SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ X ] Soliciting Material Pursuant to Section 240.14a-12
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:_________
2) Aggregate number of securities to which transaction applies: _________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined: _________
4) Proposed maximum aggregate value of transaction: _________
5) Total fee paid: _________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: _________
2) Form, Schedule or Registration Statement No: _________
3) Filing Party: _________
4) Date Filed: _________
<PAGE>
CONSENT SOLICITATION STATEMENT
PROPOSED ACTIONS BY WRITTEN CONSENT
OF LIMITED PARTNERS
OF
WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
__________, 2001
INTRODUCTION
The limited partners (the "Limited Partners") of WNC Housing Tax Credit
Fund V, L.P., Series 3 (the "Partnership"), are being asked by the Partnership
and WNC & Associates, Inc. (the "General Partner") to consider and approve by
written consent two amendments to the agreement of limited partnership of the
Partnership.
The first amendment, if approved, would eliminate the requirement that
the Partnership print, collate and mail to each Limited Partner its quarterly
and annual financial reports ("Proposal No. 1"). Instead, under Proposal No. 1,
the Partnership would upon request make its reports available to the Limited
Partners via e-mail or U.S. mail. Reports would also be available on the
Internet at www.sec.gov after the Partnership files them with the SEC. The
General Partner believes that because these reports do not provide particularly
useful information to the Limited Partners, the production and mailing costs of
the reports are unwarranted.
The second amendment, if approved, would permit the General Partner or
one of its affiliates to receive a competitive property management fee for
property management services rendered to the properties owned by entities in
which the Partnership has invested ("Proposal No. 2"). Currently, the
Partnership's agreement of limited partnership limits the property management
fee payable to the General Partner or its affiliates to the lesser of the
competitive amount or 5% of gross revenues from the property.
Each of Proposal No. 1 and Proposal No. 2 is subject to the approval of
a majority-in-interest of the Limited Partners. If the Limited Partners do not
approve Proposal No. 1, the Partnership will continue to reproduce and mail
copies of its financial reports to the Limited Partners and will continue to
bear the cost for doing so. Regardless of the result of the vote respecting
Proposal No. 1 the Partnership will continue to provide its annual tax
1
<PAGE>
information directly to the Limited Partners. If the Limited Partners do not
approve Proposal No. 2, the General Partner and its affiliates cannot receive a
competitive amount for property management services if the competitive amount
exceeds 5% of gross property revenues.
This Consent Solicitation Statement and the enclosed form of Actions By
Written Consent of Limited Partners (the "Consent") were first sent to the
Limited Partners on or about __________ ___, 2001.
Units of limited partnership interest in the Partnership (the "Units")
represented by Consents duly executed and returned to the Partnership on or
before _________ __, 2001 (unless extended by the General Partner pursuant to
notice mailed to the Limited Partners) will be voted or not voted in accordance
with the instructions contained therein. If no instructions for a Proposal are
given on an executed and returned Consent, Units so represented will be voted in
favor of that Proposal. Limited Partners may vote in favor of one Proposal and
not the other. The General Partner will take no action with respect to a
Proposal except as specified in the duly executed and returned Consents.
The cost of this solicitation of Consents is being borne by the
Partnership. Such solicitation is being made by mail and, in addition, may be
made by officers and employees of the Partnership and the General Partner,
either in person or by telephone or telegram.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The only outstanding class of voting securities of the Partnership is
the Units. Each Unit entitles its holder to one vote on Proposal No. 1 and to
one vote on Proposal No. 2.
All Limited Partners as of _________ __, 2001 (the "Record Date") are
entitled to notice of and to vote on each Proposal. As of December 18, 2000
there were 18,000 Units outstanding, 17,762 of which were held by 852 Limited
Partners entitled to vote such Units, and 238 of which were held by assignees
not entitled to vote. With respect to each Proposal to be voted upon, the
favorable vote of Limited Partners holding in excess of 50% of the total of
voting Units outstanding as of the Record Date will be required for approval of
such Proposal.
There are no rights of appraisal or similar rights of dissenters under
California law or otherwise with regard to the Proposals to be voted upon.
