The significant difference is that
depreciation expense on a tax basis as compared to a GAAP basis is greater in
the early years of operations.
Other information included in the table includes data on cash generated from
operations and tax and cash distribution information per $1,000 invested,
including Tax Credit allocations.
A-11
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
/-------------------------------------- HTCF III ---------------------------\
1992(a) 1993 1994 1995 1996 1997
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Gross revenue $ 45,236 $ 137,116 $ 87,521 $ 57,741 $ 16,756 $11,158
Less:
Operating expenses 13,036 120,054 313,134 314,320 394,781 320,565
Interest 679 0 0 0 0 0
Depreciation and amortization 3,394 24,478 45,724 47,176 47,176 47,248
Equity in losses in local partnerships 68,933 779,251 1,323,487 1,312,540 1,406,638 1,230,014
--------- --------- --------- ----------- --------- ---------
Net income (loss) - GAAP basis (40,806) (786,667) (1,594,824) (1,616,295) (1,831,839) (1,586,669)
Taxable income (loss) from operations (36,895) (850,051) (1,594,118) (1,715,667) (1,820,369) (1,877,413)
Cash generated (used) from operations 53,333 (393,615) (38,224) (16,170) (73,931) (135,974)
Cash generated from sales 0 0 0 0 0 0
Cash generated from refinancing 0 0 0 0 0 0
Less: Cash distributions to investors 0 0 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items 53,333 (393,615) (38,224) (16,170) (73,931) (135,974)
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (b)(9) (b)(77) (105) (113) (120) (124)
From gain on sale 0 0 0 0 0 0
Federal tax credits (b)4 (b)68 119 152 157 157
California tax credits 0 0 0 0 0 0
Cash distributions to investors 0 0 0 0 0 0
Amount (in percentage terms)
remaining invested in program
properties at end of year
(original total acquisition costs of
properties retained divided by the
total original acquisition costs
of all properties 100 100 100 100 100 100
- --------------------------------
<FN>
(a) Partial year of operations.
(b) Tax losses and tax credits allocated to an investor in the first
two years are dependent upon an investor's entry date. Amount
shown is that allocated to initial investors.
</FN>
</TABLE>
A-12
UNAUDITED
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
/------------------------------------ CHTC III ------------------------------\
1993(a) 1994 1995 1996 1997
------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross revenue $ 22,885 $ 156,271 $ 145,959 $ 74,947 $ 57,279
Less:
Operating expenses 7,204 86,306 193,916 214,737 204,259
Interest 0 0 0 0 0
Depreciation and amortization 0 41,757 57,466 57,933 58,596
Equity in losses in local partnerships 33,260 352,511 1,155,114 1,132,216 1,028,617
------ --------- --------- --------- ---------
Net income (loss) - GAAP basis (17,579) (324,303) (1,260,537) (1,329,939) (1,234,193)
Taxable income (loss) from operations (30,475) (388,247) (1,279,818) (1,523,381) (1,307,843)
Cash generated (used) from operations (9,831) (225,005) 437,400 (143,337) (6,960)
Cash generated from sales 0 0 0 0 0
Cash generated from refinancing 0 0 0 0 0
Less: Cash distributions to investors 0 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items (9,831) (225,005) 437,400 (143,337) (6,960)
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (b)(6) (b)(28) (70) (84) (72)
From gain on sale 0 0 0 0 0
Federal tax credits (b)6 (b)32 95 112 113
California tax credits 0 (b)48 85 85 66
Cash distributions to investors 0 0 0 0 0
Amount (in percentage terms)
remaining invested in program
properties at end of year
(original total acquisition costs
of properties retained divided by
total original acquisition costs
of all properties) 100 100 100 100 100
- --------------------------------
<FN>
(a) Partial year of operations.
(b) Tax losses and tax credits allocated to an investor in the first two
years are dependent upon an investor's entry date. Amount
shown is that allocated to initial investors.