Dissenting Limited Partners are protected under California law by virtue of the
fiduciary duty of the General Partner to act with prudence in the business
affairs of the Partnership on behalf of the Partnership and the Limited
Partners.
As of September 27, 2000 no person or group of related persons was
known by the Partnership to be the beneficial owner of more than 5% of the
Units, except as follows:
2
<PAGE>
--------------------------------------------------------------------------------
| | Number of | Percent of Total | Number of | Percent of |
| Limited | Voting | Voting Units | Total | Total Units |
| Partner | Units Owned Outstanding | Units Owned | Outstanding |
--------------------------------------------------------------------------------
| Sempra | | | | |
| Energy | | | | |
| Financial | 4,560 | 25.67% | 4,560 | 25.33% |
--------------------------------------------------------------------------------
| Western | | | | |
| Financial | | | | |
| Savings | 1,068 | 6.01% | 1,068 | 5.93% |
--------------------------------------------------------------------------------
Neither the General Partner nor any of its affiliates is the owner of
Units.
No meeting will be held with regard to this solicitation of the Limited
Partners. Voting may be accomplished by completing and returning to the offices
of the Partnership, at 3158 Redhill Avenue, Suite 120, Costa Mesa, California
92626, telephone: (714) 662-5565, the form of Consent included herewith. Only
Consents received prior to the close of business on the date (the "Action Date")
which is the earlier of (i) the date on which the Partnership has received
approval and/or disapproval of each Proposal by a majority-in-interest of the
Limited Partners, or (ii) _________ __, 2001 (unless extended by the General
Partner pursuant to notice mailed to the Limited Partners), will be counted
toward the vote on the Proposals. However, Limited Partners are urged to return
their Consents at the earliest practicable date.
If a Limited Partner has delivered an executed Consent to the
Partnership, the Limited Partner may not revoke such Consent. As of the Action
Date, one or both of the actions which are the subject of this solicitation will
either be effective (if the requisite number of executed Consents favoring
approval have been received by the Partnership) or the solicitation period will
have expired without approval of one or both of the actions.
CONSENT UNDER PARTNERSHIP AGREEMENT
The Partnership is governed by its Agreement of Limited Partnership
dated as of March 28, 1995 (the "Partnership Agreement"). Pursuant to Section
12.1.1 of the Partnership Agreement, a majority-in-interest of the Limited
Partners may approve or disapprove the amendments to the Partnership Agreement
described herein.
The General Partner recommends that the Limited Partners vote in favor
of each Proposal.
THE PARTNERSHIP'S BUSINESS
The Partnership is a limited partner in 18 limited partnerships/limited
liability companies ("Local Limited Partnerships") which own and operate
apartment complexes qualifying for the low income housing tax credit under
3
<PAGE>
Section 42 of the Internal Revenue Code of 1986, as amended. The primary
business of the Partnership is to manage its investments in such Local Limited
Partnerships and allocate to the Limited Partners the tax credits which are
allocated to the Partnership.
MANAGEMENT
The Partnership is a California limited partnership which has no
executive officers or directors. The Partnership's general partner is WNC &
Associates, Inc.
WNC & Associates, Inc. is a California corporation which was organized
in 1971. Its officers and significant employees are:
Wilfred N. Cooper, Sr. Chief Executive Officer, Chairman of the Board
Wilfred N. Cooper, Jr. President, Chief Operating Officer, Secretary
David N. Shafer Executive Vice President
Sy P. Garban Senior Vice President - Institutional Investments
N. Paul Buckland Senior Vice President - Acquisitions
Thomas J. Riha Vice President - Chief Financial Officer
David C. Turek Vice President - Originations
In addition to Wilfred N. Cooper, Sr., the directors of WNC &
Associates, Inc. are John B. Lester, Jr., Wilfred N. Cooper, Jr., David N.
Shafer, and Kay L. Cooper. The principal shareholders of WNC & Associates, Inc.
are Wilfred N. Cooper, Sr. and John B. Lester, Jr.
PROPOSAL NO. 1 AND ITS EFFECTS
Proposal No. 1 would add a new provision to the Partnership Agreement.