</FN>
</TABLE>
A-13
UNAUDITED
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
/-----------------------------HTCF IV-1-------------------------------\
1994(a) 1995 1996(c) 1997(c)
------- ---- ------- -------
<S> <C> <C> <C> <C>
Gross revenue $ 85,261 $ 66,645 $ 51,654 $ 26,663
Less:
Operating expenses 47,149 53,536 51,467 54,302
Interest 0 0 0 0
Depreciation and amortization 20,797 30,926 31,032 31,122
Equity in losses in local partnerships 413,316 727,986 837,908 776,599
------- --------- ------- -------
Net income (loss) - GAAP basis (396,001) (745,803) (868,753) (835,360)
Taxable income (loss) from operations (417,185) (874,044) (982,635) (1,094,717)
Cash generated (used) from operations 46,649 19,058 6,440 (57,639)
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
Less: Cash distributions to investors 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items 46,649 19,058 6,440 (57,639)
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (b)(59) (87) (97) (108)
From gain on sale 0 0 0 0
Federal tax credits (b)32 101 136 143
California tax credits 0 0 0 0
Cash distributions to investors 0 0 0 0
Amount (in percentage terms)
remaining invested in program
properties at end of year
(original total acquisition costs
of properties retained divided
by total original acquisition costs
of all properties) 100 100 100 100
- --------------------------------
<FN>
(a) Partial year of operations.
(b) Tax losses and tax credits allocated to an investor in the first year
are dependent upon an investor's entry date. Amount shown is that
allocated to initial investor.
(c) Based on unaudited information as final audit not yet completed.
</FN>
</TABLE>
A-14
UNAUDITED
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
/-------------------------HTCT IV-2----------------------\
1994(a) 1995 1996 1997
------------- ------------ ----- -------
<S> <C> <C> <C> <C>
Gross revenue $ 3,475 $179,927 $ 161,610 $ 65,717
Less:
Operating expenses 27,269 57,965 60,777 66,517
Interest 0 39,148 5,350 0
Depreciation and amortization 1,638 26,208 40,109 40,823
Equity in losses in local partnerships 240,698 628,521 628,631 737,115
--------- --------- ------- -------
Net income (loss) - GAAP basis (266,130) (571,915) (573,257) (769,084)
Taxable income (loss) from operations (228,979) (702,048) (641,050) (928,847)
Cash generated (used) from operations (25,518) 62,653 60,895 52,765
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
Less: Cash distributions to investors 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items (25,518) 62,653 60,895 52,765
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (b)(82) (b)(58) (41) (59)
From gain on sale 0 0 0 0
Federal tax credits (b)21 (b)70 105 113
California tax credits 0 0 0 0
Cash distributions to investors 0 0 0 0
Amount (in percentage terms)
remaining invested in program
properties at end of year
(original total acquisition costs
of properties retained divided by
total original acquisition costs
of all properties) 100 100 100 100
- --------------------------------
<FN>
(a) Partial year of operations.
(b) Tax losses and tax credits allocated to an investor in the first two
years are dependent upon an investor's entry date. Amount shown is
that allocated to initial investor.
</FN>
</TABLE>
A-15
UNAUDITED
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
/----------------------CHTC IV-4-----------------------\
1994(a) 1995 1996 1997
------- ----- ----- ----
<S> <C> <C> <C> <C>
Gross revenue $ 1,613 $ 160,888 $ 147,254 $ 65,307
Less:
Operating expenses 13,399 41,325 51,488 45,130
Interest 0 79,853 0 0
Depreciation and amortization 0 16,056 24,865 25,419
Equity in (income) losses in local partnerships (2,212) 100,224 528,288 806,639
------- --------- --------- -------
Net income (loss) - GAAP basis (9,574) (76,570) (457,387) (811,881)
Taxable (income) loss from operations (11,786) (60,108) (566,147) (778,340)
Cash generated (used) from operations 1,602 26,322 95,766 110,356
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
Less: Cash distributions to investors 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items 1,602 26,322 95,766 110,356
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (b)(12) (b)(9) (49) (69)
From gain on sale 0 0 0 0
Federal tax credits 0 (b)18 64 86
California tax credits 0 (b)53 70 90
Cash distributions to investors 0 0 0 0
Amount (in percentage terms)
remaining invested in program
properties at end of year
(original total acquisition costs
of properties retained divided by
total original acquisition costs
of all properties) 100 100 100 100
- --------------------------------
<FN>
(a) Partial year of operations.
(b) Tax losses and tax credits allocated to an investor in the first two
years are dependent upon an investor's entry date. Amount shown is
that allocated to initial investors.
</FN>
</TABLE>
A-16
UNAUDITED
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
/--------------------------HTCF V-3----------------------\
1995(a) 1996 1997
------- ---- -------
<S> <C> <C> <C>
Gross revenue $ 3,487 $ 209,940 $ 121,703
Less:
Operating expenses 12,379 69,130 66,884
Interest 0 0 0
Depreciation and amortization 454 23,436 34,605
Equity in losses in local partnerships 343 185,071 789,697
----- ------- -------
Net income (loss) - GAAP basis 9,689 (67,697) (769,483)
Taxable income (loss) from operations 2,522 (128,969) (1,060,301)
Cash generated (used) from operations 3,402 34,885 102,215
Cash generated from sales 0 0 0
Cash generated from refinancing 0 0 0
Less: Cash distributions to investors 0 0 0
Cash generated (deficiency) after cash
distributions and special items 3,402 34,885 102,215
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (b)2 (b)(26) (58)
From gain on sale 0 0 0
Federal tax credits (b)3 (b)62 84
California tax credits 0 0 0
Cash distributions to investors (c)5 0 0
Amount (in percentage terms)
remaining invested in program
properties at end of year
(original total acquisition costs of
properties retained divided by total
original acquisition costs of all
properties) 100 100 100
- --------------------------------
<FN>
(a) Partial year of operations.
(b) Tax income (losses) and tax credits allocated to an investor in
the first two years are dependent upon an investor's entry date.
Amount shown is that allocated to initial investors.
(c) This amount was distributed in 1995 by the general partner.
</FN>
</TABLE>
A-17
UNAUDITED
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
/-------HTCF V-4---------\ /-------CHTC IV-5-------\ HTCF VI-5
1996 (a) 1997(c) 1996(a) 1997 1997(a)
--------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Gross revenue $ 15,529 $ 225,609 $ 54,573 $ 78,454 $ 10,012
Less:
Operating expenses 30,183 68,263 1,393 25,517 7,843
Interest 0 0 0 0 0
Depreciation and amortization 2,851 42,034 7,753 11,352 2,256
Equity in losses (income) in local partnerships 29,329 225,000 (15) 146,305 (2,395)
------ -------- ----- ------- -------
Net income (loss) - GAAP basis (46,834) (109,688) 45,442 (104,720) 2,308
Taxable income (loss) from operations (23,166) (97,159) 45,427 (84,003) 9,308
Cash generated (used) from operations 4,010 44,679 159,328 (39,216) (2,873)
Cash generated from sales 0 0 0 0 0
Cash generated from refinancing 0 0 0 0 0
Less: Cash distributions to investors 0 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items 4,010 44,679 159,328 (39,216) (2,873)
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (b)5 (b)(4) (b)10 (13) (b)(1)
From gain on sale 0 0 0 0 0
Federal tax credits (b)14 19 0 31 0
California tax credits 0 0 0 67 0
Cash distributions to investors 0 0 0 0 0
Amount (in percentage terms)
remaining invested in program
properties at end of year
(original total acquisition costs
of properties retained divided by
total original acquisition costs
of all properties) 100 100 100 100 100
- --------------------------------
<FN>
(a) Partial year of operations.
(b) Tax income (losses) and tax credits allocated to an investor in
the first two years are dependent upon an investor's entry date.
Amount shown is that allocated to initial investors.
(c) Based on unaudited information as final audit not yet completed.