Set forth below is the proposed amendment to the Partnership Agreement which
constitutes Proposal No. 1.
9.4.4. Notwithstanding the provisions of Section 9.4.1 and 9.4.3
hereof, effective as of _________ __, 2001, the General Partner shall cause the
Partnership to prepare the reports described in Section 9.4.1 and 9.4.3, but the
General Partner shall not be required to send any such report to any Limited
Partner unless the Limited Partner has requested in writing to the General
Partner that such reports be sent to such Limited Partner. The General Partner
shall be permitted to take any action deemed necessary or appropriate to
accomplish the foregoing.
The General Partner has proposed Proposal No. 1 in order to avoid the
expense entailed in the reproduction and mailing of the Partnership's quarterly
and annual financial reports. The General Partner is not proposing that the
Partnership cease its preparation of such reports; rather, if Proposal No. 1 is
4
<PAGE>
approved, the Partnership would continue to prepare its quarterly and annual
financial reports and, so long as it is required to do so under the Securities
Exchange Act of 1934, as amended, file them with the Securities and Exchange
Commission ("SEC"), but it would no longer automatically reproduce and mail
those reports to the Limited Partners. Because of the nature of the
Partnership's business (see "The Partnership's Business" herein), the General
Partner believes that the quarterly and annual financial reports prepared by the
Partnership are of very limited use to the Limited Partners. The Partnership is
not in the business of generating profits from operations, but, rather, is in
the business of providing low income housing tax credits to the Limited
Partners. The amount of the low income housing credits is not contingent upon
the operations of the apartment complexes, but is contingent only upon the
continued rental of the apartment complexes to appropriate tenants at
appropriate rents by their current owners. Such information cannot be derived
from the financial reports, which are prepared in a manner designed to comply
with the rules and regulations of the SEC. Consequently, the General Partner
believes that the only report which the majority of Limited Partners are
interested in receiving is the annual tax information which the Partnership
provides to the Limited Partners. Proposal No. 1 will not in any way impact the
manner in which the Partnership provides tax information to the Limited
Partners. Proposal No. 1 only provides that the Partnership need not send copies
of its financial reports to the Limited Partners. Notwithstanding Proposal No.
1, Limited Partners who desire to receive any such of the Partnership's
financial reports could request copies thereof from the Partnership, or they
could obtain them from the SEC's website at www.sec.gov (so long as the reports
are filed with the SEC).
During fiscal year 1999/2000, the Partnership spent approximately
$2,750 to reproduce and mail its quarterly financial reports and its annual
financial report.
The General Partner is subject to a potential conflict of interest in
connection with Proposal No. 1. If Proposal No. 1 is approved, the Partnership
will not have to incur the costs it otherwise would incur in connection with the
reproduction and mailing of the reports. Because the Partnership itself
generates little or no cash from its operations, the costs of reproduction and
mailing are funded through reserves. To the extent reserves are not needed to
fund the reproduction and mailing of reports, the reserves will be available for
other purposes, including, perhaps, the payment of the asset management fee to,
and the reimbursement of operating expenses advanced by, the General Partner.
During fiscal year 1999/2000, the Partnership paid to the General Partner asset
management fees and reimbursements in the aggregate amount of $120,617, and
accrued but did not pay asset management fees and reimbursements in the
aggregate amount of $176,274.
A proposal similar to Proposal No. 1 has been approved by the limited
partners of WNC Housing Tax Credit Fund II, L.P., another partnership sponsored
by the General Partner.
5
<PAGE>
PROPOSAL NO. 2 AND ITS EFFECTS
Proposal No. 2 would amend existing Section 5.6.5 of the Partnership
Agreement effective as of the date of Limited Partner approval. Set forth below
is the revised Section 5.6.5 which constitutes Proposal No. 2 (deletions
indicated by striking through):
5.6.5. For any property management services actually rendered by the
General Partner or its Affiliates respecting the Properties owned by Local
Limited Partnerships, the General Partner or any such Affiliate may receive
Competitive property management or leasing fees from the Local Limited
Partnerships. Included in any such property management fee shall be bookkeeping
services and fees paid to non-Affiliated Persons for property management
services. In no event shall any leasing fee be paid to the General Partner or to
any of its Affiliates for performing leasing services unless the services are
necessary for the leasing of space in a Property of a Local Limited Partnership
and would be required to be performed by a non-Affiliated Person but for their
performance by the General Partner or an Affiliate of the General Partner. The
maximum property management fees paid to the General Partner or any of its
Affiliates (including all leasing and releasing fees and bonuses and other
payments for leasing related services, paid to any Person) shall be the lesser
of 5% of the gross revenues from the Property or a Competitive amount.
[OMITTED GRAPHIC: the last sentence of the preceding paragraph is stricken
through.]
The General Partner's wholly-owned subsidiary, WNC Management, Inc., is
engaged in providing property management services to low-income housing
properties located in southern California. Currently, WNC Management, Inc.
manages 15 properties, 11 of which are owned by WNC partnerships or local
limited partnerships invested in by one or more WNC partnerships. Included
therein is only one property in which the Partnership has an interest. Blessed
Rock of El Monte, a California limited partnership ("Blessed Rock") owns the
Blessed Rock of El Monte Apartments. The partners of Blessed Rock are the
Partnership, WNC Housing Tax Credit Fund V, L.P., Series 4 ("Series 4"),
Everland, Inc. (the "Local General Partner") and WNC Housing, L.P., the special
limited partner. If Proposal No. 2 is approved, and if a corresponding amendment
to the agreement of limited partnership of Series 4 is approved, WNC Management,
Inc. would be permitted to commence negotiations with the Local General Partner
of Blessed Rock to increase the amount of the property management fee paid to
WNC Management, Inc. from the current rate of 5% of gross revenues from the
property up to what the General Partner believes to be the current competitive
rate of 7% of gross revenues from the property. Because Blessed Rock is owned
jointly by the Partnership and Series 4, the General Partner would be unable to
negotiate a change in the property management fees paid to WNC Management, Inc.
by Blessed Rock unless Proposal No. 2 is approved by the Limited Partners and a
similar amendment is approved by the limited partners of Series 4.
Using the definition included in the Partnership Agreement, the General
Partner believes that the current "competitive" rate for property management
services for the Blessed Rock of El Monte Apartments is 7% of gross revenues.
(The Partnership Agreement defines "competitive" for these purposes as "the
amount customarily charged by Persons not Affiliated with the payee for such ...
services in the geographic area in which such ... services are rendered.") WNC
6
<PAGE>
Management, Inc. has received property management fees from Blessed Rock as
follows: $33,411 in 1999, and $30,943 in 2000, each of which was equal to 5% of
gross property revenues. If the amount payable had been equal to 7% of gross
property revenues, the amount paid would have been $47,408 in 1999, and $44,588
in 2000.
If the General Partner were able to negotiate an increase in the
property management fee paid by Blessed Rock, the increase could have an impact
on the Limited Partners. As discussed below, the General Partner believes that
any impact would not be significant.
Because the Partnership has invested as a limited partner in other
limited partnerships, the Partnership's cash flow from operations and from sale
of properties depends on the distributions it receives from all the limited
partnerships in which it has invested. Such limited partnerships, and not the
Partnership, pay property management fees. Accordingly, if the General Partner
is able to negotiate a higher property management fee from Blessed Rock, Blessed
Rock will have less cash to pay to its partners, including the Local General
Partner, the Partnership, and Series 4, and the Partnership will have less cash
to pay expenses such as the asset management fees discussed above. See "Proposal
No. 1 and its Effects." Nonetheless, the General Partner believes that this is
change is warranted because WNC Management, Inc. is not obligated to provide
property management services, and the higher competitive amount would be paid to
an unrelated property management company if one were hired by Blessed Rock.
The impact on the Limited Partners resulting from a reduction in cash
from operations to the Partnership from Blessed Rock is unlikely to be material.
However, the incremental difference in the property management fee could
ultimately decrease the amount available to be paid to the Limited Partners, if
any, from distributions resulting from the sale or refinancing of Blessed Rock
of El Monte Apartments. This could be the result if the increase in property
management fees caused Blessed Rock to accrue other fees owing to its Local
General Partner, or caused the Partnership to accrue asset management fees owing
to the General Partner which otherwise could have been paid. Again, the General
Partner does not believe that the impact on the Limited Partners in this regard
will be significant.