</FN>
</TABLE>
A-18
UNAUDITED
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
FOUR PRIVATE
/------------------OFFERINGS CLOSED DURING 1993------------------------\
1993(a) 1994 1995 1996 1997
------ ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Gross revenue $ 130,878 $ 332,016 $ 242,791 $ 147,841 $ 85,512
Less:
Operating expenses 2,834 16,958 10,944 23,613 27,073
Interest 6,111 14,094 14,427 0 4,091
Depreciation and amortization 13,808 12,262 15,457 13,863 13,863
Equity in losses in local partnerships 435,734 959,693 878,965 805,025 670,896
------- ------- ------- ------- -------
Net income (loss) - GAAP basis (327,609) (670,691) (677,002) (694,660) (630,411)
Cash generated (used) from operations 121,645 302,422 6,094 124,228 55,638
Cash generated from sales 0 0 0 0 0
Cash generated from refinancing 0 0 0 0 0
Less: Cash distributions to investors 0 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items 121,645 302,422 6,094 124,228 55,638
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (b)(48) (113) (112) (114) (105)
From gain on sale 0 0 0 0 0
Federal tax credits 49 101 126 130 130
California tax credits 46 46 46 27 0
Cash distributions to investors 0 0 0 0 0
Amount (in percentage terms)
remaining invested in program
properties at end of year
(original total acquisition costs of
properties retained divided by total
original acquisition costs of all
properties) 100 100 100 100 100
- --------------------------------
<FN>
(a) Partial year of operations.
(b) Tax loss and tax credits allocated to an investor in the first year
are dependent upon an investor's entry date. Amount shown is that
allocated to initial investors.
</FN>
</TABLE>
A-19
UNAUDITED
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
TWO PRIVATE
/----------------------OFFERINGS CLOSED DURING 1994----------------------\
1994(a) 1995 1996 1997
------- ---- ---- ----
<S> <C> <C> <C> <C>
Gross revenue $ 7,619 $ 112,058 $ 67,700 $ 23,771
Less:
Operating expenses 111,523 36,529 54,699 55,471
Interest 0 0 0 0
Depreciation and amortization 1,305 12,906 37,940 37,490
Equity in losses in local partnerships 129,352 861,238 1,285,203 1,002,071
--------- --------- ----------- ---------
Net income (loss) - Tax basis for WNC Tax Credits XXX; (234,561) (798,615) (1,310,142) (1,071,261)
GAAP basis for ITC I
Cash generated (used) from operations (39,826) (61,055) 13,001 (47,895)
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
Less: Cash distributions to investors 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items (39,826) (61,055) 13,001 (47,895)
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (24) (101) (158) (89)
From gain on sale 0 0 0 0
Federal tax credits 11 74 126 139
Federal historic rehabilitation credits 41 31 0 0
California tax credits 0 0 0 0
Cash distributions to investors 0 0 0 0
Amount (in percentage terms) remaining
invested in program properties at end of
year(original total acquisition costs
of properties retained divided by total
original acquisition costs of all properties) 100 100 100 100
- --------------------------------
(a) Partial year of operations.
</TABLE>
A-20
UNAUDITED
<PAGE>
<TABLE>
TABLE III
OPERATING RESULTS OF PRIOR PROGRAMS
ONE PRIVATE THREE PRIVATE
---OFFERING CLOSED DURING 1995--- ---OFFERINGS CLOSED DURING 1997---
1995 1996 1997 1997(a)(c)
------------ ----- ------- ----------
<S> <C> <C> <C> <C>
Gross revenue $ 58,335 $ 138,052 $ 24,580 $ 143,148
Less:
Operating expenses 126,526 102,922 129,739 49,871
Interest 0 0 0 231,390
Depreciation and amortization 6,099 32,616 49,364 661,316
Equity in losses in local partnerships 161,903 453,545 739,326 703,774
-------- -------- ------- -------
Net income (loss) - GAAP basis (236,193) (451,031) (893,849) (1,503,203)
Taxable (income) loss from operations (146,497) (716,986) (1,232,653) (1,733,726)
Cash generated (used) from operations (74,596) (44,733) 193,726 (3,543)
Cash generated from sales 0 0 0 0
Cash generated from refinancing 0 0 0 0
Less: Cash distributions to investors 0 0 0 0
Cash generated (deficiency) after cash
distributions and special items (74,596) (44,733) 193,726 (3,543)
TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
Federal income tax results
Ordinary income (loss)
From operations (b)(10) (48) (81) (b)(30)
From gain on sale 0 0 0 0
Federal tax credits (b)7 59 129 22
California tax credits 0 0 0 8
Cash distributions to investors 0 0 0 0
Amount (in percentage terms)
remaining invested in program
properties at end of year
(original total acquisition costs of
properties retained divided by
total original acquisition costs
of all properties) 100 100 100 100
- --------------------------------
<FN>
(a) Partial year of operations.