Of course, even if Proposal No. 2 is approved and a similar amendment
is approved by the limited partners of Series 4, there can be no assurance that
General Partner could successfully negotiate an increase in the property
management fee to be paid by Blessed Rock.
Of the 15 properties managed by WNC Management, Inc. four of them are
subject to the 5% restriction on property management fees. It is the current
intention of the General Partner to solicit relief from that restriction with
respect to all four properties.
7
<PAGE>
APPENDIX 1
ACTIONS BY WRITTEN CONSENT OF LIMITED PARTNERS
WNC Housing Tax Credit Fund V, L.P., Series 3
3158 Redhill Avenue, Suite 120
Costa Mesa, California 92626
(714) 662-5565
THIS CONSENT IS SOLICITED ON BEHALF OF THE PARTNERSHIP AND THE GENERAL PARTNER.
The undersigned hereby acknowledges receipt of the Consent Solicitation
Statement dated _________ __, 2001 and hereby votes all the units of limited
partnership interest of WNC Housing Tax Credit Fund V, L.P., Series 3 (the
"Partnership"), held of record by him, her or it as follows:
PROPOSAL NO. 1 The Partnership's Agreement of Limited Partnership
dated as of March 28, 1995 will be amended to provide that the
Partnership need not automatically send its financial reports to its
Limited Partners, as specifically set forth under "Proposal No. 1 and
Its Effects" on page ___ in the accompanying Consent Solicitation
Statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PROPOSAL NO. 2 The Partnership's Agreement of Limited Partnership
dated as of March 28, 1995 will be amended to provide that the
General Partner or an Affiliate thereof may receive a fee in a
competitive amount for property management services actually
rendered, as specifically set forth under "Proposal No. 2 and Its
Effects" on page ___ in the accompanying Consent Solicitation
Statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This Consent, when properly executed and returned to the Partnership, will be
voted in the manners directed herein by the undersigned Limited Partner. IF NO
DIRECTION IS MADE FOR A PROPOSAL, THIS CONSENT, IF SO EXECUTED AND RETURNED,
WILL BE VOTED FOR THAT PROPOSAL.
Please sign exactly When Units are held by joint tenants, both should sign.
as name appears below: When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If
(Name printed here) a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership,
Your form of please sign in partnership name by authorized person.
ownership is:
(Form of ownership
printed here)
DATED:_____________, 2001 _____________________________
Signature
PLEASE MARK, SIGN, DATE
AND RETURN THIS _____________________________
POSTPAID CONSENT CARD Additional Signature, if held jointly
(Name and address printed here)
<PAGE>
APPENDIX 2
__________, 2001
To all Limited Partners of WNC Housing Tax Credit Fund V L.P., Series 3
We are pleased to submit to you the enclosed materials for your review
of our request for approval of two amendments to the partnership agreement. The
first amendment would eliminate the requirement that your Partnership must
automatically reproduce and mail copies of its quarterly and annual financial
reports to the Limited Partners. Instead, as a convenience to the Limited
Partners, they would be sent such reports upon request, or they could obtain
them over the Internet. Such financial statements would be immediately available
on the Internet upon our filing them with the Securities and Exchange
Commission. Limited Partners will continue to be sent a Schedule K-1 to file
with their tax returns. The second amendment would permit WNC Management, Inc.
to receive a competitive fee for property management services rendered to the
Partnership's apartment complexes.
All of our Limited Partners should carefully read the enclosed
materials and then vote for or against the proposals by marking, signing and
returning the enclosed ballot form in the enclosed stamped, addressed envelope.
It must be understood that a proposal cannot be considered approved
without the affirmative vote of the owners of more than 50% of the units of
limited partnership interest. Therefore, if a Limited Partner does not return
his, her or its signed ballot, that Limited Partner will have effectively voted
against the proposals.
Please mark the enclosed ballot and return it to us in the enclosed
envelope. And please call us if you have any questions.
Sincerely yours,