(b) Tax loss and tax credits allocated to an investor in the first year
are dependent upon an investor's entry date. Amount shown is that
allocated to initial investors.
(c) Based on unaudited information as final audit not yet completed.
</FN>
</TABLE>
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UNAUDITED
<PAGE>
TABLE V
TABLE V presents the sales or disposals of property by partnerships sponsored by
the Sponsor during the three years ended December 31, 1997. The two sales were
in Shelter Resource Fund which is presented in TABLE II under other public
programs.
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<PAGE>
<TABLE>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
(January 1, 1995 - December 31, 1997)
SHELTER RESOURCE FUND
FOLSOM GARDEN I FOLSOM GARDEN II
<S> <C> <C> <C> <C>
Date property acquired 11/30/83 11/30/83
Date of sale 1/30/97(a) 1/30/97(a)
Selling Price, Net of Closing Costs and
GAAP Adjustments:
Cash received (disbursed) net of closing costs $(216,345) $117,454
Mortgage balance and accrued interest at time of sale 1,918,394 1,586,941
Purchase money mortgage taken back
by program 0 0
Adjustments resulting from application
of GAAP 0 0
Total 1,702,049(b) 1,704,395(b)
Cost of Properties Including Closing and
Soft Costs
Original mortgage financing 1,200,000 1,200,000
Total acquisition cost, capital
improvement, closing and soft costs(c) 369,716 362,120
Total 1,569,716 1,562,120
Excess (Deficiency) of Property
Operating Cash Receipts Over Cash
Expenditures(d) $(27,339) $140,954
- ---------------------------------
<FN>
(a) Sales were not to related parties.
(b) All taxable income was reported as Section 1231 income.
Neither sale will be reported as an installment sale.
(c) Amounts shown do not include pro rata share of original offering costs.
(d) Costs incurred in the administration of the partnership and not
related to the operation of the property are not included.
</FN>
</TABLE>
A-23
UNAUDITED
<PAGE>
EXHIBIT B
WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 6
FIRST AMENDMENT TO
AGREEMENT OF LIMITED PARTNERSHIP
The AGREEMENT OF LIMITED PARTNERSHIP of WNC HOUSING TAX CREDIT FUND VI,
L.P., SERIES 6 dated as of March 3, 1997 among WNC & Associates, Inc., as
General Partner, John B. Lester, Jr., as Initial Limited Partner, and those
Persons admitted to the Partnership as Additional Limited Partners, is hereby
amended by the General Partner and the Initial Limited Partner as follows:
1. The definition of "Return on Investment" included in Article 1 thereof
is hereby amended to read in its entirety as follows:
"Return on Investment" means an annual, cumulative, but not compounded,
"return" to the Limited Partners as a class on their Adjusted Capital
Contributions commencing for each such Limited Partner on the last day of the
calendar quarter during which the Limited Partner's Capital Contribution is
received by the Partnership, calculated at the following annual rates: (i) 11%
through December 31, 2008 and (ii) 6% for the balance of the Partnership's term.
2. Section 4.3.1 thereof shall be amended to read in its entirety as
follows:
4.3.1. Unless Section 4.3.3 applies, if there is an aggregate Loss
remaining, such remaining aggregate Loss shall be allocated:
(i) First, to the extent of the positive Capital Account balances of
the Partners, in such manner and amount as is necessary to cause such balances,
as so adjusted, to be in the ratio of 99.9% to the Limited Partners and 0.1% to
the General Partner until such balances are reduced to zero;
(ii) Second, to the extent of the excess of Partnership Minimum Gain
over the aggregate negative Capital Account balances of the Partners with such
balances, to the General Partner and the Limited Partners in such manner and
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amount as is necessary to cause their negative Capital Account balances, as
so adjusted, to be in the ratio of 99.9% to the Limited Partners and 0.1% to the
General Partner; and
(iii) Third, to the General Partner.
3. Section 4.3.2 thereof shall be amended to read in its entirety as
follows:
4.3.2. Unless Section 4.3.3 applies, if there is an aggregate Profit
remaining, such remaining aggregate Profit shall be allocated:
(i) First, in the event that the Limited Partners have an aggregate
positive Capital Account balance and the General Partner has a negative Capital
Account balance or vice versa, to the class of Partners with and to the extent
of such negative balances;
(ii) Second, to the extent of the aggregate negative Capital Account
balances of the Partners, to the Limited Partners and the General Partner in
such manner and amount as is necessary to cause the negative Capital Account
balances of such Partners, as so adjusted, to be in the ratio of 99.9% to the
Limited Partners and 0.1% to the General Partner; and
(iii) Third, to the Limited Partners to the extent that their positive
Capital Account balances are less than their Adjusted Capital Contributions.
4. Section 4.4.1(i) thereof shall be amended to read in its entirety as
follows:
4.4.1.(i) The provisions of this Agreement related to the maintenance
of Capital Accounts, the allocation of Profits and Losses for Tax Purposes and
Tax Credits and the distribution of cash and property to the Partners are
intended to comply with the requirements of Treasury Regulation Section
1.704-1(b) by causing the amount of such Profits and Losses for Tax Purposes to
be allocated among the Partners' Capital Accounts so that the amount in their
Capital Accounts as of the end of each fiscal year of the Partnership is equal
to the Partners' Deemed Liquidation Distributions. Where there would be no
Deemed Liquidation Distribution to the Partners, such provisions are intended to
comply with the above-referenced Treasury Regulations by (a) limiting the
maximum negative balance in the Capital Accounts of the Limited Partners, as a
class, to an amount not in excess of their aggregate share (determined in
accordance with Treasury Regulation Section 1.704-2(g)) of Partnership Minimum
Gain, (b) allocating the Partnership's aggregate Nonrecourse Deductions to
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cause the negative Capital Account balances of the Limited Partners, as a class,
and the General Partner to be in the ratio of 99.9% to the Limited Partners and
0.1% to the General Partner, and (c) allocating to the Partners an amount of
gross income or gain of the Partnership to the extent necessary to cause the
Partnership to comply with clauses (a) and (b) of this sentence at the end of
each fiscal year of the Partnership. In addition, such provisions are intended
to cause the amount distributable to each Partner in an actual distribution
pursuant to Section 4.2.2 to equal the amount that would be distributable to
each Partner if Section 4.2.1 rather than Section 4.2.2 applied to such
distribution.
5. Section 4.4.3(ix) thereof shall be amended to read in its entirety as
follows:
(ix) Except as otherwise expressly provided herein, Nonrecourse
Deductions shall be allocated 99.9% to the Limited Partners and 0.1% to the
General Partner.
6. Section 4.5.1 thereof shall be amended to read in its entirety as
follows:
4.5.1. Except as provided in Section 4.5.2, in accordance with Treasury
Regulation Section 1.704-1(b)(4)(ii), all expenditures giving rise to the
allowance of any Tax Credits shall be allocated among the Partners in the manner
in which the deductions arising from such expenditures are allocated among the
Partners for the relevant taxable year, it being the intention of the Partners
that such expenditures, including, without limitation, expenditures giving rise
to the allowance of Low Income Housing Credits, be allocated 99.9% to the
Limited Partners, as a class, and 0.1% to the General Partner.
IN WITNESS WHEREOF, the undersigned have executed this First Amendment
to Partnership Agreement as of August 29, 1997.
WNC & ASSOCIATES, INC.
General Partner
By: /s/ JOHN B. LESTER, JR.
John B. Lester, Jr.,
President
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